“Though Vietnam’s data centre sector is still in its infancy it has experienced impressive initial growth, solidifying its position as a rising powerhouse in the digital infrastructure landscape.”
VIETNAM DATA CENTRE: MARKET INSIGHTS and OPPORTUNITIES
Though Vietnam’s data centre sector is still in its infancy it has experienced impressive initial growth, solidifying its position as a rising powerhouse in the digital infrastructure landscape. According to Research and Markets, it surged to an impressive US$654m in 2024 and is projected to soar to US$1.75tn by 2030, rising at a compound annual growth rate of 17.93%.¹ This expansion is driven by evolving regulations supported by local authorities.
Under existing regulations, domestic enterprises are required to store customers’ data within Vietnam.² Certain foreign enterprises conducting business in the country are also subject to this data localisation mandate under specific conditions.³ These regulatory requirements are expected to fuel a surge in demand for data storage and processing infrastructure in the coming years. However, despite this growing demand, Vietnam’s data centre market remains relatively sparse, with only 33 data centres in Hanoi and Ho Chi Minh City (“HCMC”) with a combined capacity of 80 MW as of Q1 2024.⁴ Currently, the Vietnamese data centre market is somewhat consolidated, with domestic players at the forefront. The top five companies—Viettel IDC, VNPT, FPT Telecom, CMC Telecom and VNG Corp—collectively control 70% of the market by number of data centres.⁵ Meanwhile, global cloud giants such as AWS, Microsoft and Google have yet to establish their own data centres in Vietnam, presenting a compelling opportunity for future investment.
LEGAL FRAMEWORK FOR THE ESTABLISHMENT AND OPERATION OF DATA CENTRES IN VIETNAM
The primary legislation currently governing data centres in Vietnam is the Telecommunications Law, enacted by the National Assembly on 24 November 2023 and effective as of 1 July 2024. This legislation introduces, for the first time, formal legal definitions for “data centre” and “data centre service”:
- data centres are defined as telecommunications infrastructure comprising buildings, stations, cable systems, computer systems, electrical systems and auxiliary equipment used for processing, storing and managing data for one or multiple organisations and individuals;⁶ and
- data centre service is a value-added telecommunications service⁷ encompassing functions such as processing, storage and information retrieval for users via a telecommunications network by leasing part or all of a data centre.⁸
In addition to regulations under the Telecommunications Law, investors seeking to establish and operate a data centre and provide data centre services in Vietnam must comply with various other legal frameworks, including investment and planning regulations among others. Below are the key legal considerations:
Compliance with Provincial Master Plan
The establishment and operation of data centre projects must align with the provincial master plan for passive telecommunications technical infrastructure.⁹ This master plan includes details of the data centres to be developed within the respective province, including name, corresponding district-level administrations, allocated land use area, anticipated land requirement and estimated total electricity consumption.¹⁰
Currently, Vietnam has yet to implement data centre development plans for every province. However, the Telecommunications Law and its guiding decree have provided a legal basis for investors to establish data centre projects despite this gap. Particularly, Decree No. 163/2024/ND-CP dated 24 December 2024 guiding the Telecommunications Law (the “Decree 163”) stipulates that in the absence of an officially issued passive telecommunications infrastructure plan, the provincial level Department of Information and Communications shall advise the Provincial People’s Committee in issuing a formal determination regarding the project’s alignment with relevant regional, sectoral and technical plans.¹¹
Conditions for Foreign Investors
The Telecommunication Law paves the way for foreign investors to hold up to a 100% stake in data centre investments.¹² This is an unprecedented move and signals a significant shift in Vietnam’s approach to attracting foreign capital.
Under this regulation, subject to relevant legal requirements, investors looking to enter Vietnam’s data centre sector can either establish wholly foreign-owned enterprises or acquire 100% of the capital contributions/shares of existing local companies.
Investment Approval
Under Vietnam’s Law on Investment No. 61/2020/QH14 dated 17 June 2020, for investors seeking to establish data centres in Vietnam, depending on the project’s scale, geographical location, technical characteristics, and specific attributes, investment approval by the National Assembly, Prime Minister or the provincial people’s committee may be required.¹³
Regulatory authorities will assess investment applications, ensuring their conformity with relevant master plannings, investment conditions, land use requirements, socio-economic benefits, investment incentives and other criteria before granting approval.¹⁴