Exclusive-Netflix is ​​preparing to open a Vietnam office

Exclusive-Netflix is ​​preparing to open a Vietnam office

By Fanny Potkin and Phuong Nguyen

SINGAPORE (Reuters) – U.S. streaming giant Netflix Inc is preparing to open an office in Vietnam after years of talks and completing a risk assessment, two sources with knowledge of the matter said.

A local office would make Netflix the first major US tech company with a direct presence in the fast-growing Southeast Asian country of 100 million, increasingly seen as too lucrative to ignore despite warnings about its strict internet regulations.

Netflix declined to comment in response to questions from Reuters about its plans and its current operations in Vietnam.

The company is in the early stages of planning for a local entity in Vietnam after completing an assessment by the end of 2022 that assessed the security and political risks of operating an office in Vietnam and handling user data and sensitive content, the sources said.

The people declined to be identified as the preparations are confidential.

According to a source, the office could open by the end of 2023 but would require a lengthy regulatory process that could take even longer.

Authorities announced a new decree, which took effect in January, requiring video-on-demand service providers to seek a license from the Vietnamese government to operate, which would in turn require the establishment of a local office, although implementation details remain unclear.

Vietnam has proven complicated for tech companies to navigate, due to a lack of clarity on specific requirements and an enforcement system for often strict regulations, foreign executives familiar with the country’s operations said.

Although Vietnam’s 2018 Cyber ​​Security Law requires all foreign businesses earning income from online activities to open local offices in Vietnam, only TikTok owner ByteDance has complied so far, although other social media providers have counted Vietnam as one of their top-10 global markets.

As Vietnamese officials become more confident in the country’s growing consumer power, they have begun increasing pressure on tech companies to comply with regulations.

They threatened to shut down Facebook in 2020 for political content on the platform and introduce new rules in 2022 requiring tech companies to store user data locally and social media companies to remove what authorities deem false content within 24 hours.

Netflix meeting

According to a statement posted on the website of the Ministry of Planning and Investment, Netflix told senior government officials in Vietnam that it was studying the possibility of opening a local representative office during a December 2022 meeting with the firm’s vice president of Asia business strategy.

Nguyen Van Duan, a senior official at the ministry, “expressed his desire that Netflix soon establish a legal entity in Vietnam and contribute to the development of the Vietnamese economy,” 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 fintech, e-commerce and online entertainment, is on track to grow to nearly $50 billion in total transactions per year by 2025, more than double last year’s figure, according to a report by Google, Temasek Holdings and Bain & Company.

Vietnam’s ruling Communist Party maintains strict media censorship and tolerates little dissent, including strict rules on online content, while the government is keeping an increasingly close eye on foreign players in the sector.

Authorities announced last month that they had collected 1.8 trillion dong ($78 million) in taxes from Google, Meta, Netflix and TikTok in 2022.

The Vietnamese government has for years been demanding tax payments from tech giants including Netflix, which were operating without local offices, sources familiar with the matter said.

Companies said they lacked a proper system for paying taxes in Vietnam, although this was addressed last year with the creation of an online portal for the purpose.

Social media companies have faced particular pressure on content, including pending regulations on posting news-related content on social media accounts, although Netflix has occasionally been the target of public orders by the government to “block internal access to content objectionable” to Vietnamese people.

These include the 2022 Hollywood film “Uncharted,” which refers to Chinese claims in the South China Sea, and the South Korean drama “Little Women,” which contains scenes from the Vietnam War.

(Reporting by Fanny Potkin in Singapore and Phung Nguyen in Hanoi; Editing by Edmund Claman)

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