A survey by McKinsey and Co. in April found that the Internet sector currently contributes 1 percent of Vietnam's gross domestic product.
"The government is somehow scrambling to put the genie in the bottle, but you have a much more assertive citizen that has been empowered by new information technology," said Phil Robertson from Human Rights Watch.
"The organizing ability of the new social media allows people with disparate agendas to link up more closely."
The government signaled its intent to take a more aggressive line this month when the prime minister ordered police to arrest people behind three popular news blogs that had been reporting on alleged tensions between him and the president.
Traffic to the sites shot up in the hours after the announcement.
The government's website then published several quotes on the dangers of blogs from what it described as "ordinary people."
"I think the information on these bad web sites is like wild grass and poisonous mushrooms," said one of those quoted.
"These web sites aim to sow division among the top leaders of the party and state. I'm wondering why these websites with such ill intentions have been allowed to exist for so long."
On Monday, three prominent citizen journalists -- including one whose case was mentioned by President Barack Obama -- were sentenced to between 4 and 12 years in power for "spreading anti-government" propaganda. The sentences were longer than others previously handed down for online activism.
The government is currently drafting three decrees that would make it easier to prosecute bloggers and place strict controls on foreign Web companies. The U.S. government has privately and publicly registered its concerns with parts of the proposed laws.
In its original wording, the legislation required companies like Google and Facebook to have servers in Vietnam and filter content for the government. Those requirements have been dropped from more recent drafts, but prohibitions on freedom of speech remain.
Google and the Asia Internet Coalition, a lobbying group for Web companies, declined to comment, citing the sensitivity of their discussions with the government.
Asked to comment on criticism by the U.S. and others, Nghi, the foreign ministry spokesman, said Vietnam has the right to "manage the use and exploitation" of the Internet to "prevent negative impacts on the society and community."
Meanwhile, people who have been challenging the government for years are discovering how the Internet can make their activism more effective.
Nguyen Van Dai was released from prison last year after serving 4 years for organizing human rights workshops.
Last month, he began blogging on human rights after some friends showed him how.
"There are many bloggers who every day reach millions of people, who can then start a group against the government," Dai said.
"The government worries about the Internet, but they can't stop it."
