Vietnam’s Data Center Economy: Sector Insights and Key Regulations

Posted by Written by Melissa Cyrill Reading Time: 12 minutes

Vietnam’s data center economy is poised for steady expansion, with the sector forecast by Research and Markets to reach US$1.03 billion by 2028, a substantial increase from the US$561 million recorded in 2022. This projected growth is underpinned by a compound annual growth rate (CAGR) of 10.68 percent, spanning the period from 2022 to 2028. Vietnam had 77.93 million internet users in January 2023, with a 7.3 percent increase from 2022. 

These figures, however, only tell part of the story. The landscape of opportunities within Vietnam’s digital economy is vast and undergoing significant transformations driven by evolving regulations and the impetus for greater digitization.

Recent regulations emphasize the importance of data sovereignty, safeguarding personal information, and bolstering cybersecurity measures. An example is the implementation of data localization norms, which came into effect on October 1, 2022. Additionally, the government has prioritized digitization initiatives that will enable the growth of the country’s digital economy, including tax incentives for high-tech sector investments, e-governance and administration, fiber connectivity expansion, and 5G rollout.

Such policies have acted as catalysts, spurring year-on-year increases in data center investments in Vietnam.

Sector outlook

Developments in advancing connectivity

A January 2023 report in The Hanoi Times noted that following the introduction of commercial 5G in December 2020, 5G network coverage now covers 40 out of Vietnam’s 63 provinces and cities. In April, the Ministry of Information and Communications (MIC) conducted a spectrum auction within the 2,300MHz – 2,400MHz band, with the aim of facilitating the expansion of 4G and 5G services in Vietnam. Each successful bid grants access to a 30MHz spectrum allocation, distributed as follows: 2300MHz-2330MHz, 2330MHz-2360MHz, and 2360MHz-2390MHz, according to reporting from CommsUpdate. These licenses will remain valid for a duration of 15 years, with the initial bidding starting at VND 386.4 billion (equivalent to US$16.02 million).

In February 2022, the Ministry of Information and Communication had announced its research efforts to develop 6G technology, catering to the needs of the rapidly evolving technology sectors.

Regarding network connectivity, Vietnam boasts five operational submarine cables connecting it to Asia-Pacific (APAC) and Europe, Middle East, and Africa (EMEA) countries and the U.S. Furthermore, the Asia Direct Cable (ADC) and Southeast Asia-Japan Cable 2 (SJC2) are anticipated to become operational by 2023/2024, further enhancing Vietnam’s connectivity.

The “National Digital Transformation Program to 2025” (Decision No. 749/QD-TTg 2020) aims to shift 50 percent of business operations to digital platforms by 2025, aligning with the rising demand for edge data center deployment driven by the increasing connectivity of the 5G network, offering last-mile connectivity and lower latency services.

Basic targets to 2025 include:

  • Achieving a digital economy that contributes to 20 percent of the GDP.
  • Ensuring that the digital economy represents at least 10 percent of each sector.
  • Fostering annual productivity growth of no less than 7 percent.
  • Attaining a ranking within the top 50 on the ICT Development Index (IDI).
  • Securing a place within the top 50 on the Global Competitiveness Index (GCI).
  • Establishing a position within the top 35 on the Global Innovation Index (GII).

In addition, the goals related to digital society development and addressing the digital divide are as follows:

  • Expanding fiber optic internet infrastructure to cover over 80 percent of households and reach 100 percent of communes.
  • Ensuring the availability of 4G/5G services and smartphones across the nation.
  • Enabling over 50 percent of the population to possess digital checking accounts.
  • Achieving a ranking within the top 40 on the Global Cybersecurity Index (GCI).

Sector promotion and favorable tax policy

Vietnam policy promoting growth in the information communication technology (ICT) sector is contained in Decision No. 677. This decision outlines a comprehensive strategy for nurturing the development of the country’s digital knowledge systems, with a specific focus on harnessing the expertise and capabilities of foreign companies in the field of ICT to facilitate knowledge sharing. The primary objective of this initiative is to enhance the skill set of the local workforce in ICT.

