Latest draft of the cinema law: distribution of films in cyberspace by offshore service providers

On May 25, 2022, the Cinema Bill was (amended) (“draft law“) was discussed at the 3rd session of the 15th National Assembly. Compared to the version of the draft law previously presented to the National Assembly, this new draft contains many progressive changes, revising the regulations and presenting them in a clearer and more coherent way. In particular, Regarding on the distribution of films in cyberspace, the bill has been supplemented with several new regulations and mechanisms to meaningfully support the post-censorship mechanism, such as Article 21 of the bill, however, is still ambiguous as to the subjects to whom it allows is to distribute films in cyberspace, specifically:

Article 21.1 has narrowed (compared to previous versions) the scope of subjects who may distribute motion pictures in cyberspace by requiring that “The allowed topic for distributing films in cyberspace is the establishment of cinemas“. The term “cinema equipment” in the draft law is defined as follows: “Corporations, non-business entities, other organizations established by organizations or individuals the Conduct film activities in accordance with the provisions of this Act and other relevant legislation“.

This definition can be interpreted to mean that a “cinema establishment” must be an organization or company incorporated under Vietnamese law. If this is the case, foreign companies wishing to distribute films in cyberspace, in particular to provide content services (e.g. VOD services) to service users in Vietnam, are not allowed to provide the services directly across borders. Instead, they must incorporate in Vietnam (i.e. have an entity incorporated under Vietnamese law) before providing such services, meaning Vietnam will ban foreign companies from cross-border distribution of films in cyberspace.

The above regulation and its interpretation may result in Vietnam’s Cinema Law not only being inconsistent with global best practices, but also with the country’s international obligations on cross-border trade. Specifically, Chapter X (Cross-Border Trade) of the CPTPP Agreement signed by Vietnam clearly states: “No Party shall require a service supplier of another Party as a condition for the cross-border supply of a service to establish, maintain or be resident in its territory a representative office or any form of business“.

Additionally, requiring foreign companies to set up businesses in Vietnam also increases market entry costs and erects unreasonably high barriers to entry, thereby hampering the development of reputable content providers that are currently offering carefully and legally curated content to consumers.

For the above reasons, and as the National Assembly will push the button to issue the bill tomorrow (June 15, 2022), we hope that the National Assembly will review and revise the above provisions, particularly to readjust the definition of cinema facilities or the provision on the subjects permitted to distribute films in Article 21 of the draft law to ensure compliance with Vietnam’s international obligations and global best practices, as well as fair and transparent market access conditions for foreign investors.

As the National Assembly will press the button to issue the draft law tomorrow (June 15, 2022), we hope that the National Assembly will amend the definition of cinema facilities or the provision on the subjects authorized to distribute films in Article 21 of the draft amends law to ensure compliance with Vietnam’s international obligations and global best practices, as well as fair and transparent market access conditions for foreign investors.

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