On May 25, 2022, the Draft Cinema Law (amended) (“Draft Law“) was discussed at the 3rd session of the 15th National Assembly. Compared with the version of the Draft Law previously submitted to the National Assembly, this new draft has many progressive amendments, with regulations revised and presented more clearly and coherently. In particular, concerning film dissemination in cyberspace, the Draft Law has been supplemented with several new regulations and mechanisms to provide useful support to the post-censorship mechanism such as parental control mechanisms for disseminated films as well as intermediary platforms’ obligation in controlling films disseminated on the platforms. However, Article 21 of the Draft Law is still ambiguous on the subjects permitted to disseminate films in cyberspace, specifically:
Article 21.1 has narrowed down (compared to previous versions) the scope of subjects permitted to disseminate films in cyberspace by prescribing that “The subject permitted to disseminate film in cyberspace shall be cinema establishment“. The concept of “cinema establishment” in the Draft Law is defined as: “enterprises, non-business units, other organizations established by organizations or individuals that perform cinematographic activities in accordance with regulations of this Law and other relevant provisions of law“.
This definition can be interpreted to mean that a “cinema establishment” must be an organization or enterprise established under Vietnamese law. If so, foreign enterprises wishing to disseminate films in cyberspace, specifically to provide content services (for example, VOD services) to service users in Vietnam, are not permitted to directly render the services on a cross-border basis. Instead, they will be required to incorporate (i.e. having an entity established under Vietnamese law) in Vietnam before providing such services, meaning that Vietnam will ban foreign enterprises from disseminating films in cyberspace on a cross-border basis.
The above regulation and its interpretation may lead to the consequence that Vietnamese cinema law is not only inconsistent with global best practices but also contrary to the country’s international commitments to cross-border trade. Specifically, Chapter X (Cross-Border Trade) of the CPTPP Agreement, to which Vietnam is a signatory, stipulates very clearly that: “No Party shall require a service supplier of another Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border supply of a service“.
Furthermore, requiring foreign enterprises to establish companies in Vietnam also increases market entry costs and sets up unreasonably high barriers to market entry, hindering the development of reputable content providers currently providing consumers with carefully and legally curated content.
From the above-mentioned grounds and as the National Assembly will push the button to issue the Draft Law tomorrow (15 June 2022), we are hoping that the National Assembly will review and revise the above provisions, specifically to readjust the definition of cinema establishments or the provision on the subjects permitted to disseminate films in Article 21 of the Draft Law, in order to ensure compliance with Vietnam’s international commitments and global best practices, as well as ensure fair and transparent market access conditions for foreign investors.
(Co-authored with Tuan-Linh Nguyen, GR Advisor, BMVN, in alliance with Baker McKenzie)