POLICY AND LEGAL FRAMEWORK ON DIGITAL ECONOMY IN SOME COUNTRIES AND LESSONS FOR VIETNAM

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MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
MASTER THESIS
POLICY AND LEGAL FRAMEWORK ON
DIGITAL ECONOMY IN SOME COUNTRIES AND
LESSONS FOR VIETNAM
Specialization: International Trade Policy and Law
TRAN GIA HIEN

Hanoi, 2023

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
MASTER THESIS
POLICY AND LEGAL FRAMEWORK ON
DIGITAL ECONOMY IN SOME COUNTRIES AND
LESSONS FOR VIETNAM
Major: International Economics
Specialization: International Trade Policy and Law
Code: 8310106

FULL NAME: TRAN GIA HIEN
SUPERVISOR: DR. CAO THI HONG VINH
Hanoi, 2023

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DECLARATION OF ORIGINALITY
I hereby confirm that I am the sole author of the written work here enclosed
and that it has not been submitted, in whole or in part, in any previous application
for a degree. Where other people’s works are used, this has been properly
acknowledged and referenced in accordance with regulations of the Foreign Trade
University.
Hanoi, 9 July 2023
Tran Gia Hien

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ACKNOWLEDGEMENTS
I would like to express my sincere thanks to my advisor, Dr. Cao Thi Hong
Vinh and Asso. Professor, Dr. Tang Van Nghia for their invaluable guidance and
support throughout my master’s program. I have learned a lot and benefited greatly
from their wealth of knowledge and teachings. Their expertise and encouragement
helped me to complete this research and write this thesis.
I would also like to express my sincere appreciation to all lecturers and
officers from the Foreign Trade University’s Faculty of Postgraduate Studies and
Faculty of International Economics.
Last but not least, I would like to thank my friends and colleagues who have
supported me along the way.

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TABLE OF CONTENTS
DECLARATION OF ORIGINALITY i
ACKNOWLEDGEMENTS ii
LIST OF ACRONYMS AND ABBREVIATIONS vi
LIST OF FIGURES viii
SUMMARY OF RESEARCH ix
CHAPTER 1: INTRODUCTION 1
1.1. Rationale 1
1.2. Literature Review 2
1.3. Objectives of the research 4
1.4. Scope of the research 4
1.5. The significance of the study 5
1.6. Research methodology 6
1.7. Thesis structure 7
CHAPTER 2: THEORETICAL FOUNDATIONS OF THE POLICY AND
LEGAL FRAMEWORK FOR DIGITAL ECONOMY 8
2.1. Concept of digital economy 8
2.1.1. Definition of digital economy .................................................................. 8
2.1.2 Digital economy models.......................................................................... 11
2.1.3 Pillars of digital economy and approaches to digital transformation...... 15
2.1.4. Building e-government........................................................................... 18
2.1.6. Developing human resources for the information technology sector .... 20

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2.1.7. E-commerce in digital economy............................................................. 21
2.1.8. Developing policies for the sharing economy and the gig economy ..... 22
2.2. Concept of policy and legal framework of digital economy 24
2.3 Characteristics and determinants of the policy and legal framework of
digital economy 26
2.4 Roles and benefits of the policy and legal framework of digital
economy 29
CHAPTER 3: EXPERIENCES OF SOME COUNTRIES ON THE POLICY
AND LEGAL FRAMEWORK FOR DIGITAL ECONOMY 31
3.1 Policy and legal framework of e-government and digital taxation in
China 31
3.1.1 Brief history of e-governance in China................................................... 31
3.1.2 Policy and legal framework for E-governance in China......................... 34
3.1.3 Policy and legal framework for digital taxation in China ....................... 40
3.2. Policy and legal framework for Tax administrations in Australia 43
3.3. The Republic of Korea’s Tax Administration in the digital age 46
3.4 AI governance and sharing economy in the European Union 47
3.4.1 AI governance in the European Union.................................................... 47
3.4.2 The sharing economy in the European Union......................................... 50
3.5 Some lessons for Vietnam 53
3.5.1 About policy and legal framework for E-governance............................. 53
3.5.2 Digital taxation........................................................................................ 55
3.5.3 AI governance and platform economy.................................................... 55

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CHAPTER 4: CURRENT SITUATION OF THE POLICY AND LEGAL
FRAMEWORK FOR DIGITAL ECONOMY IN VIETNAM 57
4.1 Current situation of the policy and legal framework for digital
economy in Vietnam 57
4.1.1 General policy and legal framework for digital economy in Vietnam.... 57
4.1.2 Policy and legal framework for developing e-government and digital
government ....................................................................................................... 64
4.1.3 Policy and legal framework for e-commerce .......................................... 65
4.1.4 Policy and legal framework for electronic transactions and non-cash
payments........................................................................................................... 68
4.1.5 Policy and legal framework for sharing economy .................................. 69
4.1.6 Policy and legal framework for developing artificial intelligence.......... 71
4.1.7 Policy and legal framework for smart urban development ..................... 73
4.1.8 Policy and legal framework for information safety and cyber security.. 74
4.2 Digital economy in Vietnam in recent years and the effectiveness of the
current policy and legal framework for digital economy 79
CHARTER 5: RECOMMENDATION AND CONCLUSION 87
5.1. Recommendation for Vietnam 87
5.2. Conclusion 91
REFERENCES 93

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LIST OF ACRONYMS AND ABBREVIATIONS
AI Artificial Intelligence
AITA Vietnam Authority of Information Technology Application
ATO Australian Taxation Office
CJEU Court of Justice of the European Union
CPC Communist Party of China
CPTPP Comprehensive and Progressive Agreement for Trans-Pacific Partnership
DTI Digital Transformation Index
ECD E-Commerce Directive 2000/31/EC
EEC European Economic Community
EU The European Union
EVFTA Vietnam-EU Free Trade Agreement
GCI Global Competitiveness Index
GDP Gross Domestic Product
GII Global Innovation Index
GSM Global System for Mobile Communication
ICT Information Communication Technology
IDEA Vietnam e-Commerce and Digital Economy Agency
IDI ICT Development Index
IoT Internet of Things
IP Internet Protocol
IPv6 Internet protocol version 6
ISS Information Society Services

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ITA International Trade Administration
MIIT China Ministry of Industry and Information Technology
NTIS Neo Tax Integrated System
P2B Platform to Business
P2P Peer to Peer

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LIST OF FIGURES
Figure 1: Scope of digital economy models ...............................................................9
Figure 2: Five Pillars of the Digital Economy Framework
.........................................16
Figure 3: Key defining trends and key enablers of the digital
economy.....................29
Figure 4: Size of the People’s Republic of China’s Digital Economy and Its Share of
Gross Domestic Product (China Academy of Information and Communication
Technology, 2020)
.....................................................................................................42
Figure 5: Number of Internet users over
time.............................................................80
Figure 6: Daily Time Spent Using the Internet
...........................................................80

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SUMMARY OF RESEARCH
The first main objective of this thesis is to build a solid theoretical
background in terms of the policy and legal framework for digital economy
development in Vietnam, understand the current policy and legal framework for
digital economy and its impact on socio-economic development in our nation. In
order to achieve this goal, a wide variety of theories and research findings from
different sources were collected, synthesized and carefully analyzed so that a final
structured version of the definition to the policy and legal framework of digital
economy can be crafted. Not only the study clarifies clearly the differences between
the policy and the legal framework of the digital economy, it also provides a
thorough perspective in categorizing various models of digital economy
development. In addition, I list out all the relevant policies and legal documents
related to the digitalization process in both the public and the private sectors.
Through evaluating the effectiveness of these regulations over the years, I aim to
provide more solid reasoning for my policy recommendations, which draw from
other countries’ models and experiences.
The second main objective of my research is to present the current situation
of the policy and legal framework for digital economy in Vietnam. This goes hand in
hand with the final goal, which is to contribute to the current body of knowledge on
successful instances/archetypes of policy and legal frameworks for digital economy
around the globe and to provide some recommendations for Vietnamese regulators

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and policy makers in the short, medium and long-run to promote the advancement of
digital economy.
My study employs the qualitative research method, which can cover a wide
range of topics surrounding the overarching concept of digital economy. Through
the detailed deconstruction of the concept of digital economy and enabling factors
important to its development, such as infrastructures, technologies or human capital
development, certain approaches are concluded to be more efficient and suitable for
Vietnam. For example, since Vietnam is a country categorized as a Global Factory,
it would be wise to maintain a competitive edge in exporting ICT goods. Moreover,
the country ought to make investments in research and design in order to produce
higher value products and improve the quality of its workforce.
The research manages to highlight many of the difficulties that the existing
policy and legal framework for digital economy is encountering. These are: lack of
synchronization in administrative activities, disruptions in supply chains, regulations
falling behind the development of new technologies such as AI or the platform
economic models, low workers’ quality and competitiveness, etc. However, many
advantages in developing digital economy were identified as well, such as the
flexibility in the digital transformation (working online, adopting new technologies),
a young and hard-working labor force or high demand for ICT products/goods.
The qualitative research method allows for the extensive study on the
available literature on varied models of developing different aspects of the digital
economy. For example, for e-governance, the study conducted by Du, Yu and Yang
in 2019 compiled many documents and summarized in-depth the development
process of the Chinese e-governance since 1973. For digital taxation models and
digital taxation, I studied the work by Hendriyetty, Evans, Kim and Taghizadeh-
Hesary on models of taxation in the digital economy across Asian countries (China,
Australia and South Korea). With respect to artificial intelligence and the sharing
economy, I looked into the policy and legal documents issued by the European

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Union. Because these technologies and economic models are quite new, it would be
beneficial for Vietnam to learn from regulations from developed nations before
promulgating its own policies and legal documents in these areas. Not only this
would save costs and time for governing bodies, new Vietnamese laws related to AI
and sharing economy would also be able to incorporate innovative qualities with
flexibility from local experiences to meet the demands of local businesses.
From the results of studies mentioned above, it is recommended that Vietnam
focus on promoting strong leadership, make investments into technologies and
human capital for the development of digital economy. Additionally, the public
sector should put more resources into hiring and retaining talented IT workers as
well as build more advanced ICT infrastructures. In terms of digital taxation, the
country must cooperate with the private sector in providing its e-tax services and
improve service qualities. In addition, Vietnam should develop similar tax
administrative systems comparing to the NTIS of South Korea. With respect to AI
and the sharing economy, Vietnam should pour its resources in research and
development. The government should promote mechanisms to encourage enterprises
to invest and master new technologies. It should also issue new policies and law to
govern and protect platforms, their employees as well as customers.

