Vietnam becomes attractive colocation markets for foreign investors
Vietnam ranked seventh among the top 10 emerging colocation markets globally with a market size estimated to hit 1.5 billion USD by 2026, according to a recent report by KPMG published earlier this month.
Illustrative image (Photo: baodautu.vn)
Hanoi (VNA) – Vietnam ranked seventh among thetop 10 emerging colocation markets globally with a market size expected to hit 1.5 billion USD by 2026, according to a recent report by KPMG publishedearlier this month.
Colocation is the practice of renting space forservers and other computing hardware at a third-party provider’s data centrefacility.
Meir Tlebalde, merger and acquisition director forKPMG in Vietnam told Dau Tu (Vietnam Investment Review) that large tech investment traditionally tended to take placein tier-1 markets like Singapore, Hong Kong, Sydney, and Tokyo, which accountfor 82% of Asia-Pacific’s total data centre capacity.
However, tier-1 markets are facing a shortage in mass land for developmentand expensive renewables costs, high construction and power costs, andincreasing regulatory frameworks in sustainability and data privacy, Tlebaldesaid.
With rapid digitalisation, emerging Southeast Asia with land resource andcost competitiveness has become an attractive data centre investment destination.
According to Tlebalde, key growth drivers for Vietnam’s colocation market areattributed to the lowest development cost in Southeast Asia and capableinternet system, reliable power resources at the region’s lowest price, and theaccelerated digital transformation.
In terms of connectivity, Vietnam is ranked 39th globally in downloadfixed broadband, she added.
Along with the government’s commitment to sustainable development towards net-zeroemissions by 2050, Vietnam boasts the potential to become an eco-friendly datacentre market for investments in upcoming years.
As of April 2023, Vietnam was home to 28 data centres covering a total area of108,700sq.m. Hanoi and Ho Chi Minh City are the two major locations, with 11and 13 centres, respectively. The market is concentrated with 11 operators,among which five major players hold 89% of the country’s total computing space.
Experts said that major challenges for developmentin Vietnam are the need for a clear and streamlined legal framework, as well aspower stability. They highlighted the importance of a well-defined licensingprocess that provides clarity, adding that high financial costs and liquidityissues also pose obstacles for potential investors.
Chris Wallace, APAC Data Centre & Critical Facilities Lead of Mace Vietnam– a leading global consulting and construction corporation, said Vietnam’s strategiclocation and strong determination from its Government make it an attractivedestination for international investors./.
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Illustrative image (Photo: baodautu.vn)