Vietnam to scrap controversial online business rule

By Nguyen Hoai   October 3, 2016 | 12:18 am PT
The rule has shocked the startup community.

The startup community in Vietnam can breathe a sigh of relief now that the government has decided to get rid of a rule that would criminalize online business violations with possible jail sentences.

The Justice Committee of the National Assembly, Vietnam’s top legislature, on Monday agreed with the justice ministry that Article 292 should be removed from the 2015 Penal Code.

The assembly is expected to make the final decision soon, but it is almost certain that the rule will be scrapped.

Under the article, companies providing services online without being properly registered would be fined as usual, just like most business offenses. But the rule would take a step further: when businesses generated a profit of VND50 million ($2,200) or revenue of VND500 million ($22,000), there would be criminal charges that could lead to jail terms of up to five years.

The article was enshrined in the 2015 Penal Code, which itself had been scheduled to come into effect on July 1 but later postponed due to multiple errors and loopholes. Article 292 is one of the most controversial parts of the code.

Justice Minister Le Thanh Long said the article has met with strong opposition.

The local startup community, with most members providing services online, in July filed a petition calling for the criminalization to be reviewed. The petition, sent to both the National Assembly and the cabinet, had nearly 6,000 signatures.

Lawyer Tran Duc Hoang said Vietnamese startups would be hurt by the article while foreign services providers such as Facebook are not subjected to strict rules.

The Vietnam Chamber of Commerce and Industry has recently asked legislators to scrap the article, warning of negative impacts on the economy. The chamber, which represents thousands of local comapnies, said the rule would be incongruous with the modern era of online services and startups.

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