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CHAPTER 1: INTRODUCTION
1.1. Rationale
The conventional wisdom has always convinced that developing the digital
economy would benefit a country tremendously in many different aspects. The
World Economic Forum states that digital economy can improve the government’s
efficiency, transparency and decrease corruption level. Digital transformation can
also increase national GDP by enhancing workers’ productivity, modernizing
manufacturing processes and forming new high-tech industries such as
biotechnology or semi-conductor industry. Furthermore, after the COVID-19
pandemic, the development of digital economy in developing countries are
becoming more and more important as it provides many solutions that can help
countries to withstand negative impacts (disrupted supply chains, travel bans, remote
working, etc.) using innovative solutions (for example: online meeting platforms
such as Zoom or Teams, logistics and transportation optimization with AI).
Undoubtedly, in the process of modernizing and promoting the digital
economy in Vietnam, the government would need to regularly revise and update the
current policy and legal framework. Digital economy policies must put into account
the labor force and the development of a digital society. Policies related to consumer
protection, data protection and cyber security law are crucial for the benefits of
citizens as well as businesses. Nonetheless, the current policy and legal framework
has been exceptionally effective and served its purposes with a lot of effective and
timely regulations such as the Law on Electronic Transactions (2005), the Law on
Information Technology (2006), the Law on Radio Frequency (2009), Law on
Cybersecurity (2018) (Bui, 2021). This framework needs to be continuously revised
and developed based on economic and political fluctuations domestically, regionally
and internationally. The Vietnamese Government is quickly making a transition to e-
governance as well as promoting the establishment of smart cities, 5G technology
and e-commerce. Hence, there is currently a dire need for comprehensive, strategic,
calculated regulations and policies to advance the digital economy in order to

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guarantee growth and minimize potential risks. Indeed, given the rapid economic,
social and political changes caused by a plethora of technological developments, it is
crucial for Vietnamese policy makers to look deeply into the current policy and legal
framework for digital economy, study from other countries’ experiences and their
development to come up with relevant and timely policies and regulations for the
digital age.
Stemming from the above issues, the author decided to choose the topic:
"Policy and Legal framework on digital economy in some countries and lessons for
Vietnam" for the master's dissertation.
1.2. Literature Review
The Policy and Legal framework on digital economy has always been the
subject of many scholars and experts over the world. In particular, this topic has
attracted a great deal of researchers, not only Vietnamese but also foreign authors
and researchers. There are books, papers as well as reports addressing this issue
from different perspectives such as: Donn Tapscott (1995) with the book The Digital
Economy: Promise and Peril in The Age of Network Intelligence, discussing the
gradual comprehensive transformation of the economy, politics and society due to
digitalization. Tapscott coined the term ‘Digital Economy’ and successfully laid a
solid foundation for further studies in all different aspects of this new economy, such
as knowledge, virtualization, digitalization, innovation, globalization... He pointed
out how technology would change a wide variety of sectors, including healthcare,
manufacturing, education, tourism, entertainment... and also stresses the importance
of good leadership and transparency in the digital economy.
A recent work “Think differently. Think archetype. Your digital economy
model: A novel approach to digital transformation and policy reform” (by Huawei
and Arthur D. Little in 2020) categorizes different models of digital economy
development. In this study, countries are divided into seven groups/archetypes,
which are: ICT Novice, Global Factory, Business Hub, ICT Patron, Innovation Hub,

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Service Powerhouse and Efficient Prosumer. The study provides a thorough, tailored
development roadmap for each digital economy archetype.
The book “The Development of E-governance in China: Improving
Cybersecurity and Promoting Informatization as Means for Modernizing State
Governance” (by Ping Du, Shiyang Yu and Daoling Yang in 2019). This study is
part of the Research Series on the Chinese Dream and China’s Development Path,
which aims to study China’s development past, present and future. The work on
Chinese e-governance explores the overall framework of e-governance in China, the
effects of e-governance development, online government services’ application of big
data, increasing transparency using technology and opportunities and challenges in
the future for healthy and sustainable development in e-governance.
The book “Taxation in the Digital Economy: New Models in Asia and the
Pacific” (by Hendriyetty, Evans, Kim and Taghizadeh-Hesary in 2023). This work
discusses how countries can use their resources more efficiently to deal with rising
challenges in taxation caused by digitalization. Countries such as China, Australia
and South Korea are all studied in-depth in terms of their challenges such as tax
reforms, international collaboration in tax compliance, digitalization of taxation and
online tax disputes. The authors also studied how these countries are continuing to
innovate and devise new strategies for these problems.
The research “EU Internet Law in the Digital Single Market” by Synodinou,
Jougleux, Markou and Prastitou-Merdi in 2021 studies in-depth EU Internet Law
and related issues such as copyright law, digital law, fighting cybercrime, consumer
and corporate protection in the digital age..., it mentions a novel, relevant topic in
Chapter 9: AI Law in the Digital Single Market. This work discusses how the EU
puts heavy emphasis on participation from all levels of government as well as the
private sector in regulating AI. Combined with the new AI Act, it presents valuable
perspectives in defining AI as well as governance.

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The book “Digital Entrepreneurship and The Sharing Economy” (by
Vinogradov, Leick and Assadi, in 2022). This book provides a timely analysis on
various issues such as the rise of artificial intelligence, cryptocurrencies, blockchain
technologies and other technologies. It presents a new perspective on the
relationship between the platform/sharing economy and digitalization, and also
discusses governance of the sharing economy. The authors provide many case
studies to support their perspective. This is especially true in the cases of Airbnb,
Uber France and Uber Spain, in which the authors suggests that new regulations
need to be put in place in order to properly manage these types of platforms due to
the current lack of coherent definitions and clear delegation of power.
1.3. Objectives of the research
The first goal of this study is to clearly lay out and understand the current
policy and legal framework on digital economy of Vietnam and its impacts on
economic and social development. I try to study the history behind the current policy
and legal framework on digital economy of Vietnam and potential development
paths for the future based on experiences drawn from other countries. I will also try
and assess the effectiveness of these regulations to a certain extent, and point out
how can the Vietnamese central government as well as local authorities can utilize
technological developments and apply them to state management activities.
The second objective of this research is unquestionably to study and provide
information on successful policy and legal frameworks on digital economy of
developed countries/successful economies. Through these experiences, Vietnamese
regulators and/or researchers of the digital economy can provide better analysis and
policy recommendations on managing/organizing a digital-based economy.
The third objective of this study is to provide some context of the current
Vietnamese digital economy and devise some policy and regulatory framework
recommendations in the short, medium and long-run.

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1.4. Scope of the research
This research aims to provide an overview of the current policy and legal
framework for the Vietnamese digital economy, notable experiences of some
countries in developing the policy and legal framework for digital economy, and
finally come up with some useful recommendations for Vietnam. I employ the
qualitative analysis method to examine policies for digital economy in Vietnam as
well as China, Australia and South Korea. Doubtlessly, I have drawn from many
sources to try and give a complete definition of digital economy. Besides providing
assessments other countries’ digitalization programs, their effectiveness and
applicability in Vietnam, I would strive to come up with solutions for developing e-
governance and digital taxation. Even though there are a lot more aspects to be study
within digital economy, because of the vast amount of information and the number
of fields it would involve, there are many facets that are not touched by this study (e-
commerce policies, ICT infrastructure, education, etc.).
1.5. The significance of the study
Previous studies have touched upon many different aspects of digital economy
as well as given many definitions and models related to digital economy. However,
there have not been any studies that provide a systematic, comprehensive approach
to digital economic development in Vietnam given the vast amount of research done
internationally. While there have been many studies in Vietnam that have discussed
the studies on digital economy definitions or solutions, they have yet to put a wide
variety of perspective on the table and deliver a more holistic analysis.
Despite having issued multiple regulations and policies to foster and accelerate
the development of digital economy as well as e-governance, the Vietnamese
government still has many struggles in propelling the digital transformation forward.
Numerous new issues have arisen over the years and regulators are still finding it
hard to keep up with their pace of progression. There are still many gaps in
regulations and policy for the digital economy in terms of developing e-government,

