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Writer's picturePham Ba Thien

Doing business, researching, and applying artificial intelligence in Vietnam – Where to start and how to do it right?

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Not standing outside global trends, business activities related to Artificial Intelligence (AI) in Vietnam have developed rapidly in recent years. This development aligns with the national digital transformation goal, as outlined in Decision 749/QĐ-TTg by the Prime Minister on 03 June 2020. The Government has identified prioritizing research into certain core technologies where Vietnam can advance significantly, including Artificial Intelligence, as one of the essential tasks and solutions for building the foundation for digital transformation. Additionally, building computer systems capable of processing and analyzing data, with community participation, allows organizations and businesses to harness and develop an ecosystem of innovative products related to AI.


The emergence of ChatGPT further meets the increasing demand from individuals, organizations, and businesses in Vietnam, helping them apply AI to their work and daily lives. By minimizing paperwork, saving time and costs, and optimizing processes, AI is becoming one of the digital technology areas encouraged for development in Vietnam.


For investors interested in AI-related services, understanding the nature of these activities, how to start a business in Vietnam, and key considerations during the business process is crucial. This article will address these issues.


A. WHAT IS ARTIFICIAL INTELLIGENCE?


As of September 2024, there is still no legislative document specifically regulating the legal framework for artificial intelligence activities in Vietnam. The most relevant document is Decision 127/QĐ-TTg issued by the Prime Minister on 26 January 2021, which establishes the national strategy for research, development, and application of artificial intelligence by 2030. This decision outlines general guiding principles, goals, strategic directions, tasks, and solutions from the government regarding AI. In this context, artificial intelligence is defined as a foundational technology area that significantly contributes to breakthroughs in production capacity, enhances national competitiveness, and promotes sustainable economic growth.


More specifically, on July 3, 2024, the Ministry of Information and Communications sought opinions on the draft Law on Digital Technology Industry, the first law in Vietnam to detail activities related to new and advanced digital technologies such as Blockchain, Big Data, public service technology experimentation mechanisms, digital technology parks, and artificial intelligence. According to the draft law, artificial intelligence is recognized as a new digital technology service defined as "technology aimed at simulating human intelligence using machines, particularly computer systems." An AI system is described as "a machine learning-based system designed to produce outputs such as content, predictive recommendations, or decisions for a set of goals defined by humans. The system is designed to use various techniques and approaches related to artificial intelligence to develop models, represent data, knowledge, and processes used to perform tasks. AI systems are designed to operate with varying levels of automation."


Thus, although it is not yet officially in effect and may be adjusted in upcoming drafts, the Vietnamese government still considers artificial intelligence as a digital technology industry aimed at simulating human intelligence to facilitate automation in work and life, and encourages research, application, and development.


As mentioned earlier, the lack of a specific legal framework for artificial intelligence activities in Vietnam has resulted in the business of AI existing in a "gray area" of the law. Therefore, from the author's perspective, two types of AI business activities in Vietnam can be classified into the following groups:

  • Businesses directly engaged in providing artificial intelligence services in Vietnam are companies operating in the information technology sector, such as those offering computer programming services, consulting services, and other activities related to computers, registered under the business lines group 62 and information service activities registered under business lines group 63 according to Decision 27/QĐ-TTg on the issuance of the Vietnam economic sector classification system issued by the Prime Minister on 6 July 2018. These businesses may engage in activities such as computer programming, computer consulting and management, data processing, and portal services. Major information technology companies in Vietnam, such as Viettel, FPT, and VNPT, offer these services, while some startups have also entered this market, notable examples being Olli and LovinBot.

  • Businesses that apply artificial intelligence as part of their business outcomes, including manufacturing and service companies. For example, an automotive manufacturing company may implement AI for automating assembly machinery and precision engineering, while a media company might utilize AI for marketing planning and product advertising writing. Additionally, law firms may employ AI in researching and drafting legal consultations.


For the first group of companies, since the business of artificial intelligence is either the main activity or, even if not primary, is a service that generates direct revenue, with contracts signed and invoices issued, if there is no company yet, the founders need to go through the licensing process to establish a business in Vietnam and register the corresponding business sectors related to information technology and data processing. If a company already exists, it is necessary to review the existing business sectors in the company's license and supplement or amend them if the current sectors do not accurately reflect the goal of providing artificial intelligence services in Vietnam.


