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He said requiring foreign companies to set up data centres in Vietnam may increase their operational costs, but it was necessary for the country’s cybersecurity and will facilitate the companies’ operations and user activities.

“When there are acts of violation of cybersecurity, the co-ordination in handling the violations will be more effective and more viable,” Viet said, without elaborating.

An estimated 70 per cent of Vietnam’s 93 million people are online and some 53 million people have Facebook accounts.

Jeff Paine, managing director of Asia Internet Coalition, an industry association that includes Google and Facebook, said that the group was disappointed with the passage of the law whose requirements on data localization, content control and local offices will hinder the country’s ambitions to achieve GDP and job growth.

“Unfortunately, these provisions will result in severe limitations on Vietnam’s digital economy, dampening the foreign investment climate and hurting opportunities for local businesses and SMEs to flourish inside and beyond Vietnam,” he said in a statement.

The Vietnam Digital Communications Association said the law may reduce GDP growth by 1.7 per cent and wipe out foreign investment by 3.1 per cent.

Facebook did not comment on the new legislation.

The United States and Canada had called on Vietnam to delay the passage of legislation.

The U.S. Embassy said last week it found the draft containing “serious obstacles to Vietnam’s cybersecurity and digital innovation future, and may not be consistent with Vietnam’s international trade commitments.”