Also of note is Decision No. 2117, through which the Vietnam government incentivizes high-tech sector investments. A range of incentives are provided under this Decision to promote the entry of digital technologies into the Vietnam market.

These include artificial intelligence (AI), internet of things (IOT), big data analytics, blockchain, cloud computing, grid computing, edge computing, quantum computing, next-generation network infrastructure (5G, 6G, NG-PON, SDN/NFV, SD-RAN, SD-WAN Network Slicing, LPWAN, IO-Link Wireless), virtual reality (VR), augmented reality (AR), mixed reality, intelligent, remediating, and adaptive cybersecurity, digital twin, plant simulation, and precision agriculture.

Companies operating within these digital technology domains typically qualify for a favorable corporate income tax (CIT) rate of 10 percent for a duration of 15 years, along with benefits, such as reduced or exempted land rent, a reduced five percent value-added tax (VAT) rate, and tariff exemptions for parts, components, and materials used in production for a period of five years.

Emerging players

Vietnam’s data center sector is attracting investments from newcomers like Data Center First (Singapore), Edge Centres (Australia), Infracrowd Capital (Singapore), and Worldwide DC Solutions (Singapore). Meanwhile, established operators are expanding their presence, both by investing in new facilities and enhancing existing ones.

Data center hubs

The major hubs for data centers in Vietnam are Ho Chi Minh City and Hanoi, collectively hosting 27 data centers. Among these, Hanoi stands out with around 11 established facilities. In terms of geographical distribution, north Vietnam accounts for 46 percent of data centers in the country, followed by the southern region (35 percent) and the central region (11 percent).

Industry segments

The data center market in Vietnam encompasses various categories, including:

  • IT infrastructure: Servers, storage systems, network infrastructure
  • Electrical infrastructure: UPS systems, generators, transfer switches and switchgears, PDUs, other electrical infrastructure
  • Mechanical infrastructure: Cooling systems, racks, other mechanical infrastructure
  • General construction: Core and shell development, installation and commissioning services, engineering and building design
  • Security and compliance: Fire detection and suppression, physical security, DCIM (data center infrastructure management)
  • Tier standard: Tier I & Tier II, Tier III, Tier IV

What is a data center tier?

When organizations contemplate migrating their critical business applications and services to a data center, they assess the ‘tiering standard’ as a measure of the data center’s hosting capabilities in terms of quality and reliability.

The concept of data center tiering, pioneered by the Uptime Institute, groups data centers into four distinct tiers: Tier 1, Tier 2, Tier 3, and Tier 4. These categorizations serve as benchmarks for gauging a data center’s comprehensive availability and system redundancy. Tier 4 stands out as the highest level of reliability in data center infrastructure.

  • A Tier 1 data center features a single power and cooling path with minimal redundant or backup components. It boasts an expected uptime of 99.671 percent (equating to approximately 28.8 hours of downtime annually).

  • A Tier 2 data center also includes a single power and cooling path, but it incorporates some redundant and backup components. Its anticipated uptime stands at 99.741 percent (translating to around 22 hours of downtime annually).

  • A Tier 3 data center is distinguished by multiple power and cooling pathways and the capability to update and maintain systems without interrupting operations. It achieves an expected uptime of 99.982 percent (equivalent to approximately 1.6 hours of downtime annually).

  • A Tier 4 data center is designed to be entirely fault-tolerant, boasting redundancy at every level of its infrastructure. This level of robustness results in an expected uptime of 99.995 percent (equivalent to just 26.3 minutes of downtime annually).

The growth of continuous business services, such as online gaming and streaming, is shifting demand away from Tier 1 and Tier 2 facilities. The Tier 3 is the largest data center tier type available in Vietnam. In 2022, Tier 3 data centers in Vietnam reached an IT load capacity of 119.56 MW, with a projected 2.23 percent CAGR, reaching 139.56 MW by 2029. Tier 4 facilities have limited presence in the country due to infrastructural challenges.

