Remove the limit for foreign ownership: Vietnam's the rising star in data centers in ASEAN

Remove the limit for foreign ownership: Vietnam's the rising star in data centers in ASEAN

Vietnam is on the brink of a data center revolution. From July 1, 2024, according to the new law on telecommunications, foreign investors will be allowed 100% ownership of data centers in the country, a historic move that positions Vietnam as one of the most attractive destinations for global tech giants and infrastructure developers. With the removal of foreign ownership limits and favorable conditions for development, Vietnam is poised to become a key hub in Southeast Asia’s data economy.

100% Foreign Ownership: A Milestone for Vietnam

The decision to lift foreign ownership restrictions marks a major shift in Vietnam's investment landscape. Previously capped, foreign investors can now fully own and operate data centers, providing unparalleled autonomy and access to the burgeoning Vietnamese market.

This policy aligns with Vietnam’s broader digital transformation goals, allowing foreign capital to modernize the nation’s infrastructure, meet growing data demands, and compete with regional players like Singapore and Malaysia.

Vietnam’s Data Center Market: The Current Landscape

Despite its potential, Vietnam’s data center capacity remains modest, with an installed base of only 150 MW, significantly lagging behind its regional counterparts. For comparison, Singapore and Indonesia have far higher capacities, making Vietnam’s market ripe for expansion.

However, Vietnam’s competitive construction costs—ranging from $6 to $13 million per MW—combined with its growing appetite for cloud computing and AI, make the market ripe for foreign investment. By 2029, Vietnam’s data center market is expected to grow from $685 million in 2023 to $1.4 billion, fueled by rapid digital adoption in sectors like fintech, e-commerce, and AI.

Renewable Energy: A Competitive Advantage

Vietnam’s robust renewable energy resources, particularly in solar and wind, give it a competitive edge in sustainable data center development. As one of Asia's leaders in renewable energy adoption, Vietnam ensures a reliable and green energy supply for power-intensive facilities.

Currently, 13.7% of Vietnam’s energy mix comes from renewables (65% solar and 35% wind). The government is also exploring nuclear power to diversify its energy portfolio, preparing the infrastructure for next-generation technologies such as AI, which demand massive computing capabilities.

Global Tech Players Betting on Vietnam

Major global players, including NTT, Google, Alibaba, Edge Centres (Australia), and GAW Capital, are already investing in Vietnam, underscoring its potential as a data center hotspot.

Why Vietnam? A Convergence of Factors

1. Strategic Location: Vietnam’s central position in ASEAN provides proximity to major regional markets.

2. Supportive Policies: The removal of foreign ownership limits, coupled with Vietnam’s numerous trade agreements (e.g., CPTPP, EVFTA, RCEP), creates a robust investment framework.

3. Cost Efficiency: Affordable construction costs and a skilled workforce enhance Vietnam’s appeal.

4. Booming Digital Economy: With a young population of 103 million, and 50% under the age of 35, Vietnam is driving demand for advanced technologies like AI, IoT, and 5G.

The Road Ahead: Vietnam as ASEAN’s Rising Star

With its progressive policy shifts, competitive advantages in renewable energy, and surging digital demand, Vietnam is poised to become a data center powerhouse in Southeast Asia.

For investors, the time is now. Vietnam isn’t just a rising market; it’s the next frontier for global tech and telecom innovation.

Tron Chan is here to support your business expansion in Vietnam. From legal imports of ICT products to efficient delivery, we ensure your entry into Vietnam is smooth and successful. Partner with us to unlock Vietnam’s immense potential.