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e-commerce, taxation, intellectual property, internet and labor law. Current policies
and laws are still inefficient due to lack of synchronization between legal documents
and gaps between legal regulations and actual implementations (Anh Minh, 2021).
By studying the limitations of the current policy and legal framework for digital
economy in Vietnam, I aim to provide further foundational information for studying
and developing policies in this area.
From my perspective, while there are many legal documents raising the issue
of digital economy development, there are not many concrete/practical policies that
go along with these encompassing resolutions and decisions. There has not been a
lot of studies that focus on drawing upon digital economy models from other
countries and their application in Vietnam. Therefore, based on digital economy
development strategies, programs and related documents from the European Union
and countries such as China, Australia, South Korea, this study would provide more
information on digital economy policies and models for reference purposes as well
as solutions for developing digital economy in Vietnam.
While the second and third objectives of this study aims to look at other
countries’ experiences and possible improvements in policies and regulations for
digital economy in Vietnam, due to the vast number of fields that these types of
policies cover, I was only able to study e-governance, taxation, AI and sharing
economy governance in the digital economy. There are many other areas in digital
economy left to be discovered in terms of policy-making, such as e-commerce, labor
laws, building ICT infrastructure or education for the digital age. Furthermore, this
study is purely qualitative, which means that analyses may not be precisely accurate.
The results from this study would certainly benefit from quantitative studies as they
will provide solid support for policy recommendations.
1.6. Research methodology
This study employs the qualitative research method to understand digital
economy in Vietnam and in countries around the world. I conducted an thorough

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desk study when researching a well-rounded definition of the digital economy,
experiences from other countries and policy recommendations for Vietnam. I have
studied in-depth on various topics such as e-governance, digital taxation, AI
governance and sharing economy. During this process, I encountered many case
studies from different regions and nations including the EU, China, South Korea and
Australia. From the results of the desk research, I then analyze the pros and cons of
each development strategies given the current policy and legal framework for digital
economy in Vietnam. Base on the results of this analysis, I come up with lessons
and possible recommendations for the Vietnamese government.
1.7. Thesis structure
The study has five main parts (other than the table of contents, list of acronyms
and abbreviations, list of figures, summary of the research and references), which
are the following:
Chapter 1: Introduction
Chapter 2: Theoretical foundations of the policy and legal framework for
digital economy
Chapter 3: Experiences of some countries on the policy and legal framework
for digital economy
Chapter 4: Current situation of the policy and legal framework for digital
economy in Vietnam
Chapter 5: Recommendation and Conclusion.

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CHAPTER 2: THEORETICAL FOUNDATIONS OF THE POLICY AND
LEGAL FRAMEWORK FOR DIGITAL ECONOMY
2.1. Concept of digital economy
2.1.1. Definition of digital economy
In order to understand thoroughly and provide recommendations for the current
policy framework on digital economy in Vietnam, we would first have to define
several concepts. According to Donn Tapscott, the author who coined the term
“digital economy”, this new economic model relies heavily on technology and
information: “The new economy is also a knowledge economy based on the
application of human know-how to everything we produce and how we produce it”
(Tapscott, 1995, p. 17). A report by the UNDP states that the digital economy can be
considered as “the entirety of sectors that operate using Internet Protocol (IP)-
enabled communications and networks” (Lovelock, 2018, p. 5-6). The digital
economy can be interpreted as “a broad range of economic activities that include
using digitized information and knowledge as the critical factor of production”,
comprising of “modern information networks as a virtual activity space and the
effective use of ICT as an essential driver of productivity growth and economic
structural optimization” (Ha, 2020). Certainly, the digital economy contains various
sectors that “operate using Internet Protocol (IP) – enabled communications systems
– such as mobile networks, e-payment systems and public service networks” (Ha,
2020).
Bukht and Heeks proposed a structured definition of the digital economy,
including the core digital economy, the digital economy and the digitalized

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economy. The core digital economy includes hardware manufacturing, information
services software and ICT consulting (Thuy, Ha et al). The digital economy has
digital services and platform economy in addition to the factors mentioned above. In
addition, the digital economy also includes the gig economy and some factors of the
sharing economy. The most developed, all-round version of the digital economy is
the digitalized economy. This is the digital economy with e-businesses, e-commerce,
industry 4.0, precision agriculture, algorithm economy, sharing economy and the gig
economy.
Figure 1: Scope of digital economy models
Source: Bukht and Heeks, 2017.
Undoubtedly, the digital economy transforms all production-related activities
by making them more knowledge-based and technologically dependent. Even
traditional sectors such as agriculture have seen tremendous development: “farms
are operated with agricultural equipment brimming with chips” (Tapscott, 1995,
p.17). In addition, the structure of a digital economy is vastly different from a
traditional economy with the advent of new industrial sectors in “computing
(computers, software, services), communications (telephony, cable, satellite,

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wireless), and content (entertainment, publishing, information providers)” (Tapscott,
1995, p.17). What’s more, we have seen the rapid and influential rise of the
interactive multimedia industry. The likes of Facebook, Instagram, Snapchat or even
LinkedIn have certainly changed how modern society function socially as well as
economically. Another example to the notion of new technologies creating new
sectors can be found in the sharing economy, which is also a part of the digital
economy. The most notable companies operating in this field are Uber, Airbnb or
eBay. The influence of these new sectors (such as changes in the labor market) and
how they affect policy making will be studied in-depth in the latter parts of the
study.
There are several novelties about the digital economy that are major
differences to the traditional economic models. First, by utilizing technological
development, digital economies are able to foster more “interconnectivity of
networks that traffic can travel across and between” (Lovelock, 2018, p.12).
Transportation and logistical services are much more advanced that international
trade has become very efficient, resulting in interconnectedness between trade
partners. As a result, political stability and negotiations have become more prevalent
instead of conflicts. The second new aspect of the digital economy is interoperability
of platforms, which means “traffic can run effectively across different types of
networks (e.g., from telecoms to banking to educational to health networks and so
on)”, resulting in economies of scope (Lovelock, 2018, p.13). These two factors
drive down cost and create more efficiency, but sometimes they are resisted to create
dominance and therefore need supporting regulations from the government.
Due to many changes in the process of economic digitalization, regulators have
to face a plethora of problems, namely advancing “financial inclusion without
focusing on connectivity, social media, identity profiling”, advancing “effective
universal education without consulting data analytics, behavior profiling, content
delivery, and collaborative communication”, surpassing “the traditional risk
management-oriented approach failing to deliver expected regulatory control or

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provide adequate consumer protection” (Lovelock, 2018, p.14). I addition,
regulators also have to review competition laws in the digital economy with the
advent of many new types of players that have not been properly defined. Indeed,
“competition regulators need to arm themselves with new concepts” (Lovelock,
2018, p.14).
Another challenge to regulators is finding ways to take advantage of
technology for state management is delivering “certain public services in a more
targeted way at minimal cost with increased agility and impact” (Lovelock, 2018,
p.14). A few examples that have already taken place in Vietnam are digital identity
and authentication system, which would provide citizens services at a significantly
lower cost. Government officials need to keep themselves up-to-date with applicable
technologies in order to improve service quality from public administrations.
Generally, the digital economy is economic activities, commercial transactions
and professional interactions that are based on information and communications
technologies.
In the case of Vietnam, some notable problems regarding policy/regulation
framework for the digital economy include: institutions and policies not being
synchronized, the set of indicators and measuring tools for the digital economy
having been issued but not completed (no unified measurement method exists),
under-developed digital infrastructure (average fixed and mobile broadband
networks speed), human resources for digital transformation and digital economy
development lacking in both quality and quantity (Industry and Trade Magazine,
2023).
2.1.2 Digital economy models
Nowadays, finding the correct strategies to develop digital economy is a
common goal of many policy makers in every country. Nonetheless, there is no “one
size fits all” model that can be applied across the board. Depending on the country’s
economic, social, environmental, infrastructure, technological, demographic

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background as well as the development of the educational system, there will be
different tailored approaches that are best suited for each nation. In a recent study in
2020 by Huawei and Arthur D. Little on the digital economy models, there are seven
different approaches to digital economy development plan. These are: Innovation
Hub, Efficient Prosumer, Service Powerhouse, Global Factory, Business Hub, ICT
Patron and ICT Novice. It is noteworthy that a country can represent more than one
digital economy archetype, such as in the case of China. This country is recognized
as an Innovation Hub, but also can be categorized as a Global Factory due to its
characteristics of being a huge exporter in ICT products (Huawei and Arthur D.
Little, 2020). This case is analogous to that of Malaysia, in which the country’s
“primary archetype is Global Factory; nevertheless, the country also represents
salient characteristics of a Service Powerhouse, scoring in the top 15 percent of
countries in terms of ICT value” (Huawei and Arthur D. Little, 2020).
In order to develop a relevant strategy for digital economy, it is necessary to
define clearly the models of digital economy mentioned above. First and foremost,
countries who adopted the Innovation Hub model are the ones who benefit the most
from the ICT industry. These countries are leading in technological development as
well as in commercializing these solutions. Examples to this can be found in the case
of South Korea or Sweden. This type of model can only be built based on a strong
foundational applied research and technological development “across the public,
private and academic sectors” (Huawei and Arthur D. Little, 2020). This level of
commitment, support and synchronization can only be achieved through large
investments and high level of technical abilities that have been acquired through
decades of experience. Countries with this type of digital economy model tends to
create a lot of demands for their products with cutting-edge technologies, such as in
the case of Apple, IBM, Salesforce, Google and many other firms in the United
States.
The second archetype is the Efficient Prosumer model, which is similar in
terms of R&D and product development compared to the Innovation Hub model.

