Vietnam among world's fastest growing data center markets

By Savills Vietnam analysts
Thu, December 28, 2023 | 11:02 am GMT+7

As demand for data and its storage increases around the world, previously underserved data center (DC) markets are quickly establishing a presence on the main stage, write Savills Vietnam analysts.

Governments in Indonesia, Malaysia, and India are investing heavily in digital infrastructure, attracting global operators. This article explores Asia’s booming data center, which is driven by rising demand from digital economies.

Developing data center markets in Asia

Globally, emerging data center markets are largely serving the needs of their own digital economies but also those of more developed markets.

Top 10 emerging global data center markets, 2023. Source: Savills Industrial Whitepaper, 2023

Top 10 emerging global data center markets, 2023. Source: Savills Industrial Whitepaper, 2023

A Savills APAC report published last year highlights that Indonesia, Malaysia, Thailand and Vietnam have fewer data centers compared to Hong Kong and Singapore, despite significantly larger populations. India has fewer data centers than Australia.

“The world is now digital, with our populations and economies online. We are seeing notable growth in data center demand, and Asian nations are working to capitalize on this segment. For example, India, Indonesia and Malaysia have invested heavily in their digital infrastructure,” said Thomas Rooney, senior manager of Industrial Services at Savills Hanoi.

In Indonesia, 200 million of its 275 million citizens have internet access, and the country’s online retail market is forecast to reach $95 billion by 2025. Indonesia is a burgeoning tech hub, with homegrown unicorns including GoTo, which raised more than $1 billion when it was listed last year.

Indonesia’s data centers are also likely to serve other markets. For example, Batam, an island near Singapore, is set to be a future data center hotspot, serving domestic needs but also demand from Singapore. Batam has conventional and renewable power sources, making it attractive to operators.

Malaysia has also invested in its digital infrastructure, with more underwater cable links, boosted domestic connectivity and 5G. This has sparked interest from foreign companies, such as Australian data center operator NEXTDC, which is building a 65MW colocation center; it will be Malaysia’s largest Tier IV facility.

India has the world’s largest population and increasing wealth levels, which are driving the need for data center development. Savills research highlights that it added 150MW of capacity in 2022 and forecasts expect a further 250MW in 2023, bringing the capacity to more than 1GW.

Government-led initiatives such as Digital India, and an emphasis on self-reliance and data protection through data localization are expected to increase the data volume in India, which will create increased demand for data centers.

Vietnam’s data center industry

Vietnam’s cloud and data center industry is one of the fastest growing in the world. It is driven by the digitalization of the local SME sector, a young and digitally literate population, the arrival of 5G, the need for self-sufficiency in digital infrastructure, and data localization laws.

According to Savills Industrial Whitepaper 2023, Vietnam has 28 data centers with a total capacity of 45 MW with 44 service providers.

Since Q1/2021, enquiries from foreign data centers operators looking for locations and potential joint-venture partners have increased on the back of hyperscales announcing interest in Vietnam. In August 2022, Amazon Web Services announced the launch of edge data centers in Hanoi and Ho Chi Minh City.

Most of the players in Vietnam’s data center segment are local telecommunications companies such as Viettel IDC, NTT Global Data Centers, FTP Telecom, CMC Telecom, HTC Telecom International (ECODC), VNPT, and VNTT. IT Infrastructure providers include HP, Dell, Cisco Systems, Fujitsu, Hitachi, Huawei, IBM, Lenovo, NetApp, NEC Corp, and Oracle.

The government aims for Vietnam to become a key digital hub, and the data center market is forecast to grow to $1.04 billion by 2028, up from $561 million in 2022 and representing a CAGR of 10.7%. According to Viettel IDC, accelerating the commercialization of 5G technology is essential to meet Industry 4.0 movements like AI, big data, and IoT.

The government has a Digital Transformation Program, which aims to transfer 50% of business to digital platforms by 2025. Vietnam’s 5G connectivity supports edge data center deployment and offers last-mile connectivity and lower latency services. In February 2022, the Ministry of Information and Communication announced its research plans for developing 6G technology to cater to the fastest growing technology sectors.

The country has five existing submarine cables connecting to APAC and EMEA countries and the U.S. Two upcoming cables expected between 2023 and 2024 include Asia Direct Cable (ADC) and Southeast Asia-Japan Cable 2 (SJC2).

Thomas Rooney, senior manager of Industrial Services at Savills Hanoi. Photo courtesy of the company.

Thomas Rooney, senior manager of Industrial Services at Savills Hanoi. Photo courtesy of the company.

According to Thomas Rooney, rapid growth could emphasize risks related to data privacy, cybersecurity, sustainable resource consumption, reliability, and quality of service. These issues require legislative and land considerations from the government. Vietnam must address the challenges to embrace the opportunities presented by cloud, colocation, enterprise and edge computing.

“There is also potential for building portfolios here in the Asia Pacific, which will take time due to the fragmented nature of current ownership. However, the growth in specialist funds around the globe demonstrates the potential this sector holds. Recent data from Savills World Research highlights that although core investment strategies are likely to dominate in 2024, we are likely to see a rise in opportunistic investment in sectors like data centers,” Thomas said.