Major investors

Notable investors in the Vietnam data center sector include Viettel IDC, NTT Global Data Centers, FTP Telecom, CMC Telecom, HTC Telecom International (ECODC), VNPT, and VNTT, reflecting the sector’s growing importance and attracting both local and international players.

In August 2022, Amazon Web Services (AWS) unveiled plans to launch edge data centers in Hanoi and Ho Chi Minh City, signaling the growing significance of the Vietnamese market. Edge data centers are strategically situated in proximity to users and the devices responsible for data collection and transmission, or at the source of data generation. They are powered by edge caching, which comprises hardware- or software-based components designed to temporarily store data, which drastically improves computing response times.

Below is a list of significant data center investors and market stakeholders in Vietnam, categorized based on their areas of involvement.

S. No.

IT infrastructure providers

Data center construction contractors & sub-contractors

Support infrastructure providers

Data center investors

New entrants


Cisco Systems



CMC Telecom

Data Center First


Dell Technologies

Archetype Group


FPT Telecom

Edge Centres



AWP Architects


HTC Telecom International (ECODC)

Infracrowd Capital


Hewlett Packard Enterprise


Cyber Power Systems

NTT Global Data Centers

Worldwide DC Solutions


Huawei Technologies

Delta Group

Delta Electronics




Hitachi Vantara







Sato Kogyo

Fuji Electric

Viettel IDC



Internet Initiative Japan (IIJ)

Universal Smart Data Center Technology

HITEC Power Protection

Vietnam Posts and Telecommunications Group (VNPT)



Juniper Networks



VNG Cloud











Mitsubishi Electric




NEC Corporation














Schneider Electric


















Trane (Ingersoll Rand)









Source: Research and Markets report, March 2023

Regulatory frameworks that apply to data centers in Vietnam

Investment regulation and corporate establishment

  • Law on Investment No.61/2020/QH14
  • Decree No.25/2011/ND-CP

Foreign data center companies have two viable options for operating in Vietnam. They can choose to establish a business cooperation contract (BCC) with a local partner, enabling them to operate a data center without the need to set up a local company.

Alternatively, they may opt to create a local entity, typically in the form of a joint venture (JV), as data center businesses are classified as a telecommunication service under WTO commitments and Vietnamese law. Either way, foreign data center investments must be registered with Vietnam’s authorities, per legally prescribed procedures.

In the case of a BCC, foreign ownership within the agreement must not exceed 100 percent, but there must be at least one local partner involved, as stipulated by the terms of the BCC.

For JVs, foreign ownership is subject to specific restrictions:

  1. In non-facilities-based services, foreign ownership cannot exceed 65 percent.
  2. In facilities-based services, foreign ownership should not exceed 50 percent. Importantly, certain international trade and investment agreements may facilitate flexibility in the foreign ownership ratio.

Additionally, if a foreign investor already holds more than 20 percent of the charter capital in another Vietnamese telecommunication enterprise, they cannot possess more than 20 percent of the charter capital in a Vietnamese data center company.

Depending on the data center investment path selected in Vietnam, certain registration procedures are mandated:

  1. In the case of a BCC, both parties involved will need to obtain an Investment Registration Certificate (IRC) to proceed with the investment under the BCC.
  2. In the case of a JV, not only will an IRC be required, but also an Enterprise Registration Certificate (ERC) will be necessary for the establishment of the joint venture.
  3. If the data center business falls under the category of a facilities-based service, obtaining Investment Policy Approval from the Prime Minister is essential before the IRC can be issued. This additional step is crucial for regulatory compliance in this specific sector.

Decree 25, which was issued on April 6, 2011, applies to the telecommunications domain. The decree stipulates details and specifies new guidelines for the execution of several articles of Telecom Law relating to ratio of ownership, foreign investment, commercial right fees, and authorized capital.

