Vietnam sees accelerated Data Center investments as digital transformation takes center stage and data localization regulations come into effect for foreign companies. Research and Markets forecasts that Vietnam's data center market will grow at a CAGR of 10.68%, reaching over $1 billion by 2028 from $561 million in 2022.
In the report "Vietnam Data Center Market - Investment Analysis & Growth Opportunities 2023-2028”, Research and Markets highlights that current data center operators are actively expanding their footprint in Vietnam through investments in state-of-the-art facilities.
Vietnam's data center market is experiencing rapid growth
Vietnam's thriving demand for data centers is attracting global investors
The robust growth of the market can be attributed to the proactive efforts and initiatives of the government, such as the Digital Transformation Program 2025. This program sets forth ambitious goals, including the migration of approximately 50% of businesses onto digital platforms, thereby fueling the expansion of Vietnam's data center market.
In August 2022, AWS launched edge data centers in Hanoi and Ho Chi Minh City, aiming to support Vietnam's digital economy. As part of the largest-ever U.S. business mission to Vietnam organized by US-ASEAN Business Council, AWS and other tech firms expressed their interest in investment opportunities and promoting Vietnam's growth.
Japanese-based NTT Global Data Centers, in collaboration with domestic company QD.Tek, is constructing its second data center in Vietnam. The upcoming facility, named NTT Global Data Centers HCMC1, will be situated in HCMC's Saigon Hi-Tech Park and is scheduled to commence operations in 2024.
Prominent investors in Vietnam's data center market include Viettel, VNG Corp., HTC Telecom International (ECODC), FTP Telecom, CMC Telecom, VNPT, and VNTT. These companies play a vital role in shaping the growth and development of the data center industry in Vietnam.
A study led by Google reveals that the online economy in Southeast Asia is projected to reach a value of $330 billion by 2025, experiencing nearly triple the growth in just five years. Furthermore, the report predicts that the region's internet economy will surge to $1 trillion by 2030, with Vietnam emerging as the second-largest market after Indonesia. These findings highlight the immense potential and rapid expansion of Vietnam's digital landscape.
U.S. market researcher IDC reports that in 2022, revenue from cloud infrastructure in Southeast Asia surged to $2.18 billion, marking a remarkable 25% increase compared to the previous year. Notably, while Singapore contributed to approximately half of the overall revenue, Vietnam, Indonesia, the Philippines, and Thailand exhibited exceptional annual growth rates of over 30%. These countries outpaced the broader Asian and global markets, which experienced growth rates of 25% and 29%, respectively. This data signifies the significant momentum and rapid advancement of cloud infrastructure in the Southeast Asian region, with Vietnam being one of the standout performers.
With a goal to achieve carbon neutrality by 2050, Vietnam is actively working towards reducing its carbon footprint. Simultaneously, Amazon, a renowned American tech giant, has set a target to achieve net-zero carbon emissions by 2040. Similarly, Google has committed to powering all of its cloud data centers with carbon-free energy round the clock by 2030. These initiatives reflect a strong commitment towards environmental sustainability and the transition to cleaner energy sources.
In Cushman & Wakefield's report on data center developments, published in February, Ho Chi Minh City in Vietnam ranks within the top 10 in the Land Price category for data center development. The report evaluated several key factors, including market size, fiber connectivity, power cost, and environmental risks, to rank major data center markets worldwide. This comprehensive analysis identified both the overall top-performing markets and the top-performing markets in each category, showcasing Ho Chi Minh City's strength in terms of land pricing within the data center landscape.
Global and domestic investors are increasingly establishing data centers in Vietnam
Paving the Way for Vietnam's Data Centers to Achieve Net-Zero Goals
Data centers are responsible for operating and managing servers that support an enterprise's entire system. These facilities are designed to house computer equipment with high density for efficient processing and storage of information. They incorporate cooling and air ventilation systems, as well as fire-fighting measures, to ensure optimal conditions for the equipment's operation and safety. Vietnam possesses the essential attributes to emerge as a significant data center market, including political stability, a minimal risk of terrorism, and a low occurrence of natural disasters like earthquakes.
Vietnam presently boasts approximately 27 data centers (DCs) situated in major cities, offering a diverse range of sizes and quality that comply with various standards and certifications. With an estimated total market capacity of around 45MW, several operators and new developers are actively exploring opportunities to enhance the market's supply in the near to medium term.
Data centers are known for their high energy consumption and significant carbon footprint due to the continuous operation of cooling systems, IT equipment, power generators, and facility lighting. Surprisingly, data centers contribute up to 3.7% of total greenhouse gas emissions, surpassing sectors such as aviation (2.4%), shipping (2.3%), and even rice cultivation (1.5%).
Addressing its carbon footprint necessitates the adoption of more efficient energy usage. However, emissions are just one aspect of the sustainability equation. According to Cushman & Wakefield, a new trinity for measuring Data Centre sustainability includes these metrics:
- Power Usage Efficiency (PUE): This traditional measure of data center sustainability is calculated by dividing the total power consumed by the facility by the energy used by IT equipment. An ideal PUE level is 1.0.
- Carbon Usage Effectiveness (CUE): CUE measures the carbon emissions generated by a data center. It is calculated by dividing the CO2 emissions caused by the total energy used by the data center by the energy used by IT equipment. The ideal CUE level is 0.0.
- Water Usage Efficiency (WUE): WUE tracks the amount of water used for cooling and other operational needs in a data center. It is determined by dividing the total water usage by the data center by the energy used by IT equipment. The ideal WUE level is 0.0.
In recent years, the data center industry has achieved substantial advancements in Power Usage Efficiency (PUE), with the average PUE decreasing from approximately 2.5 in 2007 to 1.5 presently. However, to gain a comprehensive understanding of the environmental impact of data centers, it is crucial to measure water consumption and carbon emissions alongside power usage. This broader approach provides a more holistic perspective on the true environmental footprint of data centers.
Vietnam's data centers are transitioning towards net-zero emissions
Similar to green buildings, businesses can minimize operational costs and reduce their environmental impact by taking proactive measures during the design process, material selection, and cooling system implementation. Carbon Usage Effectiveness (CUE) can be enhanced by incorporating renewable energy sources like wind and solar power. Water Usage Efficiency (WUE) can be optimized through thoughtful cooling system design, innovative water reuse solutions, or rainwater harvesting techniques. By implementing these initiatives, businesses can not only improve sustainability but also achieve cost savings in the long run.
Data centers located in cooler climates have a natural advantage as they can leverage the ambient cold air to cool their facilities. This eliminates the reliance on energy-intensive computer room air-based cooling systems, resulting in reduced energy consumption and carbon emissions. In cases where natural cold air is not available, data centers can employ heat recovery systems to repurpose excess heat by supplying it to local businesses or municipalities, thereby maximizing energy efficiency and minimizing wastage.
As digitization continues to expand across various sectors such as banking, manufacturing, communications, and media, the demand for data centers is poised to increase steadily. To ensure the long-term sustainability of the sector, it is crucial to establish regulatory standards that keep pace with technological advancements. In order to foster the growth of data centers in Vietnam, there is a need for improvements in telecommunication infrastructure and reliable power systems to minimize downtime and meet international standards. These enhancements will contribute to creating a robust environment for the development and operation of data centers in the country.
Furthermore, the provision of attractive incentives by the government, including preferential tax rates and reduced land use fees, will incentivize investors to engage in data center development. Additionally, the presence of skilled human capital plays a crucial role in effectively managing data center operations and delivering exceptional services.