For the second group of companies, while applying artificial intelligence may directly or indirectly generate revenue for the company, this only implies that the application is part of the business process and is linked to the company's main business sector. Therefore, if the company has registered sectors that produce products outside the first group, there is no need to additionally register activities under the mentioned business lines groups 62 and 63. To understand more about the considerations regarding business sectors and company establishment, you can refer to this article: Five key legal issues for startups to consider when incorporating a company.


There are some activities related to artificial intelligence that are harder to classify within these groups, such as research and development activities falling under business lines group 72 (Research and Development, or R&D). Depending on the nature of the output of the research product, businesses may consider registering under business lines groups 72, 62, 63, or according to specific sub-sectors based on the actual activities of the company (for example: manufacturing, e-commerce, marketing, media).


In the Draft Law on Digital Industry, a new experimental mechanism has been proposed for new digital technology activities, including the business of artificial intelligence services. This means that in the future, when the first group of companies operates in this service, they may need to undergo additional licensing processes and be subject to oversight by state authorities before passing the experimental phase and officially conducting artificial intelligence service activities in Vietnam.


B. OTHER CONSIDERATIONS IN DOING BUSINESS AND APPLYING ARTIFICIAL INTELLIGENCE


Artificial intelligence, while significantly enhancing business performance within companies, also leads to many intentional or unintentional negative consequences or potential risks for the company. From a legal perspective, these risks may include:

  • Processing personal data for unintended purposes, violating user, customer, or partner privacy policies.

  • Infringing on intellectual property rights by using information without the permission of the author or copyright holder.

  • Reducing or terminating employment, leading to labor disputes within the company.

  • Utilizing false or unverified information.


There are many other potential consequences that businesses need to consider during their operations, necessitating a clearer legal framework for researching, conducting business, developing, and applying artificial intelligence. This includes enacting laws, decrees, and ethical guidelines for the development, deployment, and application of artificial intelligence in Vietnam.


Concerning the Draft Law, although it is still in its early stages, it addresses seven prohibited acts in activities related to artificial intelligence, including:


  1. There are many other potential consequences that businesses need to consider during their operations, necessitating a clearer legal framework for researching, conducting business, developing, and applying artificial intelligence. This includes enacting laws, decrees, and ethical guidelines for the development, deployment, and application of artificial intelligence in Vietnam. Returning to the mentioned Draft Law, although it is still in its early stages, it addresses seven prohibited acts in activities related to artificial intelligence, including.


  2. Introducing to the market, deploying, or using artificial intelligence systems that exploit the vulnerabilities of individuals or groups due to age, disability, or economic or social circumstances, severely distorting their behavior and causing significant harm to those individuals or groups.


  3. Introducing to the market, deploying, or using artificial intelligence systems used to assess or classify individuals based on social behavior or inferred or predicted personal characteristics or personality, leading to one or both of the following outcomes:

    (i) Adverse treatment in social contexts unrelated to the context in which the original data was created or collected;

    (ii) Unjustified or disproportionate harm to individuals or groups not commensurate with that social behavior or the severity of such behavior.


  4. Introducing to the market, deploying, or using artificial intelligence systems to assess an individual's risk to determine or predict the likelihood of committing a criminal offense based solely on records or personality assessments and characteristics; this does not apply to artificial intelligence systems used to assist in evaluations directly related to crime prevention as regulated by current law.


  5. Introducing to the market, deploying, or using artificial intelligence systems to create or expand facial recognition databases by collecting facial images without specific targets from the internet or CCTV footage.


  6. Introducing to the market or deploying artificial intelligence systems to infer human emotions in workplace and educational settings, except for those used in healthcare and safety.


  7. Introducing to the market, deploying, or using artificial intelligence systems that classify biometric data to categorize individuals based on biometric data to infer sensitive personal data; this does not include labeling or filtering legally collected biometric datasets.


  8. Businesses can refer to this list of prohibitions to establish regulations for providing services or using artificial intelligence within their operations. Overall, while the legal framework for artificial intelligence activities in Vietnam is still unclear, the stated direction and trends indicate that this "gray area" will soon be defined more clearly, providing businesses with confidence in their operations in Vietnam.


Read this article as a printed matter: Vietnamese | English


Disclaimer:

This article

  • reflects the author's subjective viewpoint on the main topic mentioned in this article, providing the best reference value at the time of publishing;

  • is not considered the viewpoint or opinion of any state agency in any case; and

  • does not constitute legal advice from Minh Thien Law and should not be applied to resolve any specific legal situation.

 

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