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Vietnam's Data Center Market Booms Amidst Digitalization Drive
Spearheaded by SMEs and tech-savvy youth, Vietnam's data center market sees exponential growth fueled by 5G, local regulations, and foreign investment, positioning the country as a digital powerhouse in Southeast Asia.
Vietnam's data center market is experiencing a remarkable surge, positioning itself as one of the world's fastest-growing sectors, as per a recent report by Savills Asia Pacific. This growth trajectory is propelled by several key factors, including the digitalization initiatives of small and medium-sized enterprises (SMEs), the tech-savvy younger population, the advent of 5G technology, the necessity for self-sufficient digital infrastructure, and stringent local regulations on data localization.
According to insights from Savills Vietnam, the country boasts a total of 28 ongoing data center projects, encompassing a combined capacity of 45 MW and involving 44 service providers. Among the key players in Vietnam's data center landscape are domestic telecom giants like Viettel IDC, alongside global providers such as NTT, FPT Telecom, CMC Telecom, HTC Telecom International, VNPT, and VNTT. Furthermore, leading ICT infrastructure providers such as HP, Dell, Cisco Systems, Fujitsu, Hitachi, Huawei, IBM, Lenovo, NetApp, NEC Corp, and Oracle are actively engaged in this burgeoning market.
Additionally, Vietnam is interconnected with the global data grid through five submarine cables, linking it with APAC, EMEA, and the US. Anticipated to further bolster Vietnam's connectivity are the Asia Direct Cable (ADC) and the Southeast Asia-Japan Cable 2 (SJC2), slated for completion between 2023 and 2024.
Foreign interest in Vietnam's data center sector has surged since Q1/2021, with major players seeking strategic partnerships and investment opportunities in the country. Amazon Web Services (AWS), for instance, announced plans in August 2022 to establish data centers in Hanoi and Ho Chi Minh City, signaling a significant vote of confidence in Vietnam's digital potential. With the government's ambitious agenda to position Vietnam as a prominent digital hub, the country's data center market is forecasted to reach USD 1.04 billion by 2023, up from USD 561 million in 2022, boasting a robust compound annual growth rate of 10.7%.
Viettel IDC underscores the imperative of accelerating commercialization and embracing 5G technology to align with Industry 4.0 trends like AI, Big Data, and IoT. Moreover, the government's Digital Transformation Program, aimed at transitioning 50% of business operations to digital platforms by 2025, coupled with the rollout of 5G connectivity, promises to usher in a new era of edge data centers and low-latency connections essential for seamless end-to-end services.
Mr. Thomas Rooney, Senior Manager at Savills Hanoi, stresses the need for Vietnam to navigate challenges and seize opportunities in cloud computing, colocation services, and edge computing to chart its digital destiny. While acknowledging the promising outlook for data center development in the Asia-Pacific region, he cautions that it may require time given the current fragmented landscape of the industry.
Nevertheless, the exponential growth of Vietnam's data center sector underscores its immense potential in the global digital arena. As data demands surge worldwide, previously underserved markets across Asia-Pacific, including Indonesia, Malaysia, and India, are rapidly emerging as data center hotspots, driven by burgeoning digital economies and government-led digitalization initiatives. This trend signifies a seismic shift in the data center landscape, heralding a new era of digital transformation across the region.
