Flashpoints | Security | Southeast Asia

Vietnam’s New AI Law and Its Strategic Implications

The country’s government is leading Southeast Asian efforts to regulate AI technologies, but its approach has several important shortcomings.

In March 2026, Vietnam began implementing its state-led, top-down AI law (Law 134/2025/QH15), one of the boldest moves to govern the juggernaut technology sector that any Southeast Asian government has made so far. For a country rapidly ramping up its high-tech ambitions, Vietnam’s AI regulatory measure aims to strengthen sovereign control over data flows, augment transparency, and mitigate against varying risks associated with AI. Moreover, it sets a benchmark for regulation within a region which has generally relied on voluntary compliance, as exemplified by ASEAN’s soft-law or guideline approach to AI governance.

But therein lies the rub. While Hanoi is forcefully implementing a standalone legal framework to assert control over information technology and strengthen state sovereignty, the Vietnamese government is ignoring the broader regulatory, socio-economic, and environmental implications. These include unintended consequences such as the sorts of economic dislocations and social disruptions that are inherent in such dynamic and historic transformations, although AI engenders change at exponential rates that could vastly widen already troubling societal inequalities.

Vietnam is not alone in its quest for enhanced digital sovereignty, and the stakes of the issue are high. The United States, China, Russia, and the European Union have long understood that key sectors – ranging from healthcare to energy and security – now operate on AI systems generally dominated by a handful of tech companies and the supply chains of critical minerals on which they rely. AI governance, therefore, increasingly encompasses the grand strategies of various global, national, and corporate stakeholders who are seeking to survive in a harshly competitive environment.

Vietnam’s new AI law creates a comprehensive legal framework, establishing a three-tier system of high, medium, and low categories of risk that align with differing levels of regulatory control. The higher the risk, the more government regulation. As a state-led approach, the law applies to both domestic and foreign entities conducting AI activities in Vietnam. While the law is still being implemented, it ideally aims to balance regulation with innovation and socio-economic development by allowing tech developers to test evolving AI models without strict penalties during a trial phase.

Although the law has its strengths, Vietnam’s AI law has several important shortcomings. First, the policy sits uneasily under ASEAN’s regional voluntary approach to AI regulation. Most troubling, it possibly creates a high-tech race to the bottom in the region, as venture capital often seeks jurisdictions with the least amount of regulation. Vietnam’s growing economy and quest for capital sits in a region increasingly shaped by ASEAN’s evolving governance architecture.

But the country’s AI law currently stands in contrast to........

© The Diplomat