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The differentiating factor is that “Efficient Prosumers focus their efforts on
developing technology solutions that will enhance the competitiveness of a single or
a few economic sectors within their countries”, as in the case of German automobile
industry. This model of digital economy benefits certain specific industries due to
the spillover effect: “The digitalization effort in the core industries leads to spin-off
benefits in other industries” (Huawei and Arthur D. Little, 2020, p.21).
The Service Powerhouse model can be found in countries like Ireland or
Philippines, where a large number of ICT workers enabled companies to enjoy
abundant and cheap labor. The Global Factory model is similar to Service
Powerhouse in that it also requires an abundant number of labor, however, the
quality of labor is not as high. Nonetheless, cheap labor is a crucial factor that makes
this digital economy model competitive, with notable representatives such as
Mexico or Malaysia. Without a strong research and technological base, countries
adopting this model must “focus on complementary investment in physical
infrastructure that enhances the competitiveness of exports such as factory clusters,
trade warehouses and logistics hubs” (Huawei and Arthur D. Little, 2020, p.22). The
fifth model of digital economy is the Business Hub model, which is a model that put
a lot of emphasis on “advanced & conducive business environments when compared
to their regional counterparts” (Huawei and Arthur D. Little, 2020, p.22). Countries
such as Singapore, Turkey or the UAE attracts foreign investors through their
favorable business regulations as well as great infrastructure and environment for
foreign firms. Business hubs are usually used as trading platforms for ICT products
to be distributed to nearby countries (Huawei and Arthur D. Little, 2020, p.22). The
sixth model is ICT Patron, which is epitomized by Denmark and the Kingdom of
Saudi Arabia. While these countries do not contribute a lot to the global value chain
of ICT products, they tend to be large consumers/importers of these items due to
their wealth, high-speed internet bandwidth and preferences for technology solutions
(Huawei and Arthur D. Little, 2020, p.22). The final form of digital economy model
is called the ICT Novice, exemplified by Zambia, Pakistan, Nigeria, Egypt, etc.

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These countries tend to suffer from a various types of issue ranging from political
instability, economic hardships, pollution, etc... They have not prioritized
investments in ICT, and hence they fall behind with “limited economic resources
and low levels of educational attainment” (Huawei and Arthur D. Little, 2020, p.23).
Vietnam represents a Global Factory model. According to Huawei and Arthur
D. Little, Vietnam has a young, abundant labor workforce. However, the country
does not have enough resources to invest in research and development, and it
certainly does not possess high-quality workforce that is enough to move the country
from model 4 to model 3 (Service Powerhouse). Vietnam is categorized as a model 4
country based on its level of ICT export (being in the top 15% of the world with
total export revenue passing 2.4 billion USD, and export share of ICT goods over
total national export is very high) (Dang, 2022, p.95). There are several key
strategies that a country having a Global Factory model must follow: “Be a preferred
investment destination for private sector ICT manufacturing”; “maintain ability of
competitive labor for ICT goods export businesses”; “Leverage new technologies to
improve manufacturing productivity” and “maintain ability of standard
communication infrastructure at global best costs” (Huawei and Arthur D. Little,
2020, p.23). Indeed, Vietnam needs to focus on developing Industry 4.0 strategies to
attract and acquire more technology solutions from foreign companies, similar to the
Industry 4.0 strategies in Thailand or Malaysia (Huawei and Arthur D. Little, 2020,
p.32). The country should also maintain and take advantage of the relatively
affordable/cheap, young and abundant labor force to cater for the tastes of foreign as
well as domestic ICT businesses. This can be done through new government
commitments to emphasize new education programs, policies, grants and facilitate
research environment: “governments may advance vocational training programs,
introduce Industry 4.0 capability centers to upskill their current workforces, or
provide tax incentives for private companies to drive training efforts” (Huawei and
Arthur D. Little, 2020, p.32).

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Another requirement for a Global Factory model to flourish is mentioned by
Arthur D. Little and Huawei in their research: “Global Factories should develop
long-term digital infrastructure strategies that can support their target to become
advanced manufacturing hubs”. The research states that fiber deployments and 5G
technology will be incredibly valuable as they will “permit the adoption of several
emerging technology solutions in industrial sites through deployment of campus
networks” (Huawei and Arthur D. Little, 2020, p.32). Furthermore, having good
internet connectivity would also enable the development and growth of many other
platforms/solutions.
One epitome to the notion that fast and stable internet connection combined
with technological advancements would enable tremendous growth can be found in
the recent growth of the stock markets in Vietnam as well as other countries around
the world using gamification: “investment gamification can be a powerful tool for
increased investor engagement and literacy” (Franklin, 2023). However, policy
makers must pay close attention to the construction and implementation of laws
related to gamification of various types of activities due to the potential lack of
clarity, online frauds, thefts, and downplayed risks: “gamification can potentially be
used by firms to drive excessive trading by retail investors, encourage trading in
complex or risky products or promote other harmful investor behaviors” (Franklin,
2023).
2.1.3 Pillars of digital economy and approaches to digital transformation
According to the World Intellectual Property Organization (WIPO), there are
five main pillars of the digital economy: Basic infrastructure (roads, ports, airports,
electricity, water), digital infrastructure (GSM network, fiber optics, internet
coverage, data storage capacity, digital public service delivery), enabling
environment (regulatory, policy, investment, public acceptance, financial
instrument), enabling technologies (short-term being cyber security, cloud
computing, big data analytics, AI), medium-term being block chain, IoT, 3D

16
printing, and long-term being biotechnology, robotics, energy storage), and human
capital development (upstream being teachers, vocational training; knowledge
creation being Masters, PhDs, Researchers, Entrepreneurs; knowledge
commercialization being engineers, skilled professionals). Among these pillars of
the digital economy, the most impactful is certainly enabling technology. This factor
can create digital disruption, which can cause product/service substitution, by-pass
(for example: “P2P funds transfer offered by Transferwise”), and technological
paradigm shift such as cloud migration process (Lovelock, 2018, p.7). The
government needs to pay close attention to a few game-changing technologies,
including infrastructure technologies (5G, IoT, cloud computing),
platform/management technologies (data analytics, digital identity, quantum
computing and blockchain), and application (or end-user) technologies
(cryptocurrencies, artificial intelligence, robotics, 3D printing, and autonomous
vehicles) (Lovelock, 2018, p. 7-11).
Figure 2: Five Pillars of the Digital Economy Framework

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Source: WIPO.
The novelty of digital economy coupling with the rapidly changing
technologies can certainly make it difficult for government regulators to address
bottlenecks, policy problems and loopholes. According to Lovelock, the government
needs to develop policies for the digital economy based on data sharing, data
analytics, data protection, and facilitate cross-platform cooperation between
companies.
There are several approach methods to digital transformation adopted in
various countries around the world, and they can be categorized in opposite pairs.
The first pair can be found in the strongest economies in the globe, which is the
government-led EU versus the private sector led US model. The European Union’s
approach is that “regulating the digital economy needs to happen through
frameworks set and developed by national governments” (Lovelock, 2018, p.24).
One example to this notion can be found in the EU’s General Data Protection
Regulation (GDPR), which has come into effect since 2018. This regulation protects
personal data of citizens of the EU by setting strict rules relating to how companies
are held responsible and how they can collect, process, store personal data. On the
other hand, the regulation of the digital economy in the US prioritizes the private
sector and its benefits: “the government seeking to create an enabling environment

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for private sector initiatives” (Lovelock, 2018, p.25). As a result, American law on
digital technology tends to be more conducive and helpful to businesses.
The second pair of approach method to regulating the digital economy can be
found in Singapore with the top-down approach and Hong Kong with the bottom-up
approach. These approach methods refer to the implementation process, “rather than
the framing” (Lovelock, 2018, p.25). For example, in Singapore, important
legislatures and regulations are directly supervised and supported by the Prime
Minister’s Office, the head of Singapore’s civil service, the country’s R&D umbrella
agency, etc... In contrast, the Hong Kong’s government has a bottom-up approach,
“with a variety of initiatives from diverse stakeholders such as technologists,
academics, and companies emerging competitively, both as experiments and
responses to perceived market demands” (Lovelock, 2018, p.26). While the
Singaporean approach may be more efficient in terms of gathering and utilizing
resources across different sectors and stakeholders, that of Hong Kong can better
encourage businesses to come up with novel solutions.
The third pair of approach to regulating the digital economy can be found in
the case of innovative China and regulated Japan. In the case of China, there are a
lot of room for businesses to innovate and flourish, as in the example of digital
payment. This new type of transaction has prospered in the Middle Kingdom like
nowhere else. According to Statista, the penetration rate of online payment in China
has grown consistently every year since 2008, from 17.6% to 85.4% in 2022.
Lovelock also states that “the value of payments transacted via Alibaba’s Alipay and
Tencent’s WeChat, have risen from less than USD 81 billion in 2012 to an estimated
USD 2.9 trillion in 2016 – a 20-fole increase in four years” (Lovelock, 2018, p.26).
Contrary to the situation in China, Japanese approach to regulating the digital
economy is stricter and revolves around “managing technological change coupled
with strong government involvement and a top-down approach” (Lovelock, 2018,
p.28). Indeed, Japanese regulators are very risk-averse, which may explain the slow
take-off of Japanese digital payment platforms.

