Data centers set to soar as Vietnam digital economy takes big strides
The number of data centers (DCs) is set to rise exponentially in Vietnam as both domestic and foreign companies look to boost capacity and meet rising demand, a new report says.
The report, released last Friday by U.S. market research and consulting company Arizton, says the Vietnamese DC market size is expected to nearly double to $1.04 billion by 2028 from $561 million last year, meaning a compound annual growth (CAG) rate of nearly 10.8%.
There are 27 DCs at present in Vietnam.
VNG Corporation, Vietnam’s first technology unicorn, will set up more DC and cloud investments this year after spending almost VND1 trillion ($42.3 million) on its tier-III VNG Data Center in Ho Chi Minh City, the company announced at its shareholders’ annual general meeting last week.
VNG opened the facility, located at the Tan Thuan Export Processing Zone, last December as one of the top three most modern DCs in the country that can provide flexible, secure, and reliable access to data storage and data solutions to local and global businesses.
The facility has 410 racks for installing servers with a designed capacity of up to 10 kW per rack and will increase to this to 1,600 racks, the meeting heard.
Viettel technicians work at a data center operated by the military-run technology group in Hanoi. Photo courtesy of Vietnam News Agency.
The Vietnamese government’s Decree 53, issued last October to provide guidance on implementing the nation’s 2018 Cybersecurity Law, mandates that both domestic and foreign firms that provide services in areas like telecommunications, e-commerce and online payments have to store specific types of data in Vietnam for at least 24 months.
At a National Assembly session last month, Information and Communication Minister Nguyen Manh Hung said the ministry was “pursuing a soft management approach for data center services and cloud computing.” The aim was to promote the sector’s development while ensuring national security, he said.
At present, Vietnam has five undersea cables that face regular problems and long repair times as they pass through other countries’ territories.
Vietnamese tech giant FPT announced this April an $87 million investment plan to participate in the Asia Link Cable (ALC) project that will connect Vietnam to mainland China, Hong Kong, Singapore, the Philippines and Brunei via a 6,000 km undersea fiber optic cable.
FPT Telecom will set up a connecting station in the central coastal city of Danang to join the ALC.
Military-run telecom giant Viettel is also set to lay an undersea cable this year or the next to hook up with the Asia Direct Cable system. This project is estimated to cost $290 million.
Meanwhile, the Vietnam Posts and Telecommunications Group (VNPT) expects to join the South East Asia - Japan 2 Cable System (SJC 2) later this year.
These cable networks are expected to support high-speed Internet connection and large amounts of data transmission from Vietnam to other countries in the Asia-Pacific region.
In April 2022, Viettel announced it would build Vietnam’s largest DC in Ho Chi Minh City with an estimated investment of VND6 trillion ($254 million).
Two months later, Hong Kong-based Gaw Capital Partners announced it had completed acquisition of a 6,056 square-meter greenfield plot within a data center cluster at the Saigon Hi-Tech Park with plans to develop a facility with an IT capacity of 20 megawatts (MW).
The real estate private equity firm said the new Vietnam project would give it a strong foothold in a market with great potential.
In August 2022, the CMC Corporation inaugurated a 1,200-rack DC, also in HCMC, with a total investment of VND1.5 trillion (nearly $64 million).
Global players
Vietnam's digital economy expanded 28% year-on-year to reach $23 billion in 2022, according to a report by Google, Temasek and Bain & Company. It said Vietnam was set to become the fastest-growing digital economy in the region with an annual growth rate of 31% between 2022 and 2025, reaching a value of $49 billion.
Global tech giants like Apple, Google and Facebook have installed servers at various DCs in Vietnam.
In August 2022, Amazon Web Services (AWS) announced the launch of cutting edge data centers in Hanoi and Ho Chi Minh City. AWS joined the largest-ever U.S. business mission to Vietnam in March that was organized by the U.S.-ASEAN Business Council to explore investment opportunities.
AWS said in an interview with Nikkei Asia this March that it would build 10 DCs in Vietnam and five other Asia-Pacific countries, including Thailand and the Philippines.
Gary McKinnon, a senior director at VNG Corporation, had said earlier that foreign companies were looking to either build their own DC in Vietnam or co-locate with a local data center.
“We expect that international business will make up a major component of our business within two or three years.”
Japan-based NTT Global Data Centers is building its second data center in Vietnam in partnership with domestic firm QD.Tek.
An artist’s impression of the NTT Global Data Center HCMC1 built at the Saigon Hi-Tech Park. Photo courtesy of NTT.
NTT Global Data Center HCMC1, located in the Saigon Hi-Tech Park, is set to open next year. The five-story building will have an IT capacity of 6 MW across 3,100 square meters of server rooms, equivalent to 1,200 racks. The project’s total investment has not been disclosed.
“Vietnamese players currently dominate the market but foreign companies are taking a greater share now,” Tony Picon, Vietnam executive director for commercial real estate brokerage firm NAI Global, had told The Investor in March 2022.
“Overall, data centers are part of the push for Vietnam to develop as a digital hub, and finding skilled staff will likely be a constant challenge for most countries embracing rapidly changing technology.
He said that the rapid increase in digital start-ups in Vietnam will be underpinned by dynamic entrepreneurism, “but more work needs to be done on training.”
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