Vietnam’s data center market is poised to become one of the most dynamic investment landscapes in the Asia-Pacific (APAC) region. While it remains relatively small compared to other APAC markets, the country’s rapid digital transformation, supported by favorable government policies and competitive infrastructure costs, is attracting significant interest from global data center operators and investors. The convergence of these factors positions Vietnam as a future hub for hyperscale and edge data centers, particularly as the global digital economy leans more heavily on technologies like AI, IoT, and 5G.
Analyzing Vietnam’s Data Center Growth Trajectory
Vietnam’s data center industry is still emerging, with its market valued at approximately USD 685 million in 2023. However, it is expected to grow at a remarkable compound annual growth rate (CAGR) of 13.1% through 2029, outpacing the broader APAC average of 10%. The growth potential stems from Vietnam’s current lack of large-scale infrastructure, making it fertile ground for new developments. As the country pushes forward with its ambitious National Digital Transformation Program and boosts its international fiber-optic cable network, the need for more advanced data centers—both hyperscale and edge—is becoming increasingly evident.
The current infrastructure is concentrated primarily in Ho Chi Minh City and Hanoi, home to about 30 data centers with a total IT power capacity of just 46 MW. This supply, while significant for a developing market, pales in comparison to regional peers like Singapore, Japan, and South Korea. Yet, this gap represents a massive opportunity for investors. Vietnam’s relatively modest market size and the increasing demand for data storage, processing, and management make it an attractive target for both local and foreign companies looking to capitalize on a market still in its early stages of development.
Competitive Landscape – Domestic vs. International Players
The competitive environment in Vietnam’s data center market is marked by a clear distinction between domestic and international operators. Local firms like Viettel IDC, VNPT, FPT Telecom, and CMC Telecom currently dominate the landscape, controlling over 90% of the market share. These companies have historically focused on building data centers to support Vietnam’s telecommunications sector, which has provided them a competitive edge in terms of local regulatory compliance and operational efficiency. Viettel IDC, for instance, operates five major data centers that have earned global certifications, including the stringent ANSI/TIA-942 Rated-3 standard, a testament to the high-quality standards that local players are increasingly able to meet.
International players, however, dominate the cloud computing segment, with major hyperscalers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud commanding roughly 80% of the market. Despite their dominance in cloud services, these global giants have yet to establish physical data center infrastructure in Vietnam. Instead, they rely on partnerships with local providers to navigate the complex regulatory environment and avoid the significant upfront capital costs associated with developing data center infrastructure. This partnership model allows foreign firms to reduce latency and improve service offerings without directly owning assets on the ground, but it also presents long-term opportunities for global hyperscalers to eventually set up their own operations.
Key Regulatory and Policy Drivers
Vietnam’s regulatory framework is evolving rapidly to accommodate the growing needs of the data center and cloud sectors. The 2023 Law on Telecommunications, along with decrees such as No. 53/2022/ND-CP and No. 13/2023/ND-CP, play crucial roles in shaping the industry’s future. These laws require certain businesses, especially those handling sensitive personal data, to store information within Vietnam’s borders, a policy that is likely to fuel the demand for local data centers.
One of the most significant regulatory shifts is the allowance for 100% foreign ownership in data center investments. This opens the door for global players to make direct investments in Vietnam’s infrastructure. The strategic decision by Google to explore the possibility of establishing a hyperscale data center near Ho Chi Minh City underscores the increasing global attention on Vietnam as a critical node in the APAC data center network.
Moreover, Vietnam’s tax incentives for high-tech investments further bolster the attractiveness of the sector. Companies building data centers in high-tech parks or export processing zones can benefit from a preferential corporate income tax rate of 10% for the first 15 years, with an additional four years of tax exemption and a 50% reduction for the next nine years. This regulatory environment not only reduces the cost burden of entering the market but also promotes long-term investment sustainability.
Power Supply and Sustainability Challenges
As with other data center markets globally, Vietnam faces challenges related to energy supply and sustainability. The energy-intensive nature of data centers, particularly hyperscale and edge facilities, places significant demand on the national grid. In 2023, data centers accounted for around 2% of global electricity consumption, a figure expected to rise sharply with the growing deployment of AI, Big Data, and IoT applications. Vietnam’s ongoing reliance on fossil fuels—despite recent progress in renewable energy development—presents a potential bottleneck to long-term growth.
The government’s Power Development Plan (PDP) VIII aims to increase renewable energy’s contribution to the national power mix to 30% by 2030. However, delays in the implementation of renewable projects could exacerbate power shortages, particularly in urban centers like Ho Chi Minh City and Hanoi, where data center density is expected to rise significantly. The Direct Power Purchase Agreement (DPPA) mechanism, introduced in 2024, provides a promising avenue for data center operators to negotiate renewable energy supply directly with independent power producers, bypassing traditional energy procurement models that rely heavily on Vietnam Electricity (EVN), the state utility.
Additionally, Vietnam’s relatively low electricity costs—averaging USD 0.08 per kWh—make the country competitive compared to other APAC nations, where costs can be as high as USD 0.33 per kWh in Singapore. This cost advantage, coupled with the availability of renewable energy through the DPPA, could position Vietnam as a leader in the race to build green, energy-efficient data centers in Southeast Asia.
The Future: Strategic Focus on Edge and Hyperscale Data Centers
Vietnam’s digital transformation agenda, particularly the rollout of 5G and the adoption of AI-driven applications, is expected to drive demand for more advanced data center infrastructure. Hyperscale data centers, characterized by their vast computing power and scalability, will play a critical role in supporting AI workloads, Big Data analytics, and other emerging technologies. At the same time, edge data centers—smaller, decentralized facilities located closer to end-users—will be vital in reducing latency and improving service reliability, especially in Vietnam’s rapidly urbanizing regions.
The strategic expansion of the country’s international fiber-optic cable network is another key enabler of this growth. Vietnam’s plan to add 10 new submarine cables by 2030, doubling the current number, will significantly enhance the country’s data transmission capacity and reduce reliance on existing, aging infrastructure. This improved connectivity will be crucial in attracting more hyperscalers to invest in local data centers and elevate Vietnam’s status as a regional digital hub.
An Emerging Data Center Hub in APAC
Vietnam is on the cusp of a data center revolution, driven by rapid digitalization, government support, and competitive cost structures. While challenges remain—particularly in energy supply and infrastructure development—the country’s strategic policies and commitment to fostering a high-tech ecosystem are making it one of the most attractive data center markets in APAC. For investors, now is the time to capitalize on Vietnam’s untapped potential before the market matures and competition intensifies.
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