Core Viewpoint - Vietnam's draft Artificial Intelligence Law aims to establish a balanced regulatory framework that emphasizes human-centric principles while managing risks and encouraging innovation. This will be Vietnam's first dedicated law for the AI sector, expected to take effect in March 2026 if approved [1][2]. Regulatory Framework - The draft law encompasses a broad regulatory scope, covering both domestic and foreign entities operating AI in Vietnam, as well as systems developed abroad that serve Vietnamese users, ensuring accountability for foreign tech suppliers [2]. - A four-tier risk classification system is proposed, categorizing AI systems into: - Prohibited: Systems that pose severe threats to national security, human dignity, and social order [2]. - High-risk: Systems in critical sectors like finance and healthcare, requiring government compliance assessment before market entry [2]. - Medium-risk: Systems that interact directly with users or generate content, necessitating clear AI attribute labeling [3]. - Low-risk: Systems with minimal socio-economic impact, subject to voluntary regulation and post-monitoring [4]. Incentive Policies - The draft law introduces several incentive measures to foster a healthy AI industry ecosystem: - Establishment of a national AI database for enterprise registration and monitoring, offering infrastructure support and tax incentives for participating companies [5]. - Encouragement of public-private partnerships in AI infrastructure, recognizing digital assets as legitimate contributions for financing [5]. - Planning for AI clusters in high-tech parks and universities, providing shared facilities and tax incentives [5]. - Introduction of a sandbox testing mechanism for SMEs and innovative startups to test new AI products in a controlled environment [5]. Market Opportunities for Chinese Companies - Chinese AI companies are encouraged to focus on three key areas in Vietnam: AI infrastructure, technology applications, and end products, while adhering to compliance requirements [6]. - In AI infrastructure, Vietnam is emerging as a hotspot for investments, with significant cost advantages compared to other ASEAN countries, making it attractive for data center development [7]. - In AI technology applications, there is a strong demand in sectors like smart cities and transportation, with several Chinese firms already establishing partnerships in Vietnam [8]. - In the end products sector, Chinese companies are deepening their presence, particularly in commercial smart devices and consumer electronics, with ongoing collaborations in Vietnam [9].

Core Points - Vietnam's National Assembly is discussing the draft of the "Artificial Intelligence Law," which aims to establish a human-centered approach to AI activities, balancing risk management and innovation incentives. If approved, the law is expected to take effect in March 2026 [1][2]. Regulatory Framework - The draft law includes a comprehensive regulatory scope covering both domestic and foreign entities engaged in AI activities in Vietnam, as well as systems developed abroad that serve Vietnamese users, ensuring that foreign technology providers cannot evade regulatory responsibilities [2]. - A four-tier risk classification system is proposed, categorizing AI systems into four risk levels: - Prohibited: Systems that pose severe threats to national security, human dignity, and social order [2]. - High Risk: Systems in critical sectors like finance, healthcare, and education that require government compliance assessment before market entry [3]. - Medium Risk: Systems that interact directly with users or generate content, which must clearly indicate their AI nature and ensure user awareness [4]. - Low Risk: Systems with minimal socio-economic impact, subject to voluntary regulation and post-monitoring [5]. Incentive Policies - The draft law introduces several incentive policies to foster a healthy AI industry ecosystem: - Establishment of a national AI database for enterprise registration and monitoring, with priority support for companies that participate in data sharing [6]. - Encouragement of public-private partnerships in AI infrastructure, recognizing digital assets as legitimate contributions for financing [6]. - Planning for AI clusters in high-tech parks and research institutions, providing shared facilities and tax incentives [6]. - Introduction of a sandbox testing mechanism for SMEs and innovative startups to test new AI products in a controlled environment [6]. Market Opportunities for Chinese Companies - Chinese AI companies looking to enter the Vietnamese market should focus on three key areas: AI infrastructure, technology applications, and end products, while adhering to compliance requirements [7]. - Vietnam is emerging as a hotspot for AI data center investments, with significant cost advantages compared to other ASEAN countries, making it an attractive market for infrastructure development [7]. - There is a strong demand for AI technology applications in smart cities, smart tourism, and smart transportation, with several Chinese companies already establishing partnerships in these areas [8]. Challenges and Considerations - Companies must be aware of the increased compliance thresholds and operational costs associated with the new law, particularly for high-risk AI systems that require prior assessments [9]. - The requirement for foreign suppliers to designate a legal representative in Vietnam adds complexity to operations and resource integration [9]. - Despite rapid market growth, challenges remain in talent availability, data flow standards, and industry ecosystem maturity, necessitating long-term investment and localization efforts [9].