Vietnam’s knowledge heart sector is drawing consideration from world buyers, with main initiatives signaling the nation may quickly emerge as a critical participant in Southeast Asia.
The surge in funding displays Vietnam’s emergence from the shadow of regional giants like Singapore and Malaysia. With simply 51 MW of whole capability throughout its two primary cities – in comparison with Singapore’s greater than 1 GW – Vietnam represents certainly one of Asia’s final main untapped markets.
However as Singapore’s constructing moratorium forces growth elsewhere, Vietnam’s mixture of low vitality prices, renewable energy entry, and 97 million more and more digital customers is attracting critical consideration from world gamers.
Ho Chi Minh Metropolis stays Vietnam’s major knowledge heart hotspot as a result of its financial scale and connectivity. Picture: Alamy
Main Gamers Getting into Vietnam
Samsung C&T and Vietnam’s CMC Company lately introduced a $1.3 billion plan to construct a big knowledge heart hub in Ho Chi Minh Metropolis, together with a 30 MW first part and a 100 MW follow-on growth.
Google can be contemplating a hyperscale facility close to Ho Chi Minh Metropolis, which might be the primary knowledge heart funding by a serious US expertise firm within the nation.
In response to a current Reuters report, the info heart may come on-line as early as 2027 and would help Google Cloud companies and Vietnam’s fast-growing base of YouTube customers.
The mission can be a serious vote of confidence for Vietnam’s maturing digital economic system, with John Dinsdale, chief analyst and analysis director, Synergy Analysis Group, noting the nation is “very underdeveloped” relative to its neighbors.
“Singapore is by far the most important market however faces some robust progress constraints,” he explains. “Partly as a result of that, Malaysian and Indonesian markets are rising extraordinarily quickly.”
He provides that whereas Thailand and the Philippines have established knowledge heart markets, they are not experiencing the explosive progress seen in Malaysia and Indonesia, making them much less engaging for main new funding in comparison with these quickly increasing markets.
“Vietnam could possibly be attention-grabbing, however it isn’t in the identical league because the markets in these different international locations,” Dinsdale mentioned.
Vietnam’s Large Upside Potential
Regardless of lagging regional friends, Vietnam has sturdy fundamentals that make it engaging for knowledge heart growth.
In response to JLL, the info heart market sizes for Hanoi and Ho Chi Minh Metropolis are roughly 15 MW and 36 MW, respectively. That is among the many lowest in Southeast Asia.
This capability is considerably behind that of regional friends resembling Bangkok (72 MW), Manila (74 MW), Jakarta (250 MW), and Kuala Lumpur (149 MW).
When contemplating the MW per GDP indicator, Ho Chi Minh Metropolis and Hanoi additionally exhibit one of many lowest ratios within the area, clearly demonstrating substantial potential for future progress.
Market Strengths, Development Drivers
“There are clear demographic and financial drivers: a rising economic system, a younger, tech-savvy inhabitants, and really excessive smartphone penetration are fueling demand for digital purposes,” Trang Le, nation head for Vietnam at JLL, informed DCN.
Vietnam additionally affords comparatively low business vitality charges and a excessive share of renewables throughout the vitality combine, which is a serious benefit for sustainability-focused operators.
This mix of price benefits and sustainability credentials may give Vietnam an edge as hyperscalers search to increase capability exterior Singapore, the place a moratorium on new builds has pushed growth into neighboring markets.
The nation’s Energy Improvement Plan VIII (PDP8) offers a roadmap for renewable era and grid upgrades, signaling official help for large-scale vitality customers like knowledge facilities.
Challenges: Energy, Permits, and Connectivity
Steve Lim, senior vp of selling and go-to-market technique at NTT, mentioned Vietnam is experiencing a speedy scale-up however stays capacity-constrained.
Nevertheless, for all its potential, Vietnam’s knowledge heart ecosystem faces hurdles that might gradual its rise.
“Information heart initiatives should navigate a fancy regulatory panorama, together with land use restrictions, zoning approvals, and environmental allowing,” Lim mentioned.
International buyers can lease land solely by industrial parks or native companions, which provides layers of negotiation to web site choice.
Energy stays the largest single concern. Whereas Vietnam’s grid is the most important in Southeast Asia by put in capability, seasonal pressure and blackouts have underscored its vulnerability.
“Main upgrades are required to help large-scale builds,” Lim notes. “Southern areas like Ho Chi Minh Metropolis at the moment current extra secure choices for brand new initiatives, whereas the north has increased danger from grid interruptions.”
Community resilience is one other crucial issue. The nation nonetheless depends closely on a restricted variety of subsea cables, and outages have induced vital service disruptions.
Lim notes investments in new cable landings and metro fiber are underway, with initiatives just like the lately introduced Viettel-Singtel VTS cable anticipated to bolster capability and enhance latency.
Following the Cash: Who’s Driving Demand
Lim explains that cloud and hyperscale suppliers, notably native telecoms and worldwide hyperscale entrants, lead demand in Vietnam’s knowledge heart market. AI workloads and controlled enterprises, together with finance and public sector digitalization, observe.
“Ho Chi Minh Metropolis stays the first hotspot as a result of its financial scale and connectivity, with Binh Duong and Hanoi rising as key second-tier areas,” he mentioned.
Speedy 5G rollout and home knowledge localization mandates are fueling progress in edge and core amenities nationwide.
Le notes no overseas participant at the moment operates at vital scale in Vietnam, however that may change as laws evolves, and colocation demand grows.
“We count on the market to observe transformation patterns seen throughout Southeast Asia, with growing selection and scale of companies provided to enterprise prospects,” she mentioned. “AI and machine studying will significantly enhance capability demand from each operators and finish customers.”
Subsequent-Gen Design Requirements
Vietnamese initiatives are additionally adopting extra superior design methods to satisfy rising effectivity and sustainability expectations.
“We’re seeing modular builds, renewable energy buy agreements, and water conservation options turning into normal in new initiatives,” Lim mentioned.
He factors out operators are focusing on Energy Utilization Effectiveness (PUE) beneath 1.4 as inexperienced compliance strikes from elective to strategic.
These strikes align with rising ESG pressures on hyperscalers and multinationals, a lot of which now require carbon accounting and renewable sourcing commitments from their colocation companions.
Moreover, Vietnam has comparatively low business vitality charges and a excessive share of renewables in its vitality combine.
“Information facilities require massive quantities of energy and a secure grid and still have sturdy sustainability mandates, so entry to renewables, which is a serious worth add, particularly in gentle of wider local weather implications,” Le defined.
She provides that Vietnam is in an excellent place to supply a mixture of vitality contracts for big knowledge heart customers, with sturdy governmental help for PDP8.
In the end, Le mentioned the continued moratorium on new knowledge heart growth in Singapore is pushing operators to shift operations to native host international locations.
“If we take a look at different Southeast Asian international locations as a proxy for future progress of the Vietnam market, we are able to see that the nation is primed for vital and sustained progress in capability, noting the favorable macro-economic, demographic elements at play,” Le mentioned.
