Sufficient, reliable power supply key for FDI inflow into Vietnam data centers

By Lien Thuong, Hai Yen
Mon, September 2, 2024 | 7:44 pm GMT+7

Sufficient and reliable power supply will be a crucial factor in attracting foreign direct investment (FDI) for developing data centers as Vietnam looks to tap the growing global demand for such facilities, experts say.

These days, the Saigon High-Tech Park (SHTP) in Ho Chi Minh City has caught the eye of many tech players looking to develop data centers.

For instance, in May-June 2024, South Korea’s Hyosung Group informed the HCMC People’s Committee that it was interested in investing in a three-hectare data center of tier-3 standards with a capacity of 1,500-4,000 racks.

 Inside a data center in Ho Chi Minh City, southern Vietnam. Photo courtesy of Saigon Times.

Inside a data center in Ho Chi Minh City, southern Vietnam. Photo courtesy of Saigon Times.

Several other data center projects have already got the green light from Vietnam, including Hong Kong-headquartered Gaw Capital’s 20MW facility at SHTP, Singapore-based Worldwide DC Solution’s 30MW data center in Thu Duc city, and a project jointly developed by Japanese telecom giant NTT and South Korea’s DQ Tek.

China’s Alibaba has also announced a plan to build a data center in Vietnam. Hathor DC Vietnam Holdings Pte. Ltd – a subsidiary of Singapore’s SEvolution Data Centers Group, has asked for approval from the HCMC government to become a strategic investor in the SHTP Data Center project.

Alongside the race for data center development, an equally compelling competition is unfolding in the semiconductor industry.

In early July, a business mission from U.S. chip giant Nvidia visited HCMC to explore investment opportunities. Nvidia officials said they aimed to establish a research, development and training center focused on artificial intelligence; install a supercomputer system; and move some of its GPU production for supercomputers to Vietnam.

Another U.S. tech giant, Marvell Group, is also accelerating the expansion of its chip design centers in Vietnam. In mid-May 2024, Marvell launched a new chip design center in the central city of Danang, complementing two existing centers in HCMC.

Other key factors

On November 24, 2023, the National Assembly, Vietnam’s parliament, passed the Law on Telecommunications. Effective July 1, 2024, the new law is considered another key factor in attracting foreign investment for developing and operating data centers in Vietnam.

David Jackson, CEO of Avison Young Vietnam, told The Investor that besides the Telecommunications Law, there was a growing effort to spare industrial land for high-tech industries.

With an increasingly open and competitive market, Vietnam was poised to attract more investors into the high-tech sector, he added.

Cleared land (with all site clearance formalities completed) and reliable energy infrastructure were crucial factors for attracting foreign investment, Jackson said, noting that data centers required large and stable power supply.

He recommended that Vietnam in general and HCMC in particular continue to refine legal policies to guide the data center market towards sustainable and green development.

Celina Chua, director of Data Center Client Solutions (APAC) at JLL, a Singapore-based real estate investment advisory firm, remarked that Vietnam’s Telecommunications Law permits 100% foreign investment in data center services. However, market access restrictions will apply if the data center service provider also offers network connectivity services, she said.

Chua also said that Vietnam ranked high among countries that investors and operators were planning market entry strategies for. The country was becoming a key destination in the Asian data center market thanks to its strategic geographical location, dynamic economic policies, tech-savvy young population, and increasing demand for data localization, she added.

She also said that construction and operational costs gave Vietnam a relative advantage, with building data centers in the country costing $6 million to $13 million per megawatt.

Furthermore, under its latest Power Development Plan (PDP VIII), Vietnam aims to raise total power generation capacity from around 80 GW to 155 GW by diversifying the energy structure, reducing dependence on coal power and shifting to more sustainable energy sources.

Chua said that this transition will be crucial for ensuring stable and reliable energy supply to meet increasing demands of the rapidly expanding, energy-intensive data center sector in Vietnam.

Vietnam now has 33 data centers, mostly in Hanoi and HCMC, far below mature markets like mainland China, Hong Kong, and Singapore.

Comments (0)
  • Read More
Donald Trump won. What’s next for Vietnam real estate market?

Donald Trump won. What’s next for Vietnam real estate market?

Under Trump’s administration in the next four years, there might be further supply chain diversification, acceleration of friendshoring and nearshoring strategies, and trade polarization globally. Vietnam may benefit from these trends, write Avison Young Vietnam analysts.

Consulting - Tue, November 12, 2024 | 8:16 am GMT+7

Bright prospects seen for banking, securities, real estate, retail stocks next year: broker

Bright prospects seen for banking, securities, real estate, retail stocks next year: broker

Banking, securities, real estate and retail stocks have the potential to do well in 2025, says Dao Hong Duong, director of sectors and stock analysis with VPBank Securities (VPBankS).

Banking & Finance - Mon, November 11, 2024 | 9:37 pm GMT+7

Taiwan SpaceX supplier Universal Microwave Technology to double Vietnam investment

Taiwan SpaceX supplier Universal Microwave Technology to double Vietnam investment

Taiwan-based Universal Microwave Technology, a supplier for billionaire Elon Musk’s SpaceX, has said that it will increase its investment in Vietnam to a maximum $12 million.

