(CNN) -- A controversial law to prevent Vietnamese internet users from sharing news articles drew criticism on Tuesday from human rights groups which said the decree is designed to clamp down on dissent in the one-party Communist state.
Known as Decree 72, the new law which came into effect on September 1 not only limits blogs and social websites to exchanging 'personal information' - original material generated by users - but requires foreign internet companies to locate their local servers inside Vietnam.
While the Vietnamese government has defended the law saying that it is aimed at stemming the illegal dissemination of intellectual property, critics say the law -- which also bans the online publication of material that 'harms national security' - is further evidence of Hanoi's crackdown on the Internet.
Reporters Without Borders says as many as 35 bloggers and netizens are currently jailed in Vietnam on anti-state charges, some of them serving sentences as long as 13 years.
"This is Vietnam vaulting to the head of the crowd on internet censorship in South East Asia," Phil Robertson from Human Rights Watch told CNN.
"The fact that it will effectively criminalise the sharing of information and the sharing of links by requiring that online social media only include originally written material is really quite a jump."
He said it was clear the government was being heavily criticized by its citizens on the Internet.
"This is a case of the empire strikes back," he said, adding that while the government was unlikely to monitor every Facebook page it had lists of known activists who would likely come under increased scrutiny.
Vietnam's head of the Department of Radio, TV and Electronic Information, Hoang Vinh Bao, told Vietnam's state media last month the decree would not limit freedom of the press or the voices of social media users and would only clamp down on those who 'undermined national unity'.
An article published last month in the official Nhan Dan newspaper defended the laws saying they were aimed at those who use social media to "defame the prestige and honor of others" and "incite hostility to the government."
"The government is desperate to make it appear that this is not aimed primarily at dissidents which is why they've rolled out various excuses including the protection of intellectual property," Robertson said.
The decree comes at a time when Vietnam is facing unprecedented growth in the internet, with 34% of the country's 90 million people connected to the web.
Unlike China, which has placed social networking sites such as Facebook and YouTube outside the Great Firewall of China as it is popularly known, analysts say Vietnam is playing catch up with its crackdown.
"The Internet in terms of the Vietnamese language has really become a super highway of information sharing," Robertson told CNN. "It also goes to the literary traditions of Vietnam -- it's a very learned society.
"People who are authors and writers are respected and that has translated to the online bloggers some of whom have immense followings."
The U.S. Embassy in Hanoi also weighed into the debate over Decree 72 last month saying: "Fundamental freedoms apply online just as they do offline."
It added that the internet law 'appears to be inconsistent with Vietnam's obligations under the International Covenant on Civil and Political Rights, as well as its commitments under the Universal Declaration of Human Rights.
While Vietnam has been escalating its pressure on dissidents it has also been attempting to improve its image on human rights. Earlier this year, it opened a dialogue with Amnesty International, allowing the human rights group to meet with dissidents and government officials in the first such meeting since the end of the Vietnam War.
Vietnam has been drafting a constitution that seeks to address civil liberties and issues of religious tolerance and comes as the South East Asian country is in negotiations to craft a free trade zone under the U.S.-led Trans Pacific Partnership.
Vietnamese President Truong Tan Sang visited the White House in July, holding talks with President Barack Obama which broached issues of Vietnam's human rights record.
"We had a very candid conversation about both the progress that Vietnam is making and the challenges that remain," President Obama said at the conclusion of the talks.