Vietnam's Data Centre Sector: Legal Framework and Growth Prospects

Vietnam's data centre industry is rapidly emerging as a significant player in the global digital infrastructure landscape. This development is underscored by a series of regulatory advancements and increasing investment opportunities, which are positioning the country for substantial growth in the coming years.

As of 2024, Vietnam's data centre market was valued at approximately USD 654 million, with projections estimating a meteoric rise to USD 1.75 trillion by 2030, representing a compound annual growth rate of 17.93%, according to a report by Research and Markets (2024). This growth is primarily driven by evolving regulatory frameworks that mandate domestic data storage, compelling both local and foreign enterprises to invest in data infrastructure within the country.

Currently, there are only 33 data centres located in Hanoi and Ho Chi Minh City, with a combined capacity of 80 megawatts (MW) as of Q1 2024, indicating a relatively nascent market that is ripe for expansion (ACBS, 2024). The market is predominantly controlled by five local companies—Viettel IDC, VNPT, FPT Telecom, CMC Telecom, and VNG Corp—who collectively manage about 70% of the existing data centres (ACBS, 2024). However, major global players such as Amazon Web Services (AWS), Microsoft, and Google have yet to establish a foothold in Vietnam, opening the door for potential investment opportunities.

The legal landscape governing the establishment and operation of data centres in Vietnam is primarily dictated by the Telecommunications Law enacted by the National Assembly on November 24, 2023, which goes into effect on July 1, 2024. This law introduces formal definitions for 'data centre' and 'data centre service', classifying them as essential telecommunications infrastructure necessary for data processing, storage, and management (Telecommunications Law, 2023).

Furthermore, the law encourages foreign investment by allowing 100% foreign ownership in data centre projects, a significant policy shift aimed at attracting international capital (Telecommunications Law, 2023). This is complemented by various investment incentives, such as reduced corporate tax rates and exemptions from certain fees for projects located in high-tech parks (Law on Corporate Income Tax, 2020).

Despite the promising regulatory framework, challenges remain. Investors must navigate a complex landscape of local regulations, including alignment with provincial master plans and compliance with various telecommunications and cybersecurity laws (Decree 163, 2024). The Government's commitment to enhancing the digital economy, highlighted by the forthcoming Digital Technology Industry Law, is expected to provide further clarity and incentives for data centre development.

As Vietnam's digital economy continues to expand, the demand for secure data storage and processing services is anticipated to surge. The convergence of regulatory support and market demand presents a unique opportunity for both domestic and foreign investors to establish a strong presence in Vietnam's emerging data centre sector. Engaging effectively with local stakeholders and leveraging expert legal guidance will be crucial for successfully navigating this dynamic market.

In conclusion, while the Vietnamese data centre market is in its infancy, significant growth potential exists, driven by favorable legal reforms and increasing demand for data infrastructure. Investors looking to capitalize on this opportunity must remain vigilant about regulatory changes and market dynamics to ensure sustainable growth in this burgeoning sector.