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Some other approaches to regulating the digital economy can be found in
models of Estonia, India or Kenya. In Estonia, digital governance or e-governance
plays a crucial role in daily life. Public administration operates using digital
technologies and programs, such as electronic identities, online state services such as
“paying bills, filling taxes and accessing medical records”, “digital infrastructure to
foreigners through its e-residency programme” (Lovelock, 2018, p. 30). In India,
one of the most populous countries in the world, the biometric digital identity
scheme is pivotal in regulating the digital economy: “the Indian government
considers Aadhaar as one of the key initiatives under the Digital India programme
and a “strategic policy tool for social and financial inclusion, public sector delivery
reforms, managing fiscal budgets, increasing convenience and promoting hassle-free
people-centric governance” (Lovelock, 2018, p.30). Truly, each country’s digital
strategy and approach must be based on its economic, geographical and political
factors. In the case of Kenya, digital transformation has taken place through
financial inclusion via mobile phones (the M-Pesa model. Cheap mobile phones can
still make use of money transfer technology. However, the M-Pesa model is not
easily copied or usable for other nations. This model has failed in South Africa,
“where a much higher percentage of the population already have bank accounts, and
the perception of the service was more focused upon the financially-more secure
middle class” (Lovelock, 2018, p.31). As a result, South Africa cannot use this
model to increase living standards or push for development in digital payments.
2.1.4. Building e-government
E-governments are becoming more and more prevalent around the world due
to higher efficiency, increased transparency and flows of information between
authorities and people, creating a better economy (hence raising output and GDP) as
well as resulting in less corruption and more ease in executing and receiving
government services. According to the UN, e-government can “be defined as the use
of ICTs to more effectively and efficiently deliver government services to citizens
and businesses” (UN E-Government Knowledgebase). The UN also states that use

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of e-government “is to improve the internal workings of the public sector by
reducing financial costs and transaction times so as to better integrate work flows
and processes and enable effective resource utilization across the various public
sector by reducing financial costs and transaction times so as to better integrate work
flows and processes and enable effective resource utilization across the various
public sector agencies aiming for sustainable solutions” (UN E-Government
Knowledgebase).
According to the Ministry of Information and Communication, e-government
is a government that applies information technology to improve operational
efficiency and effectiveness, and better serve people and businesses (the process of
computerizing government activities). E-government is understood as governance
with virtual meetings, paperless documents processing, handling contactless
administrative procedures and making non-cash payments.
There are several differences between a digital government and an e-
government. Digital government is generally a broader concept comparing to e-
government: “Digital government is a government that transforms digitally, changes
operating models, work processes” and service providing methods (Ministry of
Information and Communication). In terms of measurement, e-government can be
assessed through the number of online public administrative services, while digital
government can be assessed through the decrease in the number of public
administrative services, the increase in the number of new innovative public services
based on digital technologies (Ministry of Information and Communication).
As we can see from the differences between an e-government and digital
government, the development of e-government in Vietnam has taken place in many
years. E-government development will practically be completed in 2022, with the
goal that 100% of public services carried out by eligible ministries, branches and
localities are online (level 4). At this level, citizens can get access to information on
administrative procedures and relevant documents, download templates and

21
documents needed, send documents to the public service provider directly or by
post, or fill out and submit forms and pay fees (if any) online (Decree 43/2011/ND-
CP dated 16/3/2011 of the Prime Minister) (Ministry of Information and
Communication). Truly, it is necessary for Vietnam to start moving towards
developing digital government because it would facilitate transparency, increase
state management efficiency and limit corruption (Ministry of Information and
Communication).
2.1.6. Developing human resources for the information technology sector
Education has always been considered one of the most crucial factors in a
digital economy. Having adequate, competitive labor force to support would allow
both the private and the public sector to utilize available technologies, increase
productivity and advance the economy. It is estimated that Vietnam would need
around 90,000 new labors each year in order to sufficiently develop the digital
economy and digital society, but domestic training programs have not been able to
meet up with these numbers (Nguyen, 2021). With the advent of technologies such
as collaborative platforms, education apps, etc... the nature of learning is changing
with the digital economy. In a paper studying the impact of digital economy on
education, Maymina, Divina and Liulia states that the main directions in which
education technologies should develop should include: “re-training of teachers,
online-education, hybrid education, network communication technology, social
networks management, marketspace tool usage”.
To fully understand and to be able to recommend policy changes, we must first
define some key terms related to education in the digital economy. Firstly, the
definition of digital literacy can be broken down into many parts, including
information literacy, communication literacy, internet literacy, ICT literacy
(hardware and software) (Pham, 2022). Pham mentions that digital literacy can be
measured through digital competence, which can also be defined in many ways; and
he resorts to a definition formed by the European Union: “Digital competence

22
involves confident, critical and responsible use and participation of digital
technologies for learning, working and participating in society; It includes
information and data innovation, communication and collaboration, media
innovation, digital content creation (including programming), security (including
digital convenience, and cybersecurity-related competencies). ), issues related to
intellectual property, problem solving and critical thinking” (Pham, 2022). Indeed,
digital literacy and digital competence are very multidimensional and complicated.
This explains why many digital competency frameworks around the world have
multifaceted approaches:
Spain's digital competency framework for teachers, Norway's digital
competency framework for teachers, Australia's digital literacy framework, and the
Australian digital literacy framework. Indonesia's national digital light, Singapore's
Skills Future skills framework, the European Union's Dig Comp 2.2 digital
competency framework... all include 3 to 5 dimensions expressed in digital
competence areas/fields (first dimension); each area will include specific digital
competencies (second dimension), in which each digital competency is understood
as a combination of digital knowledge, skills and attitudes to perform a specific task
in a particular context, with different levels of competence (third dimension) (Pham,
2022).
One example to the notion that technologies are revolutionizing education
can be found in artificial intelligence. AI has been applied for smart management in
higher-education, and can be utilized for personalized educational experiences
(ChatGPT) and enhancing access to educational materials. Truly, AI possesses
massive potential in multidisciplinary research and can help students better their
analysis, especially when it comes to political, economic and history analysis due to
its nature.

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2.1.7. E-commerce in digital economy
Having a strong policy framework for e-commerce development is also pivotal
in digital economy development. According to the ITA (International Trade
Administration), “e-commerce is a sales channel that crosses all industries that sell
or promote brand awareness online and is considered a sales channel and part of a
businesses’ digital strategy”. E-commerce can be domestic or it can take place
internationally (cross-border e-commerce). Factors that play important role in e-
commerce include e-commerce marketplace (third-party websites that host vendor
pages as online storefronts and process transactions for sellers) and e-commerce
platforms (technologies that are integrated into a business’s website that allow them
to sell their products online) (ITA).
The World Trade Organization provides another comprehensive definition of
e-commerce: E-commerce includes the production, advertising, sale and distribution
of products that are bought, sold and paid for on the Internet but delivered physically
(including digital products. There are three types of e-commerce in general: B2B,
B2C and C2C. The Vietnamese government defines this terminology through
Decree 52/2013/ND-CP, stating “e-commerce activities are parts of or the whole
process of commercial activities by electronic means through the internet, mobile
telecommunications networks or other open networks”. In sum, e-commerce can be
understood as commercial activities taking place online using
digital/telecommunication technologies.
There are many potential benefits to developing e-commerce, namely saving
marketing and operating costs, increasing flexibility and comfort for the customers
(buying goods from sellers located far from them physically), providing fast, reliable
services through delivery companies (Thanh Xuan District Office of Culture and
Information, 2020). E-commerce can provide sellers with access to a wider variety
of markets, data on their customers, as scaling abilities that were not accessible in
the traditional economy. However, there are also many cons to a digital economy.

24
The lack of personal communications between sellers and buyers, data security and
cyber security issues, credit card frauds, and notably the complexities in regulations,
tax laws certainly prevent the smooth transitions to e-commerce (Thai Nguyen
University, 2022).
2.1.8. Developing policies for the sharing economy and the gig economy
The historical development of the sharing economy dates back to the 19th
century. When production costs become too high and domestic production and
consumptions become sub-optimal, the sharing economy was born as an economic
tool to encourage the utilization of resources. According to VIOIT, “the sharing
economy represents a change in the method of product delivery from the transfer of
ownership of the product to the provision of an on-demand product service system;
Sellers/service providers will connect with each other to provide products
efficiently”. Strong ICT infrastructure (especially internet speed) combined with e-
commerce platforms are the foundations of rapid development of the sharing
economy. These innovations enable businesses to minimize various types of costs
and connect with more buyers, while helping consumers to find the
products/services they need faster and cheaper.
The sharing economy and the gig economy, and the mesh economy are all
different interpretations of the platform economy. Platforms are considered services
provided as an intermediary process in the buying and selling of information, goods
or services provided by third parties. The European Commission states that a
platform is “an undertaking operating in two (or multi)-sided markets, which uses
the Internet to enable interactions between two or more distinct but interdependent
groups of users so as to generate value for at least one of the groups” (Finck, 2017,
p.4). However, according to Finck, this definition is not comprehensive. As a result,
amidst “great variety of types of existing online platforms and their areas of
activity”, Finck claims that it is easier to define the platform economy by the factors
that it is not: “conventional, static, and easy to qualify” (Finck, 2017, p.4).

