Vietnam has made significant changes to the rules to allow Elon Musk’s Starlink satellite internet services to operate in its country. The move is being seen as an ‘olive branch’ amid potential tariff threats that may be imposed by the US. According to the new draft rules, Starlink will be able to fully own its local subsidiary in Vietnam, which is a significant change in the country’s existing policies.
Against this background, in late 2023, talks between SpaceX and the Vietnamese government stalled when Vietnam refused to lift restrictions on foreign ownership in satellite internet providers. This restriction was a major condition for Elon Musk, who is also currently a chief advisor to US President Donald Trump.
New rules and their features
Under draft rules to be adopted by the Vietnamese parliament in an extraordinary session on Wednesday, internet providers with low-orbit satellite networks will be allowed full foreign ownership under a pilot scheme that runs until the end of 2030. Projects submitted under the scheme will require the approval of Vietnam’s prime minister.
Business and diplomatic implications
SpaceX plans to invest $1.5 billion in Vietnam, a significant economic opportunity for the country. The investment could help Vietnam reduce its trade surplus with the US, which hit a record high of $123.5 billion last year. US President Donald Trump recently directed reciprocal tariffs on countries that tax US imports, and countries with large trade surpluses like Vietnam will be under special scrutiny.
Potential challenges
While the move signals an improvement in relations between Vietnam and SpaceX, some challenges still remain. Vietnam has strict rules related to data storage and localization, which foreign internet providers must comply with. In addition, Vietnam’s communist government’s censorship policies and control over the internet can also be a concern for foreign companies.
To conclude
Vietnam’s decision will not only strengthen the country’s digital infrastructure but will also help improve trade relations with the US. SpaceX’s investment will improve internet connectivity in remote and mountainous areas of Vietnam, benefiting sectors such as education, disaster management and maritime security. However, successful implementation will require both parties to address regulatory and policy challenges.