International norms under UN, WTO, and FTA frameworks

Vietnam’s WTO commitments lack specific provisions pertaining to data center services. However, it is reasonable to categorize these services under “on-line information and database retrieval” (CPC 7523) and/or “on-line information and data processing,” including transaction processing (CPC 843), which are UNSD provisional codes. The latter falls within the purview of value-added services under telecommunications services in Vietnam.

International commitments are also contained in Vietnam’s free trade agreements—ASEAN Framework Agreement on Services (AFAS), Vietnam-Japan Economic Partnership Agreement (VJEPA), Vietnam-Korea Free Trade Agreement (VKFTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and EU-Vietnam trade and investment agreements (EVFTA).

Law impacting telecommunications and internet services

  • Telecommunications Law No. 41/2009/QH12
  • Decree No. 25/2011/ND-CP
  • Decree No. 53/2022/ND-CP (provisions of Law on Cybersecurity)
  • Decree No. 72/2013/ND-CP
  • Circular No. 17/2016/TT-BTTTT, as amended by Circular No. 08/2017/TT-BTTTT

The Law on Telecommunications establishes specific guiding principles for telecommunication interconnection, which can also be relevant to data center connectivity.

In a draft revision of the Law on Telecommunications (No. 41/2009/QH12), the classification of data center businesses is explicitly defined as a communication service.

Data and cybersecurity laws

  • Law on Cyber Information Security No. 86/2015/QH13, dated November 19, 2015
  • Law on Cyber Security No. 24/2018/QH14, dated June 12, 2018
  • Decree No. 53/2022/ND-CP, dated August 15, 2022, detailing several provisions of the Law on Cyber Security
  • Decree No. 13/2023/ND-CP, dated April 17, 2023, regarding Personal Data Protection (Decree 13), in effect from July 1, 2023

According to Decree No. 53/2022/ND-CP, issued on August 15, 2022, and detailing several provisions of the Cybersecurity Law, individuals and entities, whether within or outside Vietnam, offering telecommunication services, internet services, and value-added services in Vietnam’s cyberspace that involve the collection, exploitation, analysis, or processing of specific data types (such as data storage and sharing services in cyberspace, e.g., cloud storage) may be obligated to store certain data within Vietnam. This data includes personal information of users in Vietnam, user-generated data in Vietnam, and data related to the interactions of service users in Vietnam, collectively referred to as “regulated data.” These requirements apply to both foreign and domestic data center developers and operators.

Furthermore, foreign entities conducting business in Vietnam may also be required to localize the storage of regulated data or establish a branch or representative office in Vietnam if requested by the Ministry of Public Security (MPS). Such a request may be made when the MPS, in consultation with the Department for Cybersecurity and Prevention of High-Tech Crime under the MPS, has issued warnings to the foreign entity regarding the misuse of its services for violating the Cybersecurity Law and the entity has not taken the necessary measures to prevent, address, combat, or resist such violations, including actions that obstruct or disable cybersecurity protection measures carried out by specialized cybersecurity protection forces. This requirement can also extend to foreign data center developers/operators. In this scenario, the foreign entity must fulfill the localization and local presence requirements within 12 months from the MPS’s request. The data storage duration is calculated from the moment the MPS request is received until the conclusion of the specified time outlined in that request, with a mandatory minimum storage period of 24 months.

While Vietnamese law currently lacks specific requirements for data center operations concerning data protection and cybersecurity, data center operators engaged in personal data processing or other activities affecting personal data must strictly adhere to key general regulations outlined in Decree 13. These regulations encompass fundamental principles for personal data processing, obtaining prior consent from personal data owners before processing, and implementing measures for both basic and sensitive personal data processing. Additionally, all organizations and individuals providing data center-related services are obligated to respect Vietnam’s national defense and security, safeguard state confidential information, contribute to the development of social and economic aspects, and refrain from compromising cyber information security.

