Vietnam emerges as fast-growing data centre market

HCM City (VNA) - Vietnam is assessed 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.

The Vietnamese market surged to over 1 billion USD last year, nearly double the figure logged in 2022. Currently, most of those participating in the local data center segment are domestic telecommunications companies.

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 involvement of 44 service providers. Notably, in August 2022, Amazon Web Services (AWS) announced the launch of data centers in Hanoi and Ho Chi Minh City.

Similarly, a study by Cushman & Wakefield Vietnam reveals that compared to mature markets like Singapore, Tokyo, Sydney, Beijing and Shanghai (China), 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 scales undertaken by domestic firms are underway in both Ho Chi Minh City and Hanoi.

According to Trang Bui, CEO of Cushman & Wakefield Vietnam, the nation experiences 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 center infrastructure on a global scale concerning population ratio. This may pressure domestic investors in terms of construction challenges, scarcity of experienced labour, and supply chain logistics, among others.

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

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

Data centers are expected to play a crucial role in supporting Vietnam's digital transformation. Therefore, despite being in the nascent stage, many foreign investors anticipate effective investment-attracting policies in the near future to meet demands.