Vietnam is set to experience substantial growth in the data centre market, driven by an expanding digital economy and increasing data consumption across the region. A tech-savvy population engaged in data-intensive activities like social media usage, e-commerce, and gaming, as well as the adoption of big data, IoT, and cloud technologies are all expected to fuel a significant expansion in the market over the next decade, according to JLL (NYSE: JLL).

According to the JLL report, development costs for data centres in Vietnam typically span from $6 million to $13 million per megawatt, a range that reflects the bespoke agreements that characterise data centre constructions and the variable local construction expenses. This variance is also reflective of the broader Asia Pacific region where countries like Japan, Singapore, and Korea are experiencing escalating build costs, in contrast to China and India, which continue to present more cost-effective alternatives for data centre developments. In terms of operational costs, the report elaborates on the retail colocation pricing dynamics, emphasising that costs can fluctuate substantially based on the kilowatt per month consumption.

“Pricing variability, through comparative analyses within the region, highlights the economic diversity and strategic costing that data centre operators must consider when planning their investments in different Asian markets. Vietnam has recently climbed the priority list of countries investors and operators are looking to understand as they work out their market entry,” says Celina Chua, Data Centre Client Solutions Director, Asia Pacific, JLL.

Current Market Landscape and Growth Projections

The Vietnamese data centre market is currently dominated by local telecom players such as VNPT, Viettel IDC, FPT Telecom, and CMC Telecom, with significant growth noted in cloud service demands and big data analytics. However, international developers and operators are beginning to enter the market, including notable projects like the 20MW facility by Gaw Capital in Saigon Hi-Tech Park, a 30MW project by Singapore-based Worldwide DC Solution, and a partnership between Japanese telecom giant NTT with DQ Tek​​. Notably, Alibaba has announced its plans to establish a data centre in Vietnam, indicating a trend where more global cloud services providers, particularly from the US, are expected to follow, thereby enhancing market competition and diversifying offerings.

Energy Infrastructure and Sustainability Efforts

Vietnam's recently ratified Power Development Plan VIII sets forth an aggressive strategy to boost the nation’s total power generation capacity from approximately 80 GW to 155 GW by diversifying the energy mix away from coal toward more sustainable sources. This transition is critical for ensuring a reliable and stable energy supply to meet the escalating demands of the rapidly growing, energy-intensive data centre sector in Vietnam. The plan is fundamental in supporting the data centre industry, providing the necessary infrastructure to accommodate the increasing operational requirements of these facilities, which are crucial for the country's digital economy expansion.

Legislative and Regulatory Environment

The Telecommunications Law 2023, which will take effect in January 2025, is set to provide a more structured regulatory framework with clearer definitions and guidelines for data centre and cloud computing services as telecommunications services. This legislation, with a light-touch governance approach, is expected to provide a conducive regulatory framework for the sector's development, potentially attracting more foreign investment due to the liberalisation of market access conditions. The Telecommunications Law 2023 allows 100% foreign investment in data centre services. However, market access restrictions apply if the DC Co provides network connectivity services.

“This interest is driven by Vietnam’s strategic geographical location, dynamic economic policies, a young tech-savvy population, and the need for data localisation, positioning it as an important hub for data centres in Asia. Our analysis illustrates the readiness of Vietnam to capitalise on these opportunities, with increasing support from the government and an ever-growing demand for digital services shaping a promising future for the sector here,” says Chua.

More information on the detailed report: Vietnam Data Centres: Opportunity on the Horizon