Exclusive-Netflix making preparations to open Vietnam office - sources
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[February 24, 2023]
By Fanny Potkin and Phuong Nguyen
SINGAPORE (Reuters) - U.S streaming giant Netflix Inc is making
preparations to open an office in Vietnam after years of negotiations
with authorities and completing a risk assessment, two sources with
knowledge of the matter said.
A local office would make Netflix the first major U.S tech firm with a
direct presence in the fast-growing Southeast Asian country of 100
million, increasingly seen as too lucrative to ignore despite wariness
over its stringent internet rules.
Netflix declined to comment in response to Reuters questions about its
plans and its current operations in Vietnam.
The company is in the early stage of planning for a local entity in
Vietnam after completing an assessment in late 2022 that evaluated
security and political risks of operating an office in Vietnam and the
handling of user data and sensitive content, the sources said.
The people declined to be identified because the preparations are
confidential.
The office could open as early as late 2023 but will require a lengthy
regulatory process that could take longer, according to one of the
sources.
Authorities announced a new decree, effective from January, requiring
video-on-demand service providers to seek licences from the Vietnamese
government to operate, which would in turn require establishing a local
office, although details of implementation remain unclear.
Vietnam has proven complex for tech firms to navigate, due in part to a
lack of clarity on specific requirements and enforcement mechanisms for
its often strict regulations, foreign executives familiar with
operations in the country have said.
Although Vietnam's cybersecurity law of 2018 requires all foreign
businesses earning income from online activities in Vietnam to open a
local office, only TikTok owner ByteDance has so far complied, even
though several other social media providers count Vietnam as one of
their top-10 global markets.
As Vietnamese officials grow more confident in the country's rising
consumer power, however, they have begun ramping up pressure on tech
firms to abide by the rules.
They threatened to shut down Facebook in 2020 over political content on
the platform, and in 2022 introduced new regulations requiring that tech
firms store user data locally and that social media firms remove within
24 hours what the authorities deem to be false content.
NETFLIX MEETING
Netflix told senior Vietnamese government officials it was studying the
possibility of opening a local representative office during a December
2022 meeting with the firm's Asia business strategy vice president,
according to a statement posted on the Ministry of Planning and
Investment's website.
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Smartphone with Netflix logo is placed
on a keyboard in this illustration taken April 19, 2022.
REUTERS/Dado Ruvic/File Photo/File Photo
Nguyen Van Doan, a senior official at the ministry, "expressed his
wish that Netflix soon establish a legal entity in Vietnam and
contribute to the development of the Vietnamese economy," the
statement said.
Vietnam's information ministry 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 tight media censorship
and tolerates little dissent, with strict rules over online content,
while the government is keeping increasingly close tabs on foreign
players in the sector.
The 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 had for years been demanding tax payments
by tech giants, including Netflix, that were operating without local
offices, according to sources familiar with the matter.
Companies had said they lacked a proper mechanism to pay tax in
Vietnam, although this was addressed last year with the creation of
an online portal for that purpose.
Social media companies have faced particular pressure over content,
including pending rules over the posting of news-related content on
social media accounts, although Netflix has also on occasion been
the target of public orders by the government to block domestic
access to content judged "offensive to the Vietnamese people".
This included in 2022 the Hollywood film "Uncharted", which
referenced Chinese claims in the South China Sea, and the South
Korean drama "Little Women", which contained scenes of the Vietnam
War.
(Reporting by Fanny Potkin in Singapore and Phuong Nguyen in Hanoi;
Editing by Edmund Klamann)
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