Is Vietnam's data centre market ready for take-off?

Vietnam's digital economy is surging, driven by a young, tech-savvy population, who are embracing e-commerce, social media, and online gaming. This digital transformation is creating unprecedented demand for robust data infrastructure, positioning Vietnam's data centre market for explosive growth in the coming years.

Currently, Vietnam’s data centre landscape is dominated by major telecommunications players, with Viettel IDC and VNPT leading the way. These companies leverage their extensive infrastructure and government connections to maintain a strong market presence. However, a new wave of local tech giants is emerging to challenge this dominance. Companies such as FPT Telecom, CMC Telecom, and VNG Cloud are rapidly building their data centre capabilities in the competitive landscape. International developers and operators are also starting to enter the market. Notable projects include Gaw Capital's 20MW facility in Ho Chi Minh City (HCMC) and a 30MW project by Singapore-based Worldwide DC Solution. The major cloud providers have not yet established their data centres in Vietnam, but this is expected to change.

Figure 1: Map of data centres in Vietnam

Source: JLL Research and various news sources

The current demand for data centre services in Vietnam is primarily driven by telecom companies' internal needs. The colocation and retail segments are also growing, but are still in the early stages. Unlike neighbouring countries where global cloud service providers are major data centre customers, demand for hyperscale center is currently absent in Vietnam. This situation presents both a challenge and an opportunity for the data centre market.

Despite the promising outlook, several key obstacles are preventing Vietnam's data centre market from reaching its full potential. Foreign-invested enterprises face significant regulatory barriers. The depth and sustainability of local demand remain unclear, making it challenging for operators to justify large-scale investments. Additionally, securing suitable land, with appropriate zoning and adequate power and water infrastructure is a significant hurdle, particularly for larger facilities.

However, recent developments suggest a brighter future for Vietnam's data centre industry. The Vietnamese government recognises the critical importance of data centres for the country's digital future. The new Telecommunications Law 2023, which took effect in 2024, specifically addresses data centre and cloud computing services. This legislation aims to provide clear guidelines and ease some restrictions on foreign investment. Meanwhile, the Power Development Plan VIII aims to improve power reliability and increase renewable energy use. A further digital infrastructure master plan for 2030 has also been released, outlining objectives for digital government, economy, and society, which will drive demand for data centres.

Looking into the future, Vietnam's data centre market stands at a critical inflection point. Vietnam is expected to significantly increase the scale and diversity of data centre operations in the next five years according to 451 Research, despite current capacity being limited – estimated at less than 40MW, the lowest in the region. Provided that key obstacles in foreign investment regulations, land access, and power infrastructure are addressed, the coming years could see a data centre boom that mirrors the explosive growth seen in other Southeast Asian markets like Indonesia, Malaysia, Thailand and the Philippines.