SINGAPORE (Reuters) – U.S. streaming giant Netflix ( NFLX.O ) is set to open an office in Vietnam after years of talks with authorities and the completion of a risk assessment, two sources familiar with the matter said.
A local office could make Netflix the first major US tech company to have a direct presence in the fast-growing Southeast Asian nation of 100 million people, which is seen as too lucrative to ignore despite wariness of strict internet regulations.
Netflix declined to comment in response to questions from Reuters about its plans and current operations in Vietnam.
Sources said the company is in the early stages of planning a local unit in Vietnam after completing an assessment in late 2022 that assessed the security and political risks associated with operating an office in Vietnam and handling user data and sensitive materials.
The office could be opened as early as 2023, but according to a source, this would require a lengthy regulatory process that could take time.
Authorities announced a new order to take effect in January that would require video-on-demand providers to obtain a license from the Vietnamese government to operate, which would require setting up a local office, although implementation details remain unclear.
Foreign officials familiar with operations in the country said Vietnam has proven difficult for tech companies because it often has strict regulations with specific requirements and a lack of clarity about enforcement mechanisms.
Although the 2018 Vietnam Cyber Security Law requires all foreign companies that derive income from online activities in Vietnam to open local offices, only ByteDance, which owns TikTok, has so far complied, although several other social networks have followed suit for instance. Media providers see Vietnam as one of the top 10 global markets.
And as Vietnamese officials grow more confident about the country’s growing consumer power, they have begun pressuring tech companies to comply.
He threatened to shut down Facebook in 2020 over political content on the platform, but in 2022 he introduced new rules requiring tech companies to store user data locally and social media companies within 24 hours. Removes what authorities deem inappropriate. material.
According to a statement posted on the website of the Ministry of Planning and Investment, Netflix informed top Vietnamese government officials of the possibility of opening a local office during a December 2022 meeting with the company’s vice president of business strategy in Asia.
A senior official at the ministry, Nguyen Van Duan, “expressed his desire for Netflix to establish a legal entity in Vietnam soon and promote Vietnam’s economic development,” the statement said.
Vietnam’s Ministry of Information did not respond to a request for comment.
With the fastest growing middle class in Southeast Asia, Vietnam has become a key market for tech giants.
Its digital economy, including financial technology, e-commerce and online entertainment, will grow to nearly $50 billion by 2025, more than double last year, according to a report by Google, Temasek Holdings.
Vietnam’s ruling Communist Party tightly controls the media and tolerates the slightest dissent with strict regulations on online content, while the government increasingly monitors foreign players in the industry.
Last month, authorities said they had collected 1.8 trillion dong ($78 million) in taxes from Google, Meta, Netflix and TikTok in 2022.
For years, Vietnam’s government has demanded taxes from tech giants including Netflix that have operated without local offices, according to people familiar with the matter.
Companies said they lacked a proper mechanism to pay taxes in Vietnam, although this was remedied last year with the creation of an online portal for the purpose.
Social media companies in particular have faced pressure on content, including pending rules on posting news-related content to social media accounts, although Netflix has also at times been the target of government public orders blocking local access to controlled content. is “offensive” to the Vietnamese.
In 2022, this included the Hollywood film Uncharted, which referenced China’s claims in the South China Sea, and the South Korean drama Little Women, which included scenes from the Vietnam War.
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