Regarding the transfer of personal data, Decree 13 imposes restrictions on the transfer of Vietnamese personal data outside of Vietnam. However, the requirements for personal data transferred into Vietnam are not specified.

Specifically, Vietnamese personal data can only be transferred to another country (i.e., any server located outside of Vietnam) if the transferring party, authorized to process the personal data, fulfills the following conditions:

  1. The party prepares, retains, and submits an impact assessment dossier for the cross-border transfer of personal data to the Department of Cyber Security and Hi-tech Crime Prevention (A05). under the Vietnamese Ministry of Public Security within 60 days after processing the data.
  2. The party submits a notification to A05 after the successful transfer.

The MPS may conduct inspections of cross-border transfers of personal data, as performed by the transferring party, once annually.

Draft revisions

On July 17, 2023, the Ministry of Information and Communications (MIC) issued a call for public comments regarding a draft Decree aimed at replacing two existing regulations: Decree No. 72/2013-ND-CP, dated July 15, 2013, governing the management, provision, and utilization of internet services and online information, and Decree No. 27/2018/ND-CP, dated March 1, 2018, which amended and supplemented Decree No. 72/2013-ND-CP.

The draft decree outlines responsibilities, such as data retention requirements and types of data to be archived, for foreign entities and individuals offering services across borders and utilizing data storage leasing services within Vietnam. Public comments are being considered until September 15, 2023 (see draft decree available in Vietnamese).

Since this is still a draft decree and potentially conflicts with Decree No. 53, further guidance and clarification are needed to ascertain how this revised Decree No. 72 will affect the existing legal obligations of data centers.

Construction of data centers

Circular 03 mandates that the design, construction, operation, and management of data centers adhere to specific national standards and technical regulations. These include:

  1. The national standard for data centers and telecommunications technical infrastructure requirements, as outlined in TCVN 9250:2021 (or ANSI/TIA-942-B:2017 standard or the Tier standard by the Uptime Institute).
  2. The national technical regulation (NTR) concerning fire prevention and firefighting equipment applicable to buildings and facilities, as specified in QCVN 06:2021/BXD.
  3. The NTR pertaining to lightning protection, which is relevant to telecommunications substations and peripheral cable networks, as detailed in QCVN 32:2020/BTTTT.
  4. The NTR regarding earthing for telecommunication stations, as specified in QCVN 9:2016/BTTTT.

These regulations are essential in ensuring the compliance and safety of data centers in Vietnam.

Land law

  • Law on Land No. 45/2013/QH13
  • Civil Code No. 91/2015/QH13, dated November 24, 2015

Foreign investors cannot own land for data center development. In the case of a business cooperation contract, foreign investors are not allowed to own real property for data center development. Instead, the ownership of real estate must reside with the local partner, who then contributes it to the BCC.

For joint ventures, a similar restriction applies. JVs are technically prohibited from owning land. Instead, they have the option to lease land from the State or sub-lease land within an industrial zone from an industrial zone developer specifically for data center development. However, JVs are permitted to retain ownership of the data center buildings constructed on the leased land and are required to register ownership of any assets attached to the land with the relevant land authority. This arrangement ensures that foreign investors can develop and maintain data center facilities in Vietnam while complying with local land ownership regulations.

Electricity law

  • Law on Electricity No. 28/2004/QH11, dated December 3, 2004

Vietnamese law doesn’t currently require special power purchase agreements for data center operations, and it lacks guidelines for buying power from Independent Power Producers (IPPs), except for IPPs operating rooftop solar systems.

A recent draft decision by Vietnam’s Prime Minister outlines a pilot program allowing direct power purchase agreements between renewable power producers and consumers. To participate, renewable power plants and consumers, including data centers, must register with the Ministry of Industry and Trade (MOIT). MOIT will assess and create a list of eligible participants. Only those on this list can directly buy power from IPPs.

This draft has not yet finalized, but is expected to be fast-tracked in 2023, following the release of Vietnam’s Power Development Plan 8 on May 15, 2023.

(US$1 = VND 24112.48).

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