Netflix Plans To Open Vietnam Office

U.S streaming giant Netflix Inc (NFLX.O) is preparing to set up an office in Vietnam after years of negotiations with authorities and finalizing a risk assessment, two sources familiar with the matter said.

A local office would make Netflix the first big U.S. tech firm with a physical presence in the fast-growing Southeast Asian country of 100 million, increasingly seen as too lucrative to look past despite wariness over its strict internet rules.

Netflix would not comment in response to Reuters queries about its plans and its current operations in Vietnam.

The company is in the early stage of making preparations for a local entity in Vietnam after finalizing an assessment late last year that evaluated the political and security risks of operating an office in Vietnam and the handling of user data and sensitive content, the sources said.

The people refused to be named because the preparations are confidential.

The office could open as early as late this year but will require a lengthy regulatory process that could take longer, said one of the sources.

Authorities introduced a new decree, effective from January, requiring video-on-demand service providers to obtain licenses from the Vietnamese government to operate, which would in turn require setting up a local office, although details of implementation remain undefined.

Vietnam has proven complicated for tech firms to navigate, owing in part to a lack of clarity on particular requirements and enforcement mechanisms for its often stringent regulations, foreign executives with knowledge of operations in the country have said.

Although Vietnam’s cybersecurity law of 2018 expects all foreign businesses generating income from online activities in Vietnam to set up a local office, only TikTok owner ByteDance has so far adhered, even though some other social media providers include Vietnam as one of their top-10 global markets.

As Vietnamese officials grow increasingly confident in the nation’s rising consumer power, however, they have started mounting pressure on tech firms to comply with the rules.

They threatened to close down Facebook in 2020 over political content on the platform, and last year announced new regulations requiring that tech companies store user data locally and that social media firms delete within 24 hours what the authorities considered false content.

Netflix Meeting

Netflix told senior Vietnamese government officials it was exploring the possibility of establishing a local representative office during a December 2022 meeting with the firm’s Asia business strategy vice president, according to a statement published on the Ministry of Planning and Investment’s website.

Nguyen Van Doan, a senior official at the ministry, “expressed his wish that Netflix soon establishes a legal entity in Vietnam and contribute to the development of the Vietnamese economy,” the statement said.

Vietnam’s information ministry failed to reply to a request for comment. With the fastest-growing middle class in Southeast Asia, Vietnam has become a major market for tech titans.

Its digital economy including e-commerce, fintech, and online entertainment is on track to expand to almost $50 billion in total transactions per year by 2025, more than double 2022’s figure, according to a report by Google, Bain & Company, and Temasek Holdings.

Vietnam’s ruling Communist Party keeps tight media censorship and condones little dissent, with stringent rules over online content, while the government is keeping increasingly a close eye on foreign players in the sector.

The authorities disclosed in January that they had earned 1.8 trillion dongs ($78 million) in taxes from Google, Netflix, Meta, and TikTok last year.

The Vietnamese government had for years been asking for tax payments by tech giants, including Netflix, which were operating without local offices, and according to sources with knowledge of the matter.

Firms had said they did not have a proper mechanism to pay tax in Vietnam, although this was dealt with in 2022 with the creation of an online portal for that purpose.

Social media firms have faced separate pressure over content, including pending rules over the posting of news-related content on social media accounts, although Netflix has also occasionally been the target of public orders by the government to restrict domestic access to content deemed “offensive to the Vietnamese people”.

This included in 2022 the Hollywood film “Uncharted”, which cited Chinese claims in the South China Sea, and the South Korean drama “Little Women”, which included scenes of the Vietnam War.