Comments (0)
  • Read More
Fed rate cuts, upgrading efforts to lure foreign investors back into Vietnam stock market: VinaCapital

Fed rate cuts, upgrading efforts to lure foreign investors back into Vietnam stock market: VinaCapital

The U.S. Fed’s rate cut cycle and the Vietnamese government’s fresh efforts to upgrade the local stock market status are likely to bring foreign investors back into the stock market next year, according to VinaCapital.

Finance - Mon, November 4, 2024 | 11:42 am GMT+7

Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Shunsin Technology (Bac Giang, Vietnam) Limited, a subsidiary of Taiwanese giant Foxconn, will invest $80 million in Vietnam’s northern province of Bac Giang to produce integrated circuits (IC).

Industries - Mon, November 4, 2024 | 10:44 am GMT+7

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Net profits of listed companies in Vietnam increased 21.6% year-on-year in the third quarter of this year, maintaining a stable growth rate since the start of this year, according to local financial data provider FiinGroup.

Finance - Mon, November 4, 2024 | 9:31 am GMT+7

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand’s Siam Cement Group (SCG) recorded a revenue of THB36.71 billion ($1.08 billion) in Vietnam in the first nine months of this year, up 14.7% year-on-year.

Companies - Mon, November 4, 2024 | 8:00 am GMT+7

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh, Party chief of Hau Giang province, was appointed by the Politburo, the country’s supreme decision-making body, to be Khanh Hoa province’s Party chief for the 2020-2025 term.

Politics - Sun, November 3, 2024 | 7:45 pm GMT+7

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand is holding talks with Russia to expedite negotiations for a free trade agreement (FTA) with the Eurasian Economic Union (EAEU).

Southeast Asia - Sun, November 3, 2024 | 7:20 pm GMT+7

Indonesia attracts foreign investment in technology sector

Indonesia attracts foreign investment in technology sector

As many as 19 Australian companies have expressed an interest in investing in Indonesia's technology sector, Communication and Digital Affairs Minister Meutya Hafid said on Thursday.

Southeast Asia - Sun, November 3, 2024 | 7:18 pm GMT+7

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Small businesses in logistics should look to use existing tools, software and technology solutions effectively, says Dinh Thanh Son, deputy CEO of Viettel Post.

Companies - Sun, November 3, 2024 | 4:30 pm GMT+7

Vietnamese multi-sector group Masan uses AI to forecast product sales: executive

Vietnamese multi-sector group Masan uses AI to forecast product sales: executive

AI has helped Masan Group forecast the number of items likely to be sold during peak season based on available data and to optimize product placement, says An Luong, head of the corporation’s artificial intelligence & data science division.

Companies - Sun, November 3, 2024 | 2:51 pm GMT+7

Vietnam needs large, specialized logistics centers to compete better: official

Vietnam needs large, specialized logistics centers to compete better: official

Vietnam needs large-scale, specialized logistics centers that will enable greater competitiveness of local economies and enterprises, says Tran Thanh Hai, deputy head of the Ministry of Industry and Trade's agency of foreign trade.

Economy - Sun, November 3, 2024 | 11:00 am GMT+7

Vietnam manufacturing sector sees 35% increase in Q3 job orders: Adecco

Vietnam manufacturing sector sees 35% increase in Q3 job orders: Adecco

Vietnam’s manufacturing and sourcing sectors saw a substantial 35% year-on-year increase and a 52% quarter-on-quarter increase in Q3/2024 job orders, global workforce solutions provider Adecco said in a reseach report released Thursday.

Economy - Sun, November 3, 2024 | 9:00 am GMT+7

Construction majors to continue capitalizing on public investment projects

Construction majors to continue capitalizing on public investment projects

Vietnamese construction giants are expected to continue capitalizing on public investment projects for the remainder of this year after delivering strong performances in the third quarter, analysts say.

Companies - Sun, November 3, 2024 | 8:00 am GMT+7

Former Government Office chairman receives $7,900 bribe from property project

Former Government Office chairman receives $7,900 bribe from property project

Mai Tien Dung, former Minister-Government Office Chairman, received a bribe worth VND200 million ($7,900) from Nguyen Cao Tri, owner of the Dai Ninh eco-resort and urban area project in Lam Dong province.

Society - Sat, November 2, 2024 | 9:13 pm GMT+7

Thai food giant CP enters public-private partnership to promote food system transformation

Thai food giant CP enters public-private partnership to promote food system transformation

Thai-invested C.P. Vietnam Livestock JSC and the Partnership for Sustainable Agriculture Vietnam (PSAV) signed a memorandum of understanding Friday on working together to advance sustainable agriculture in the country.

Companies - Sat, November 2, 2024 | 7:16 pm GMT+7

Central Vietnam province Quang Ngai to begin work on new VSIP industrial park next year

Central Vietnam province Quang Ngai to begin work on new VSIP industrial park next year

Vietnam’s central province of Quang Ngai will work with the investor to have construction of VSIP II Quang Ngai, a facility based on the Vietnam-Singapore Industrial Park (VSIP) model, begin in August 2025.

Industrial real estate - Sat, November 2, 2024 | 3:47 pm GMT+7

Vietnam likely to grow 6.5% in 2024-2025: VinaCapital

Vietnam likely to grow 6.5% in 2024-2025: VinaCapital

VinaCapital, among the biggest foreign-run asset managers in Vietnam, has forecast the country’s economy to achieve 6.5% growth in both 2024 and 2025, with the composition of the expansion to change to more domestically driven factors next year.

Economy - Sat, November 2, 2024 | 2:00 pm GMT+7