Industries - Mon, November 11, 2024 | 7:51 pm GMT+7

Vietnam central bank sticks to ‘goldization’ fight, will consider open gold exchange

Vietnam central bank sticks to ‘goldization’ fight, will consider open gold exchange

Vietnam’s central bank, the State Bank of Vietnam (SBV), will continue to discourage the use of gold as investment or an asset to speculate on, says Governor Nguyen Thi Hong.

Banking - Mon, November 11, 2024 | 5:48 pm GMT+7

Vietnam records highest rate of online shopping in Asia Pacific: PwC

Vietnam records highest rate of online shopping in Asia Pacific: PwC

Vietnam stands out among the Asia Pacific region with the highest rate of online shopping. Vietnamese consumers are also increasingly prioritizing sustainability in their consumption practices, write PwC Vietnam analysts.

Consulting - Mon, November 11, 2024 | 5:18 pm GMT+7

Malaysia tightens control of social media

Malaysia tightens control of social media

Social media platform providers have been given a one-month deadline to respond to the code of conduct, after which they will be required to register with the Malaysian Communications and Multimedia Commission (MCMC) for licensing purposes, according to Malaysian Communications Minister Fahmi Fadzil.

Southeast Asia - Mon, November 11, 2024 | 4:05 pm GMT+7

Thailand pursues new policies to boost digital economy

Thailand pursues new policies to boost digital economy

The Thai Government is pursuing new digital policies to handle emerging security threats, including the impacts of US-China rivalry on the economy and technology, says Prime Minister Paetongtarn Shinawatra.

Southeast Asia - Mon, November 11, 2024 | 4:02 pm GMT+7

Japan’s Shizuoka Gas to acquire 25% stake in 50MW solar power plant in Vietnam

Japan’s Shizuoka Gas to acquire 25% stake in 50MW solar power plant in Vietnam

Japan’s Shizuoka Gas will acquire a 25% stake of My Son-Hoan Loc Viet Solar Energy JSC, the owner of 50-MW My Son-Hoan Loc Viet solar power plant in Vietnam’s central province of Ninh Thuan.

Energy - Mon, November 11, 2024 | 3:59 pm GMT+7

Vietnam central bank vigilant on inflation, cautious about credit risks

Vietnam central bank vigilant on inflation, cautious about credit risks

Vietnam’s central bank will manage its monetary policy in coordination with its fiscal policy to support economic growth, but it will stay alert about the return of inflation and take prompt action to curb it, says Governor Nguyen Thi Hong.

Banking - Mon, November 11, 2024 | 3:29 pm GMT+7

Vietnam’s first LNG-to-power plants set to connect to grid mid-Nov

Vietnam’s first LNG-to-power plants set to connect to grid mid-Nov

Nhon Trach 3 and Nhon Trach 4 power plants, the first LNG-to-power plants in Vietnam and located in the southern province of Dong Nai, are set to connect to the grid later this month.

Energy - Mon, November 11, 2024 | 2:28 pm GMT+7

Vietnam credit expands over 10% in 10 months

Vietnam credit expands over 10% in 10 months

Credit in Vietnam as of October 31 had grew 10.08% compared to the end of 2023, and 16.65% year-on-year, according to State Bank of Vietnam (SBV) Governor Nguyen Thi Hong.

Banking - Mon, November 11, 2024 | 12:09 pm GMT+7

Qualcomm earns $39 bln revenue, Vietnam 2nd biggest market

Qualcomm earns $39 bln revenue, Vietnam 2nd biggest market

American chipmaker Qualcomm earned a revenue of $38.96 billion in fiscal year 2024 (ending September 29), including 12% from Vietnam, the second-highest portion among all nations.

Companies - Mon, November 11, 2024 | 11:00 am GMT+7

Vinhomes spends $198 mln on record share buyback since start

Vinhomes spends $198 mln on record share buyback since start

Vinhomes, the largest housing developer in Vietnam, has spent some VND5 trillion ($197.82 million) on buying back its shares since it started its record-breaking plan on October 23.

Finance - Mon, November 11, 2024 | 9:25 am GMT+7

Vietnam moves up in global value chain with high-value investments: Savills

Vietnam moves up in global value chain with high-value investments: Savills

Vietnam's industrial sector is undergoing a significant transformation, attracting a "new wave" of high-value investments and the attention of leading global manufacturers and technology experts, says a Savills Vietnam report.

Investing - Mon, November 11, 2024 | 8:08 am GMT+7

KFC Indonesia shutters numerous outlets, lays off thousands of employees

KFC Indonesia shutters numerous outlets, lays off thousands of employees

KFC Indonesia, owned by Gelael and Salim Group under PT Fast Food Indonesia Tbk (FAST), reported a net loss of IDR557.08 billion (over $36 million) as of the third quarter of this year, resulting in the company’s closure of 47 outlets (as of September) and sack of 2,274 employees.

Southeast Asia - Sun, November 10, 2024 | 11:00 pm GMT+7

Indonesia eyes to become world’s palm oil price setter

Indonesia eyes to become world’s palm oil price setter

Indonesia’s Ministry of Agriculture has set a target of making the country the world’s largest palm oil producer by 2025, enabling it to influence global prices of the commodity.

Southeast Asia - Sun, November 10, 2024 | 11:00 pm GMT+7