Vietnam among world's fastest growing data center markets
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.
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).
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.
- Read More
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
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
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
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
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
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 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
Vietnam may welcome more FDI from US allies in Trump 2.0: broker
More companies from U.S. allies and elsewhere may move more production facilities to Vietnam in the second term of Donald Trump as U.S. President, given the expected intensification of U.S-China trade tension, according to KB Securities Vietnam (KBSV).
Economy - Mon, November 18, 2024 | 12:19 pm GMT+7
Vietnam PM asks Brazil's aerospace giant Embraer to help with air logistics development
Vietnam seeks to build an air logistics center and plans to collaborate with Brazil’s aerospace giant Embraer for the task, says Prime Minister Pham Minh Chinh.
Companies - Mon, November 18, 2024 | 10:45 am GMT+7
Singapore-domiciled TAEL Two Partners struggles to divest from Vietnam taxi operator Vinasun at loss
Singapore-headquartered fund TAEL Two Partners has planned to divest entirely from Vietnamese taxi operator Vinasun at a heavy loss after more than a decade of investment.
Finance - Mon, November 18, 2024 | 10:19 am GMT+7
Vietnam's opportunity in a shifting global EVs market
The global electric vehicle boom presents numerous opportunities for Vietnam's economy, supported by leading technology suppliers like Bühler Group.
Companies - Mon, November 18, 2024 | 10:00 am GMT+7
Vietnam, Brazil elevate bilateral ties to strategic partnership
Vietnam and Brazil issued a joint statement on elevating their bilateral relations to a Strategic Partnership in Rio de Janeiro on Sunday (local time) on the occasion of Prime Minister Pham Minh Chinh’s ongoing trip to the Latin American nation to attend the G20 Summit and join bilateral activities.
Politics - Mon, November 18, 2024 | 8:11 am GMT+7
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 - Mon, November 18, 2024 | 7:52 am GMT+7
State-owned housing developer HUD has new chairman
Dau Minh Thanh, chief of the Ministry of Construction (MoC) Office, has been appointed chairman of the ministry’s Housing and Urban Development Corporation (HUD).
Companies - Sun, November 17, 2024 | 9:34 pm GMT+7
Vietnam private lender LPBank reports $394 mln profit in 10 months
Hanoi-based Loc Phat Vietnam Joint Stock Commercial Bank, or LPBank, logged an after-tax profit of VND10 trillion ($394 million) in the first 10 months of this year, said its leadership at the EGM on Saturday.
Banking - Sun, November 17, 2024 | 3:30 pm GMT+7
Vietnam stock market unlikely to experience further steep declines in next sessions: experts
The probability of continued sharp falls in the Vietnamese stock market over the next sessions is relatively low, barring unexpected geopolitical turbulences that could cause significant volatility, according experts.
Finance - Sun, November 17, 2024 | 1:30 pm GMT+7
- Travel
-
Indian billionaire to visit Vietnam’s Ha Long Bay with 4,500 employees
-
Vietnam in talks on visa exemptions with 15 countries to boost tourism
-
Foreign businesses in Vietnam urge relaxation of visa, work permit requirements
-
AI can be a game changer for Vietnam tourism
-
Google Doodle honors world's largest cave Son Doong
-
Four Vietnam airports to suspend operations as typhoon 'strongest in a decade' approaches