Demand for data centers attracts global investors to Vietnam

By Van Minh
Thu, March 30, 2023 | 9:29 am GMT+7

Data center investments in Vietnam are gathering momentum as the country looks toward the digital transformation of its fast-expanding economy and implements regulations on data localization for foreign firms.

Vietnam’s data center market size is expected to increase to more than $1 billion by 2028 from $561 million in 2022, growing at a compound annual growth rate (CAGR) of 10.68%, according to Research and Markets, the world's top market research store.

In its report, "Vietnam Data Center Market - Investment Analysis & Growth Opportunities 2023-2028", the firm said existing operators are expanding their presence in the country by investing in new facilities.

The market’s strong growth is being driven by government efforts and initiatives, for example, the Digital Transformation Program 2025 which aims to transfer around 50% of the business to digital platforms.

In August 2022, Amazon Web Services (AWS) announced the launch of its edge data centers in Hanoi and Ho Chi Minh City. AWS joined the ever-largest U.S. business mission to Vietnam from March 21-23, organized by the U.S.-ASEAN Business Council (USABC), to discuss and sound out investment opportunities. AWS and other tech firms in the delegation said they want to help develop Vietnam's digital economy.

Some current key investors in the Vietnamese data center market are Japan-based NTT Global Data Centers, and Vietnam-based firms Viettel, VNG Corp., HTC Telecom International (ECODC), FTP Telecom, CMC Telecom, VNPT, and VNTT.

NTT Global Data Centers is building its second data center in Vietnam as a partnership with domestic firm QD.Tek. The facility, called NTT Global Data Centers HCMC1 and located in HCMC’s Saigon Hi-Tech Park, is set to open in 2024. The five-story building will provide a total of 6 MW of IT capacity across 3,100 square meters of server rooms, equivalent to 1,200 racks. The project’s total investment has not been disclosed.

An artist’s impression of NTT Global Data Centers HCMC1 in Saigon Hi-Tech Park. Photo courtesy of NTT.

An artist’s impression of NTT Global Data Centers HCMC1 in Saigon Hi-Tech Park. Photo courtesy of NTT.

Japan’s NTT Group announced on March 21 that it is investing $90 million via its subsidiary NTT Global Data Centers to build a new data center in Thailand’s Bangkok, and the center will also open next year.

“The economic activity based on the digital infrastructure available in South Asia is changing rapidly. High-quality digital infrastructure is required to support the accelerating digital needs of enterprises,” Takeshi Kimura, managing director of NTT Global Data Centers in Asia, said in the announcement. “We plan to expand further in this area,” he added.

“Asia Pacific is a key growth region for NTT,” Sutas Kongdumrongkiat, NTT Thailand CEO, said in the release.

Southeast Asia’s online economy is forecast to be worth $330 billion in 2025, almost tripling in five years, according to a Google-led study. The region’s internet economy is forecast to reach $1 trillion by 2030, with Vietnam second only to Indonesia, according to the report.

According to U.S. market researcher IDC, Southeast Asia’s cloud infrastructure revenue rose to $2.18 billion in 2022, up 25% over the previous year. While Singapore accounted for around half of the total, Vietnam, Indonesia, the Philippines, and Thailand each posted annual growth of over 30%, outpacing the wider Asia and global markets, which expanded by 25% and 29%, respectively.

Vietnam is seeking to reach carbon neutrality by 2050. Meanwhile, American tech giant Amazon, including its AWS, aims to reach net-zero carbon emissions by 2040. Google has set a goal to power all its cloud data centers with carbon-free energy, 24 hours a day, by 2030.

Singapore's Keppel Corporation now has plans to expand its business in Vietnam for stronger growth in an alternative manufacturing hub for investors and companies seeking to diversify from China.

The data center sector and clean energy transition in Vietnam are the industrial conglomerate’s new areas in the country beyond real estate, Keppel Corp. CEO Loh Chin Hua told Nikkei Asia earlier this month.

An illustration of a data center. Photo courtesy of Cushman & Wakefield Vietnam.

An illustration of a data center. Photo courtesy of Cushman & Wakefield Vietnam.

Vietnam’s Ho Chi Minh City is in the top-10 group for selection in the land price category in Cushman & Wakefield’s latest annual report on data center developments published by the global property services firm this February. The report ranked major data center markets around the world based on 13 categories, including market size, fiber connectivity, power cost, and environmental risks to determine the top overall markets as well as the top-performing markets in each category.

Vivek Dahiya, head of Cushman & Wakefield’s data center advisory team, Asia Pacific, said interest and investment in the APAC region would continue at pace as the sector evolved.

“We are seeing significant investment and interest in Bangkok, Ho Chi Minh City, Hyderabad, Johor and Manila and we expect this to continue, along with interest in other primary and secondary markets in the region,” Dahiya said.

Vietnam may be a frontier data center market at this juncture, but has numerous fundamentals that would suggest great potential for development going forward, Cushman & Wakefield said in the report.

Comments (0)
  • Read More
Tecombank Securities becomes largest broker in Vietnam by capital base

Tecombank Securities becomes largest broker in Vietnam by capital base

Techcombank Securities JSC (TCBS) has become the largest securities company in Vietnam by charter capital after finishing a rights offering last week.

Banking & Finance - Tue, November 19, 2024 | 9:11 am GMT+7

Vietnam airport operator ACV looks to better exploit non-aviation service potential: exec

Vietnam airport operator ACV looks to better exploit non-aviation service potential: exec

Vietnam's airports operator ACV expects to earn $145 million from non-aviation services this year, accounting for around 18.83% of its total revenue, which is modest compared to other countries, said deputy general director Nguyen Duc Hung.

