Vietnam an appealing data center location for Google, Amazon: JLL

Many U.S. cloud service providers would soon enter Vietnam’s data center market, making it increasingly competitive and diversified, property consultancy JLL Vietnam said in the report.

"It is only a matter of time until Google, AWS, and Microsoft look at [data center] development [in Vietnam]."

Vietnam is considered attractive by data center investors due to its strategic geographical location, flexible policies and young population, it said.

New regulations on cloud computing and data center services, set to take effect in 2025, would provide a flexible and transparent legal framework for the development of the data center market, it said.

Meanwhile, the national power development plan would help ensure stable power supply for the growing data center industry, it said.

Reasonable construction costs, of US$6-13 million per MW of data center capacity, are also an advantage for Vietnam, it said.

Meanwhile, the cost is escalating in Asia, especially in Japan, Singapore and South Korea, making countries with lower costs like China, India and Vietnam appealing alternatives, it explained.

The Vietnamese market is currently dominated by domestic telecommunication companies such as Viettel IDC, FPT Telecom, VNPT, and CMC Telecom, JLL noted.

With the demand for cloud storage and big data analytic services growing rapidly in recent years, many foreign businesses have entered Vietnam.

Some notable projects involving foreign enterprises include Hong Kong fund management firm Gaw Capital’s 20-MW data center and the Ho Chi Minh City 1 Data Center, a $70-million joint venture established by Japanese telecom company NTT and Vietnamese technology distributor QD.TEK.

Both are in HCMC’s Saigon Hi-Tech Park.

Chinese e-commerce giant Alibaba is also considering setting up a data center in Vietnam, Dang Minh Tam, the lead solution architect at Alibaba Cloud, said in a recent interview with Nikkei Asia.

Celina Chua, data center client solutions director at JLL, said: "Vietnam is becoming a hotspot for data center investment in Asia."

Another real estate consultancy, Savills, said in a recent report that Vietnam's data center industry is among the fastest growing in the world.

But it warned that rapid growth comes with challenges such as ensuring data privacy and cybersecurity, and managing resource consumption to grow sustainably.

Vietnam has 28 data centers with a total capacity of 45MW.