25
Indeed, it is difficult to provide a thorough explanation for platforms that are
the backbones of e-commerce development. This is why regulators “face no easy
task” in regulating the sharing economy. Finck listed three regulatory models for the
platform economy, which are commanding-and-controlling platforms (top-down
approach), self-regulating platforms and co-regulated platforms. While a
commanding-and-controlling platform model leaves no room for “polycentric
deliberation and compromise”, meaning that this form of economic management
would not be efficient for abandoning the ever changing, and quick development of
the sharing economy. The self-regulating platforms is not without flaws, either: “we
should not encourage platforms’ transformation into purely self-regulating
oligopolies that act outside of any oversight mechanism” (Finck, 2017, p.13). Due to
asymmetrical information, biased incentives when platforms self-regulate, lack of
consumer protection and lack of insights in state management, the companies
operating these platforms should not be entitled to regulate themselves. Indeed, the
co-regulated platforms model is best suited for regulating the sharing economy for
being able to satisfy a number of needs, from reconciling centralizing and
decentralizing force, solve information asymmetry and protect customers/buyers to
allowing both the public and the private sector to quickly adapt and adjust to
changes in new technologies (flexibility). Truly, “co-regulatory solutions bear the
potential to marry the benefits of both regulatory paradigms in harnessing the
effectiveness of platform’s involvement in the regulatory process with public
oversight” (Finck, 2017, p.28). This polycentric governance model should be
carefully examined and researched for appropriate application in Vietnam.
2.2. Concept of policy and legal framework of digital economy
In addition to a clear definition of digital economy, it is also necessary to
define the concept of policy and legal framework of digital economy. According to
the Cambridge Dictionary, legal means “connected with or allowed by the law” or
“connected with the system of law within a country or area”. Similarly, policy is
defined as “a set of ideas, or a plan of what to do in particular situations, that has

26
been agreed officially by a group of people, a business organization, a government,
or a political party”. The Cambridge Dictionary also defines framework as “a system
of rules, ideas or beliefs that is used to plan or decide something”. Combining these
definitions, we can arrive at the concept of policy and legal framework of a nation,
which is a system of national rules of law/regulations and government plans devised
to achieve certain economic, political or social outcomes.
Policy framework can also be defined as something that “includes the system
of administrative regulations, laws and strategies of the state on which the
government, government agencies and localities operate the economy in order to
achieve development goals in each given historical period” (Duc Nhuong, 2019).
There are many functions to a good policy framework, including attracting foreign
investor and facilitating trade. Another definition to policy framework is provided
by ICAC (Independent Commission against Corruption – South Australia): “A
policy framework provides an overarching structure that guides how policies and
procedures will be developed, approved, communicated and reviewed”. Moreover,
this organization states that “effective policy framework clearly documents the
processes to be followed at each stage of the policy life cycle” (ICAC, 2022).
From the definition of digital economy previously mentioned, we can now
derive a complete concept of the policy and legal framework for the digital
economy, which is a system of rules/regulations/guidelines and national strategies
that aim to enhance economic activities, commercial transactions and professional
interactions that are based on information and communication technologies. It is
undeniable that a structured, comprehensive policy and legal framework would
“improve the effectiveness of policies and reduce the risk of non-compliance”
(ICAC, 2022, p.1). Having a good policy and legal framework for digital economy
would allow Vietnam to thrive digitally transforming its economy and industries. A
good policy and legal framework would also provide clear policy hierarchy and
policy development process, proper consultation from government agencies as well
as businesses and transparent mandates of power.

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In addition to defining the policy and legal framework for digital economy, is
still very important to distinguish between the policy framework and the legal
framework. According to the Cambridge dictionary, policy can be defined as “a set
of ideas or a plan of what to do in particular situations that has been agreed to
officially by a group of people, a business organization, a government, or a political
party”. From this basis, a policy framework can be understood as a set of guidelines,
principles and procedures issued by the government to achieve common strategic
objectives. On the other hand, a law or a legal document pertains to a “a rule, usually
made by a government, that is used to order the way in which a society behaves”
(Cambridge dictionary). Therefore, a legal framework is a set of laws and
regulations that are enforced by the power of the state. Truly, while the policy
framework provides orientations for society, the legal framework consists of laws
that must be obeyed.
2.3 Characteristics and determinants of the policy and legal framework of
digital economy
There are several noteworthy characteristics of the policy and legal framework
for digital. First and foremost, the digital economy is constantly changing with the
incessant advents of new technologies. As a result, Lovelock mentions in his study
that “the pace of innovation has accelerated and rapid technological changes require
governments to gauge, understand, make and implement regulatory decisions faster”
(Lovelock, 2018, p.45). It is undeniable that agility (flexibility) is a great quality for
the government to cultivate in developing a policy and legal framework for digital
economy, as this would help alleviate “internal constraints of agencies”, “the risks of
overregulation” and increase the efficiency in handling “licensing” and business
registration” (Lovelock, 2018, p.45).
Another significant characteristic of the policy and legal framework of digital
economy is ‘cross-sectoral policy making’. Indeed, in traditional models of
governance, “public administration functions are based on silos – where public

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servants’ expertise is mostly limited to a specific policy domain such as agriculture,
education or infrastructure” (Lovelock, 2018, p.44-45). According to Lovelock,
“specialized agencies alone won’t create a cross-sectoral communication process
without establishing formalized communication channel and collaboration
methods”. Because of this, many countries have created “distinct entities in charge
of the digital economy – agencies like the MDES in Thailand and MDEC in
Malaysia, or specialized departments within the Prime Minister’s Office” (Lovelock,
2018, p.45). Another instance to the notion that distinct entities taking charge of
digital transformation can be found in Singapore with GovTech, which “established
a cluster group that collaborates closely with sectoral agencies (in finance, health,
education etc.) to ensure that newly developed digital services answer the needs of
their users” (Lovelock, 2018, p.45).
The final characteristic of the policy and legal framework for digital economy
that Lovelock states in his study is having a multi-stakeholder approach. This means
“governments not only need to coordinate various public sector stakeholders, but
engage the private sector, civil society and academia in setting the agenda for digital
development, creating appropriate regulations and implementing digital initiatives”
(Lovelock, 2018, p.45). Lovelock refers to a commonly used method of cooperation
between firms and the government, which is the “Public-Private Partnerships
(PPPs)”. However, this method can only operate in full effect “if they genuinely
involve a partnership, with mutual responsibilities and accountability, and are not
simply another name for outsourcing” (Lovelock, 2018, p.45). One archetype to this
notion can be seen in the case of Malaysia, where the PPP model comes in the form
of the Ministry of International Trade and Industry’s M-Powered Platform, “an
employment portal for persons with disabilities, in collaboration with Microsoft”
(Lovelock, 2018, p.45).
In terms of determinants of the policy and legal framework for digital
economy, there are four main determinants that regulators need to pay close
attention to. They are: digital strategies and regulations, digital infrastructure, data

29
and digital skills (Nazir, 2021). In terms of digital strategies and regulations, it is
crucial for countries to tailor their digital economy approach to their specific
political, economic and social conditions. Examples to this notion can be found in
China, which intends to make use of data and applications to “foster new business
models” or Singapore’s “Digital Economy Framework for Action that focuses on
digitalizing industries, integrating ecosystems, and transforming the ICT sector”
(Nazir, 2021).
When it comes to digital infrastructure, businesses must modernize themselves
regularly to stay competitive. Indeed, “the evolution of infrastructure is
characterized by two overarching trends: the move toward the edge and the uptake
of cloud platforms” (Nazir, 2021). Organizations are utilizing technologies to
improve and optimize their administrative, manufacturing as well as other processes.
The private sector needs to cooperate with the public sector in making investments
into new technologies such as “5G and Wi-fi 6”, “data centers and the cloud –
sensor and camera networks, applications and platforms” for implementation in
various cases “such as remote triaging in connected ambulances in the healthcare
sector, remote surveys by mobile robots in hazardous environments in the energy
sector, and factory automation in manufacturing” (Nazir, 2021).
Another factor affecting the development of digital economy and its policy and
legal framework is data. Because of the nature of the digital economy is being
“primarily a data-driven economy”, regulators need to devise policies and laws that
cater to this need (Nazir, 2021). A wide variety of issues need to be covered by
policy makers, including “IoT platforms, devices, networks, and AI and ML tools”
as well as personal data protection and consumer protection (Nazir, 2021).
The final determinant to the policy and legal framework of digital economy is
digital skills. According to Nazir, there are two main categories to digital skills:
“core ICT skills – such as programming, applications, infrastructure, cybersecurity,
and data analytics – and generic ICT skills required by all employees to work in a

30
digitalized environment”. At the current rate of technological development, it is
undeniable that knowledge and information taught in schools as well as universities
“often fall short and quickly become outdated” (Nazir, 2021). It is essential for
policy makers to devise mechanisms and methods to enhance “the ICT skills of
graduating students and the wider workforce”, as this would both increase the
capability of the private sector as well as prepare government officials to “adapt a
new generation to changing economic scenarios and avoid disruptions to the labor
market” (Nazir, 2021).
Figure 3: Key defining trends and key enablers of the digital economy

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Source: Huawei, 2021.
2.4 Roles and benefits of the policy and legal framework of digital
economy
Digital economy is increasingly becoming more and more involved in every
aspect of the modern society, whether it is commerce, law, justice, governance,
consumer goods, and many others. According to statistics, the Chinese economy’s
scale of digital economy has grown from being 30.61% of total GDP (3.9 billion
USD) in 2016 (Tencent Research Institute and China Info 100) to about 41.5% as
reported at the 6th
Digital China Summit (Xinhua, 2023). Similarly, in the U.S, “the
digital economy is growing at a rate of 10% a year, while the overall economy is at
just two percent annually” (Mei, 2022, p. ix). According to analysis, the fastest
growing companies in the U.S are all “engaged with the digital economy” and “by
2035 there will be 400 million job openings worldwide in these related industries”
(Mei, 2022, p. x). The digital economy includes a wide variety of business model
and activities, such as e-commerce, sharing economy, artificial intelligence (AI),
digital finance/services, Industry 4.0, digital media, telecommunication, supporting
services, and more (Mei, 2022, p.1-2). It is undeniable that in such a wide-ranging

32
and rapidly developing area, state management needs to get involved as soon as
possible to ensure stable, quick and methodologically oriented transitions.
Since the Industrial Revolution 4.0 is based on digital economy, every country
in the world will gradually move to a knowledge base economy. According to recent
estimates, Vietnam will need about 100,000 technology companies in 2030 in order
to carry out the vision “Make in Vietnam” with enterprises mastering technologies,
designing and manufacturing their own products (Hien, 2022). To achieve this,
Vietnam needs a comprehensive strategy in developing the necessary infrastructure
and labor force. Indeed, it is pivotal to build “power plants, highways, railways, and
public utilities”, and infrastructure for 5G technology, data centers, R&D facilities
for semiconductors (Mei, 2022, p. 7). In addition, according to Dang Thi Viet Duc
(2022), Vietnam needs to increase investment in R&D. Moreover, it is crucial that
the Southeast Asian nation put down heavy investments over a lengthy period of
time in education. It cannot be denied that the young, flexible, studious and
innovative human resources will be the foundational factor in the transition of
Vietnam from the current Global Factory model of digital economy to Innovation
Hub or Efficient Prosumer.