Companies - Tue, November 19, 2024 | 7:45 am GMT+7

The Investor to host seminar on removing legal bottlenecks for infrastructure, property investment

The Investor to host seminar on removing legal bottlenecks for infrastructure, property investment

A seminar themed “Removing legal bottlenecks for infrastructure and property investment” will be organized by The Investor in Hanoi on Tuesday.

Economy - Tue, November 19, 2024 | 7:00 am GMT+7

Indonesia promises Asia-Pacific investors more incentives

Indonesia promises Asia-Pacific investors more incentives

Indonesian President Prabowo Subianto recently told the press that he will create more incentives and expand special economic zones (SEZs) so as to lure investors from Asia-Pacific.

Southeast Asia - Mon, November 18, 2024 | 11:01 pm GMT+7

Indonesia, Brazil enhance aviation cooperation

Indonesia, Brazil enhance aviation cooperation

Indonesia's state-owned aircraft manufacturer, Dirgantara Indonesia (DI), and Brazilian aerospace company Embraer have signed a memorandum of understanding (MoU) to expand collaboration in the commercial aviation sector.

Southeast Asia - Mon, November 18, 2024 | 11:00 pm GMT+7

Indonesia eyes to become member of BRICS

Indonesia eyes to become member of BRICS

Indonesian President Prabowo Subianto has shown his country’s desire to become a member of the BRICS - the alliance of major emerging economies initiated by Brazil, Russia, India, China, and South Africa.

Southeast Asia - Mon, November 18, 2024 | 10:57 pm GMT+7

Former Party chief, chairman of Vinh Phuc province face disciplinary action

Former Party chief, chairman of Vinh Phuc province face disciplinary action

Vietnam’s Central Inspection Committee has proposed disciplining Pham Van Vong, former Party chief of Vinh Phuc, and Phung Quang Hung, former chairman of the northern province, for violations related to Phuc Son Group.

Politics - Mon, November 18, 2024 | 9:17 pm GMT+7

Shaping a waterway into a key shipping channel: Viconship gets dredging nod

Shaping a waterway into a key shipping channel: Viconship gets dredging nod

A major dredging project will allow safer ship navigation and increased cargo transportation capacity on the Hai Phong shipping channel, thereby enhancing competitiveness of Vinconship’s port system, says the company.

Companies - Mon, November 18, 2024 | 7:08 pm GMT+7

Former assistant to State President appointed general director of state-owned financial firm HFIC

Former assistant to State President appointed general director of state-owned financial firm HFIC

Truong Tuan Anh, an official at the State President Office and former assistant to a state president, has been appointed general director of Ho Chi Minh City Finance and Investment Stated-owned Company (HFIC).

Companies - Mon, November 18, 2024 | 5:35 pm GMT+7

MBBank’s takeover of weak OceanBank to have limited impact on its credit profile: Fitch

MBBank’s takeover of weak OceanBank to have limited impact on its credit profile: Fitch

Military Commercial Joint Stock Bank's (MBBank) takeover of Ocean Commercial Bank Limited (OceanBank) will have limited financial impact on the former’s credit profile, Fitch Ratings said Monday.

Banking - Mon, November 18, 2024 | 5:06 pm GMT+7

Win-win philosophy indispensable for sustainable growth: Bamboo Capital founder

Win-win philosophy indispensable for sustainable growth: Bamboo Capital founder

A win-win cooperation strategy is not just desirable, but a necessary condition for sustainable development, says Nguyen Ho Nam, founder of Vietnam’s private conglomerate Bamboo Capital Group.

Bamboo Capital - Mon, November 18, 2024 | 4:46 pm GMT+7

Vietnam central bank resumes selling gold after 1-month hiatus

Vietnam central bank resumes selling gold after 1-month hiatus

The State Bank of Vietnam (SBV), the country's central bank, on Monday announced that it will reactivate the sale of SJC-branded gold bars to meet market demand.

Banking - Mon, November 18, 2024 | 4:02 pm GMT+7

Vietnam 2nd biggest market of Thai giant Central Retail in Jan-Sept

Vietnam 2nd biggest market of Thai giant Central Retail in Jan-Sept

Thailand’s leading retailer Central Retail earned a revenue of THB37.99 billion ($1.09 billion) in Vietnam in the first nine months of this year, up 0.9% year-on-year.

Companies - Mon, November 18, 2024 | 4:00 pm GMT+7

Singapore firm to invest in $19.7 mln garment factory in central Vietnam

Singapore firm to invest in $19.7 mln garment factory in central Vietnam

Singaporean-based HGQ ASIA Pte., Ltd will pour nearly VND500 billion ($19.7 million) into building a garment factory in the south-central province of Binh Dinh.

Industries - Mon, November 18, 2024 | 2:23 pm GMT+7

IP developer KBC to raise $236 mln to restructure debts, augment capital

IP developer KBC to raise $236 mln to restructure debts, augment capital

Kinhbac City Development Holding Corporation (KBC), a leading industrial real estate developer in Vietnam, will offer 250 million shares to 11 investors for more than $6,000 trillion ($236.4 million) to restructure its debts.

Companies - Mon, November 18, 2024 | 2:17 pm GMT+7

Vietnam's chemical giant Vinachem targets $500 mln trade turnover with Brazil in 2030

Vietnam's chemical giant Vinachem targets $500 mln trade turnover with Brazil in 2030

Vietnam’s state-run chemical group Vinachem and Brazil’s major trading firm Oceanside One Trading LLC say they will strive to boost their bilateral trade to $500 million in 2030.

Companies - Mon, November 18, 2024 | 12:32 pm GMT+7