LEGAL UPDATE: NATIONAL ASSEMBLY PASSES LAW ON SCIENCE, TECHNOLOGY AND INNOVATION – INTRODUCING SANDBOX MECHANISM TO FOSTER INNOVATION

A. Introduction

On June 27, 2025, the National Assembly of Vietnam officially passed the Law on Science, Technology and Innovation. The Law consists of 73 articles and will come into effect on October 1, 2025. This marks an important legal step to institutionalize Resolution No. 57-NQ/TW, which identifies science, technology, and innovation as key driving forces for economic growth and national development.

B. Key updates

For the first time, the Law on Science, Technology, and Innovation officially introduces the regulatory sandbox mechanism — a legal tool that allows for trial implementation of new models, technologies, products, or policies that have not yet been regulated by existing laws, within defined scope and time limits. These trials must follow transparent procedures under close supervision by competent authorities to ensure social safety and protect citizens' rights.

Organizations and individuals participating in sandbox trials, if complying with the prescribed procedures and limits, will be exempt from administrative, civil, and even criminal liability in the event of risks arising during the trial process. This is considered a significant breakthrough to strongly promote innovation, especially in sectors such as finance, digital technology, healthcare, energy, and environment.

In addition, the Law introduces several policies to encourage research, development, and technology application. Specifically, organizations leading national-level science and technology programs are allowed to directly appoint experts, organizations, and enterprises to provide scientific services or technology transfer, without being required to conduct public bidding. They are also authorized to negotiate remuneration, contract value, and transfer conditions on the basis of transparency and market conformity, helping to attract high-quality human resources in a timely manner.

Notably, the Law establishes the position of “Chief Engineer” — the individual with overall responsibility for expertise, progress, quality, and coordination of resources for large-scale innovation programs. This person enjoys special incentives and is selected based on actual capacity, regardless of administrative status.

Moreover, the Law promotes the development of technology exchanges and nationwide technology supply-demand networks, creating favorable, transparent conditions for businesses to access new technologies. It also strengthens intellectual property protection, encourages patent, utility solution, and trademark registration, and limits copyright infringement or non-transparent, unsafe technology transfers.

These policies are expected to improve the national innovation ecosystem, create an enabling legal environment, and help Vietnam quickly access, master, and effectively apply advanced scientific and technological achievements.

C. Practical considerations

The practical implementation of the controlled pilot mechanism (sandbox) requires the prompt issuance of detailed and consistent guiding documents. These documents should clearly define the conditions, eligibility criteria, approval process, supervision mechanism, and the responsibilities of all parties involved. It is particularly important to specify the scope of the trial in terms of location, duration, and applicable entities to both encourage innovation and ensure public safety and the protection of citizens' rights. Moreover, regulations on how to handle trial outcomes, including unsuccessful or prematurely terminated trials, must be clearly established to avoid legal disputes and safeguard the legitimate rights and interests of participating organizations and individuals.

For sectors with high risks or significant social impacts, such as finance (fintech), healthcare, and the environment, the development of sector-specific sandbox programs should be prioritized to provide a timely and clear legal framework. Notably, the fintech sandbox under Government Decree No. 94 dated April 29, 2025, serves as the first concrete example. This sandbox applies to areas such as payment services, peer-to-peer lending, and crowdfunding. The decree will officially take effect on July 1, 2025, marking an important starting point for putting the sandbox mechanism into practice and laying the groundwork for its expansion to other sectors in the near future.

D. Conclusion

The 2025 Law on Science, Technology and Innovation is expected to create a flexible legal framework to foster innovation, support businesses and individuals in safely and effectively testing and implementing new models and products. This represents a significant advancement in making science, technology, and innovation a true driving force for national development.

How ALTAS Can Assist You:

ALTAS LAW is uniquely positioned to assist your business in navigating these complex administrative reforms. We offer a comprehensive suite of legal and business services designed to provide seamless support during this transition period:

• Accounting and Tax Services: We also offer accounting and tax services to help your business manage the financial implications, including tax planning, tax settlement, tax auditing and tax refund.

• Licensing & Regulatory Compliance: We will meticulously review your existing licenses and permits, advise on necessary amendments or renewals, and guide you through the process of obtaining any new approvals. Our team will also ensure your compliance with all relevant regulatory changes.

Please feel free to reach us via email contact@altas.vn to discuss your specific concerns and explore how we can navigate these reforms successfully.

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Written by: Mr. Le Quang Lam – Partner Lawyer at ALTAS Law & Senior Legal Assistant Pham Uyen Thy - ALTAS Law 
Date: 03/07/2025