33
CHAPTER 3: EXPERIENCES OF SOME COUNTRIES ON THE POLICY
AND LEGAL FRAMEWORK FOR DIGITAL ECONOMY
3.1 Policy and legal framework of e-government and digital taxation in
China
3.1.1 Brief history of e-governance in China
The digital transformation in Vietnam has three main pillars, which are
developing e-government (orientation towards digital government), developing the
digital economy and digital society. Among these pillars, developing e-government
is likely the most important and influential target. When Vietnam successfully
developed e-government, it would have a great foundation for cultivating digital
economy and digital society. Therefore, it is extremely critical that Vietnam
scrutinize strategies and policies related to e-government. China has been
developing e-government a long time and has plenty of similarities with Vietnam in
terms of social, political, geographical and economic factors. E-governance has been
planned and developed systematically with major successes in China over the years.
There are many examples to this notion, such as the ubiquitous usage of e-
transactions through mobile phones, citizens completing paperwork online, or big
data helping the government to provide better customer services and come up with
better regulations. Indeed, having a good policy framework for developing e-
governance is crucial and would serve as the basis for digital economy development.
In order to fully understand how China e-governance got so successful, we
must first look at the development process of e-governance here. In total, “the
Chinese E-governance construction has undergone five phases of development: (1)
the pilot phase characterized by data-processing (1973-1983); (2) the vertical
construction phase characterized by information management (1983-1993); (3) the
beginning of key transaction systems characterized by transaction processing (1993-
2000); (4) the comprehensive promotion phase characterized by E-governance

34
guiding national phase characterized by a service orientation; and (5) the deep
application phase characterized by a service orientation (2006 on ward)” (Du, Yu
and Yang, 2019, p.1). The first phase of developing digital economy in China (1973-
1983) revolved around the country quickly “promoting the application of
computers" as well as focusing on data processing, which was epitomized by
national census data: When China carried out its third national census in 1999, with
the help of the United Nations, it formed the first prototype central and provincial-
level computer system in China and completed the massive tasks of processing 40
billion characters of raw data from a population of 1 billion people (Du, Yu and
Yang, 2019, p.1). This is undoubtedly a huge achievement even in today’s
standards.
The second phase of developing e-governance in China is called the vertical
construction phase that was characterized by information management (1983-1993).
One major contributor to the promotion of electronic information technology in
order to transform traditional industries is the State Council Electronics Promotion
Group (set up by the State Council), later to be known as the State Council
Electronic Information Systems Promotion and Application Office. China in this
period manages to achieve some impressive feats:
(1) government technical support capability; (2) the computer equipment
deployment proficiency of government departments and their subordinate
information organs significantly improved, laying a solid foundation for the
construction of government information technology; (3) a large number of databases
were developed mainly to manage information, and significant progress was made in
the digitalization of government information resources (Du, Yu and Yang, 2019,
p.3).
After this period of enhancing government capacities in digital technologies,
China began to move on to a third phase of key transaction systems from 1993 to
2000. The Chinese government implemented the “three Goldens”, which consisted

35
of the “Golden Bridge”, the “Golden Customs” and the “Golden Card”. These
massive programs are designed to “modernize the country's information technology
infrastructure by establishing a data communications network” (CNET, 1997). The
Golden Bridge project had the participation from major companies such as Intel,
Cisco or IBM. The project aimed to build a network across China with the backbone
being the “interconnected space satellite and ground fiber optic networks linked to a
domestic private network” (CNET, 1997). The Golden Card project aimed to use
telecom networks to build banking and credit card system countrywide, and the
Golden Custom project aimed to “create paperless trading by automating customs
checks and eliminate cash transactions for international trade” (CNET, 1997). There
were also the Golden Tax program which constructed the “value-added tax computer
cross-auditing systems in 50 pilot cities”, and the Golden Sea project which
“established a unified office automation network with the State Council as the hub”
(Du, Yu and Yang, 2019, p.4). Additionally, in 1999, the Government Online
program has brought about the improvement of government information technology
equipment and increased the awareness of information technology throughout
society. These combinations of acute and strategic programs laid a very strong
foundation for the development of e-government, digital government and digital
economy starting from the 2000s.
The fourth phase of e-governance development in China started from 2000 and
ended in 2006. During this period, the CPC Central Committee “reestablished the
Leading Group for National Informatization” (Du, Yu and Yang, 2019, p.6). The
Group concentrated on the construction of E-governance and implemented programs
that are considered the upgraded versions of the Three Goldens. The fifth and final
phase of E-governance development was from 2006 until now, “characterized by a
Service Orientation” (Du, Yu and Yang, 2019, p.6). Some of the most noteworthy
events in this period are: the launching of the People’s Republic of China Central
People’s Government web portal in 2006, the issuance of the “Overall Framework
for National E-governance” by the Leading Group for National Informatization, the

36
“National E-governance Program for the Twelfth Five-Year Plan” by the MIIT in
2011, the “National E-governance Informatization Program Construction Plan for
the Twelfth Five-year Plan” and “the establishment of the Central Leading Group
for Cyberspace Affairs” (Du, Yu and Yang, 2019, p.7-9).
Having meticulously examined the history of e-governance development in
China, Du, Yu and Yang concluded in their book that “the tremendous achievements
in E-governance are closely related to national strategy and overall planning for E-
governance” (Du, Yu and Yang, 2019, p.10). One outstanding point that these
authors made is that China did not follow world trends in e-governance blindly,
partly due to the fact that there has not been any consensus on the best model for e-
governance development. Truly the country was cautious about adopting policies
based on international experiences. China has a very ancient and distinct culture,
hence the nation must pay close “attention to integrating economic and social
development needs and cultural background in order to formulate an E-governance
development strategy with Chinese characteristics” (Du, Yu and Yang, 2019, p.10).
Local authorities in China had to integrate “economic, social and informatio4n
technology trends” very carefully through “major policies with profound impact at
the appropriate time” for the digital transformation of governance” (Du, Yu and
Yang, 2019, p.10).
3.1.2 Policy and legal framework for E-governance in China
China began constructing infrastructure for e-governance in early 1990s, but it
faced many obstacles due to “lack of coordination in system design, redundant
construction, information silos, and technical barriers” (Du, Yu and Yang, 2019,
p.13). As a result, the Golden Programs were implemented as the start of a more
methodical and organized approach. One of the most important documents for the
structured development of e-governance in China is the Document No.17 (the
Leading Group on National Informatization Guiding Opinions on E-governance
Construction in China), promulgated in 2002. This document clearly states the basic

37
contents of the overall framework for e-governance in China, “commonly known as
one site, two networks, four databases, and twelve goldens” (Du, Yu and Yang,
2019, p.14). This refers to one government web portal “with integrated
applications”, the unified E-governance network that consists of the government
intranet and extranet, “basic government information resources of the population
information database, the legal persons (corporations) and work units information
database, the national resource and spatial and geographic information database, and
the macroeconomic database” and 12 golden programs. The 12 golden programs are
the key transaction systems, including the “office work transaction resources system,
Golden Customs, Golden Tax, financial regulation (including Golden Card),
macroeconomic management, Golden Finance, Golden Shield, Golden Audit, social
security, Golden Agriculture, Golden Quality, and Golden Water” (Du, Yu and
Yang, 2019, p.14). This ordered framework is distinct proof to a clear vision for
enhancing public services using digital technologies, correctly applied to best adapt
with the particular cultural and social factors in China.
There are five crucial documents after the issuance of Document No.17 that
defined the development path of E-governance in China:
The Overall Framework for National E-governance issued by the Leading
Group for National Informatization in 2006; (2) the “National Informatization
Development Strategy (2006-2020), jointly issued by the CPC Central Committee
General Office and the State Council General Office in 2006; (3) the Program for
Informatization of Development of the National Economy and Society for the
Twelfth Five-Year Plan, issued by the National Development and Reform
Commission (NDRC) in 2008; (4) the Program for National E-governance for the
Twelfth Five-Year Plan, issued by the Ministry of Industry and Information
Technology in 2011; and (5) the State E-governance Informatization Program
Construction Plan for the Twelfth Five-Year Plan, issued by the NDRC in 2012 (Du,
Yu and Yang, 2019, p.14).

