Vietnam boasts great potential for developing data centres

Illustrative image (File photo)

Data centres are expected to play a crucial role in supporting Vietnam's digital transformation, so despite the fact that the centre are in the nascent stage, many foreign investors anticipate effective investment-attraction policies soon to meet demand.

Vietnam is seen as one of the fastest-growing data centre markets globally, driven by the digitalisation efforts of domestic small- and medium-sized enterprises (SMEs), tech-savvy young population, the advent of 5G, demand for self-sufficient digital infrastructure, and data localisation.

According to the real estate consultancy firm Savills Vietnam, there are 28 data centre projects nationwide with a combined capacity of 45 MW. The market sees the involvement of 44 service providers. Notably, in August 2022, Amazon Web Services (AWS) announced the launch of data centres in Hanoi and Ho Chi Minh City.

Meanwhile, a study by Cushman & Wakefield Vietnam reveals that compared to mature markets like Singapore, Tokyo, Sydney, Beijing, and Shanghai, Vietnam remains relatively "young". While major international cloud service providers have yet to establish a significant presence, some international telcos have entered through partnerships with domestic peers. Projects of small and medium scale undertaken by domestic firms are underway in both HCM City and Hanoi.

Trang Bui, CEO of Cushman & Wakefield Vietnam (Photo: VNA)

According to Trang Bui, CEO of Cushman & Wakefield Vietnam, the nation is experiencing rapid population growth – particularly the middle class, urbanisation, high internet penetration, and active digital adoption in banking and business operations.

However, despite its advantages, Vietnam currently lacks data cetre infrastructure on a global scale concerning population ratio. This may pressurise domestic investors in terms of construction challenges, scarcity of experienced labour, and supply chain logistics, among challenges.

Cushman & Wakefield Vietnam's expert suggest investors continue to monitor the sector, particularly focusing on larger-scale projects rather than building numerous small facilities.

According to the CEO, southern localities could become favoured destinations thanks to abundant land reserves, readily available electricity within industrial zones, and major national undersea cable landing stations in Quy Nhon, Da Nang, and Vung Tau. Additionally, renewable energy accounts for a quarter of the national energy mix.

Vietnam's data centre market exceeded 1 billion USD in 2023, nearly double the figure logged in 2022. Currently, most of those participating in the local data centre segment are domestic telecommunications companies such as Viettel IDC, FPT Telecom, CMC Telecom, HTC Telecom International, VNPT, and VNTT.

According to Thomas Rooney, Senior Manager of Industrial Services at Savills Hanoi (Savills Vietnam), rapid growth could emphasise risks related to data privacy, cybersecurity, sustainable resource consumption, reliability, and quality of service. These issues require legislative and land considerations from the Vietnamese Government.

Vietnam must address the challenges to embrace the opportunities presented by cloud, colocation, enterprise and edge computing, he said./.