38
All of the later documents on e-governance development are based on the
overall framework (Document No.17). The framework has five sections, including
“services and applications, information resources, infrastructure, laws and
regulations, standardized systems and the management system” (Du, Yu and Yang,
2019, p.18). The Chinese government heavily focused on enhancing citizen
experiences whenever they use government services. Such service-oriented approach
managed to drive up demand and further e-governance development through a
market mechanism. This factor, as well as business and system construction, are
further emphasized in the National Informatization Development Strategy 2006-
2020, which clarifies “strategic positioning, construction ideas, and priorities for E-
governance” (Du, Yu and Yang, 2019, p.18). Not only the Chinese government
wanted to strengthen their control over the cyberspace, it also managed to do so by
building a calculated system in terms of management mechanism and internet
infrastructure. Their focus steadily “shifted from emphasizing software and
construction” to putting more weight into “operating system applications and the
development and use of information resources” as well as “comprehensive
applications” and tightening the connection in technology and construction of the
overall framework (Du, Yu and Yang, 2019, p.20).
Document No.18 was issued in 2006 and was built upon the foundational
principles made in Document No.17. It called for: (1) top-to-bottom re-ordering and
clear delegation of power and responsibilities, in which size major government
departments were assigned to the construction and maintenance of their own
networks (“leaving the CPC Central Committee General Office and the State
Council General Office the responsibility of coordinating interoperability between
the platforms”); (2) government agencies at all levels (central and local) would use
both intranets and extranets (Du, Yu and Yang, 2019, p. 21-22). These basic
foundational framework for development orientation and digital infrastructure in e-
government are coupled perfectly with the 2006-2020 State Informatization
Development Strategy, which were created based on the basic four functions of the

39
government. The eleventh and twelfth Five-Year programs for informatization also
complemented this strategy by stressing the importance of service role of
government agencies. They asserted the importance of integrations and the role of
top-level designs to departments and regions at different levels. In addition, these
two programs “proposed building and perfecting an e-governance public platform
and service capacities of e-governance” (Du, Yu and Yang, 2019, p.25). They also
“placed focus for the construction of the application system on safeguarding and
improving the people’s livelihood” and “emphasized bringing about operations
coordination and resource sharing and the formation of an integrated Informatization
program” (Du, Yu and Yang, 2019, p.25-26).
In terms of information resources structure, the Document No.17 puts out a
plan for building and exchanging information resources. This framework prioritizes
information collecting and updating, openness in sharing information at all levels
(“the compiling of an open directory and a sharing directory for government
information”), collection of population, legal entities, natural resources and
geographic/spatial data (Du, Yu and Yang, 2019, p.26). In an effort to further
facilitate the utilization of information resources, in 2004, “the CPC Central
Committee General Office and State Council General Office jointly issued” the
document Several Opinions on Strengthening the Work of Development and
Utilization of Information Resources (Du, Yu and Yang, 2019, p.26). In 2009, an
amended version of this document named the Temporary Measures for Electronic
Document was issued. Both of these regulations have put the development of
information resource on a national strategic level, and called for rapid
implementation through governmental, market and public welfare mechanisms (Du,
Yu and Yang, 2019, p.27).
In terms of network and information security policies for e-governance, there
have been many documents issued over the years for the construction of information
security infrastructure and advancement of cybersecurity. Without a doubt, the first
document that laid out the basic foundations was document No.17. It proposed

40
establishing a system for information security protection, called for more research
and investments into developing key technological products. Other influential
regulations are the 2003 “Opinions on Strengthening the Work of Safeguarding
Information Security”, the “Opinions on Strengthening Information Security and
Protection Work”, the 2006 “Overall Framework for National E-governance”, the
2012 “Several Opinions of the State Council on Vigorously Promoting the
Development of Informatization and Feasibly Safeguarding Information Security”,
and the “National E-governance Program for the Twelfth Five-Year Plan” (Du, Yu
and Yang, 2019, p.31).
The 2003 document on strengthening information security emphasized on
safeguarding information security, ensuring development and clarifying the roles of
authorities at different levels. The 2006 overall framework focused on facilitating
the construction of “E-governance information security infrastructure and a system
for safeguarding information security” (Du, Yu and Yang, 2019, p.30). Meanwhile,
by 2012, the priorities shifted back to safeguarding information security. This can be
explained by the increased influence of information technology and the internet on
“politics, the economy, society and culture” (Du, Yu and Yang, 2019, p.30). The
“Opinions” document marked the end of the Twelfth Five-Year Plan period: “The
System for safeguarding national information security should be basically complete”
(Du, Yu and Yang, 2019, p.30). On another note, The National E-governance
Program for the Twelfth Five-Year Plan raised various issues, namely “following
the guiding principles of giving priority to regulations, clearing obstacles and
attending to multiple issues simultaneously” (Du, Yu and Yang, 2019, p.31). In
addition, this regulation also promotes the acceleration of “construction of network
and information security infrastructure” and the improvement of systems and
capacity for safeguarding national information security (Du, Yu and Yang, 2019,
p.31).
When it comes to “laws, regulations, standards and management system
structures” for e-governance, the Overall Framework for National E-governance

41
covers both “the need to strengthen informatization training and assessment
protocols for civil servants” and “the need to accelerate the promotion of legislation
for E-governance” (Du, Yu and Yang, 2019, p.32). Other than providing clear
definitions for legislation research and construction, this regulation also promotes
the “integration of e-governance with government innovation and systemic reforms
pertaining to the overall development of E-governance” as well as “the
standardization and specialization of construction operations” (Du, Yu and Yang,
2019, p.32).
Indeed, China has already developed a very complete policy and legal
framework for e-governance. Besides the most important documents such as
Document No.17, Document No.18 and the Overall Framework that provide
guidance and orientation for the development of e-governance, information security
and informatization construction; there have been plenty of other documents that
“called for one site, two networks, four databases, and twelve goldens” (Du, Yu and
Yang, 2019, p.33). The Chinese government has been amending the old and issuing
new regulations as situations developed over the years. Despite this constant change,
policy goals have always revolved around improving service quality “through
innovative development, making public services more equal, and building such
major E-governance projects as the Informatization Program to Safeguard
Convenience and Health” (Du, Yu and Yang, 2019, p.34). The development of e-
governance in China through the National E-governance Program and the National
E-governance Informatization Program Construction Plan for the Twelfth Year-Plan
has significantly improved the average quality of life through the expedition of e-
governance construction systems (Du, Yu and Yang, 2019, p.34). Moreover, the
advent of cloud computing, blockchain technology, artificial intelligence and other
novel technologies have enabled e-governance programs to operate at higher
intensity, lower costs and higher efficiency. Making use of this opportunity, the
National E-governance Program for the Twelfth Five-Year Plan called for higher
integration between government agencies and increase in data sharing and functional

42
coordination. In total, the overall framework for e-governance in China places heavy
emphasis on “integration between functions and technology, and adjusting to
changes in the environment and functions of E-governance through more timely
upgrades” (Du, Yu and Yang, 2019, p.36).
Undoubtedly, e-governance development in China follows a strategic, orderly
and carefully designed direction. Government agencies at all levels are held
responsible for the construction, promotion and synchronous development of e-
government projects. In addition, the government also promotes information sharing
across ministries, local authorities and agencies as well as continuously amending
and adopting policies, regulations in order to facilitate e-governance development.
This has paid off handsomely because by 2015, almost all governments at different
levels have built their own websites. E-government augmentation occurred at “100%
of government sectors at national, 100% of government at the provincial level,
99.1% at the city level, and more than 85% at the county level with around 58,000
government websites” (Lu, 2018). Recently, from 2018, China has started to move
on from developing e-governance to building digital government. The government
set up pilot programs in Guangdong and Guangxi provinces and aimed to spread
these programs to other nearby provinces and cities. The nature of digital
government in China can be summed up with four characteristics: (1) user-centric,
which “aims to limit people’s travel and reduce transaction costs”, (2) increased use
of data, (3) enhanced coordination, which means deploying integrated services
through technology and data integration and (4) smart technology application (Tran,
2022).
China has achieved many great feats through the implementation of the 13th
Five-Year Plan (2016-2020). It has become the global leader in terms of
constructing large information infrastructure in terms of fiber optic network and 4G
network, speed and scale of 5G network construction, number of national domain
names (Tran, 2022). The development of e-governance truly paved the way for
digital competence, with more than 98% of people in Chinese poor villages have

43
access to cable and 4G, and around 462 million people use IPv6 by 2020 (Tran,
2020). In addition, China has bettered itself in innovation capabilities, ranking 14th
globally through “making great achievements in areas such as 5G, artificial
intelligence, high-performance computing, and quantum computing” (Tran, 2022).
The middle kingdom also witnessed “the rapid development of the digital economy,
accounting for 7.8% of GDP in 2020”, an incredible increase in the number of
internet users to about 70.4% of the population (1 billion people) in 2020, and a high
e-government development index ranking (45th
globally) (Tran, 2022). Besides, laws
and regulations related to digital technologies and businesses such as the law on
cybersecurity, law on e-commerce or the law on personal information protection
have also been set up.
3.1.3 Policy and legal framework for digital taxation in China
a) The People’s Republic of China’s Tax Reform in the Digital Economy
Since the birth of the concept of digital economy, countries have been racing to
strategize and design their policies and regulations for better economic integration
into the global value chain and more technological developments. As we have seen
from China’s quick actions in the development of e-governance, which serves as a
solid foundation for digital economy, the Asian tiger is very ambitious and decisive
once it has narrowed down its strategic or tactical goals. One of those goals is tax
administration reforms: “Internationally, the PRC’s rapid integration into global
supply chain has increasingly required it to work with other countries on many
issues, including a consensus-based international tax system” (Hendriyetty et al
(Eds), 2023, p.110). The PRC, along with many other countries in the region, are
currently relying on domestic measures such as value-added tax to tax the digital
economy. This is sub-optimal due to the incongruity between foreign enterprises’
“taxation location of profits” and “the place of value creation”, prompting countries
to reconsider “how to allocate taxation rights, with the aim of reaching a consensus”
(Hendriyetty et al (Eds), 2023, p.110).

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