Six months ago, we wrote that Vietnam’s data center market was gaining momentum with investment projections rising to US$ 1.75 billion by 2030 from US$ 654 million in 2024, a CAGR of 17.93%, according to a March report by Vietnam Data Center Market – Investment Analysis & Growth Opportunities 2025-2030 . The growth then was driven by digital transformation, government policies, and increasing investments from both domestic and international players.
Since then, the projections still stand and the reasons behind the rising momentum are still the same but the pace of growth has accelerated and the scale has grown tremendously. Construction costs still average about US$ 7 million per MW, with land representing 5 per cent of total construction cost, one of the lowest in the region, compared to the Asia Pacific average of US$10.1 million per MW.
But the bigger story is that massive investments are pouring into the sector since the beginning of this year. Consider the headlines: “Viettel invests US$1 billion in data center and R&D center”; “Viettel breaks ground on large scale data center in Ho Chi Minh City”; “Samsung C&T, CMC ink MoU to build US$1 billion data center in Ho Chi Minh City”; “Vietnam’s CMC Corp to build US$ 250 million hyperscale data center”; “S. Korea’s KT plans to set up AI data center in Vietnam”; as well as news such as this: “South Korean IT service firm, LG CNS Co. will partner with VNPT, Vietnam’s state-run telecom giant Vietnam Posts and Telecommunications Group, to develop a hyperscale artificial intelligence data center in Vietnam.”
The list continues on with Cyprus-based IPTP Networks’ US$ 200 million planned AI data center in Da Nang; a planned US$2 billion hyperscale data center in Ho Chi Minh City by a consortium that includes UAE-based G42, Microsoft, FPT, VinaCapital, and Viet Thai Investment; and a US$ 1.5 billion, 150 MW facility in Binh Duong Province by Saigon Asset Management.
Unprecedented Reforms
The incoming investment in droves is driven in no small part by unprecedented reforms in the industry beginning with the country allowing 100 per cent foreign ownership of data centers from July, 2024. This was followed by sweeping reforms in the sector which include simplified processes for data centers and cloud providers, provincial-level licensing for faster local deployment and a fully digitalised procedure framework – effective from July 2025.
But what could bring on an avalanche of incoming investments would be the very attractive tax incentives effective October 1, 2025; and data sovereignty laws passed in June 2025.
Data centers with qualifying investment will get:
- 10% preferential tax rate for 15 years (versus standard 20%);
- Complete tax exemption for the first 4 years;
- 50% tax reduction for the subsequent 9 years;
- Land rent exemptions up to 11 years depending on location; and
- Five-year personal income tax exemptions for foreign experts.
Effective January 1, 2026, Vietnam’s Personal Data Protection Law, mandates domestic storage of Vietnamese user data with penalties of up to 5 per cent of annual revenue for cross-border transfer violations. Imagine the increased demand for local data center infrastructure in order to comply with this law.
Unrelenting AI Demand
Cindy Pham, Head Of Data Center And Cloud Computing Chapter, Southern Vietnam Digital Communications Association in her Linkedin post wrote that Vietnamese companies are responding to unrelenting AI demand with specialized facilities capable of supporting AI workloads. Examples include Viettel’s collaboration with NVIDIA to develop infrastructure integrating almost 800 supercomputers and 6,000 GPU cards.
“New hyperscale facilities are designed with average rack densities of 10 kW—2.5 times the national average—with AI-optimized racks supporting up to 60 kW to meet computational demands of large-scale machine learning models.”
In terms of connectivity, Vietnam plans to deploy 10 additional submarine cables by 2030, two of which are under final stage of application. This is in addition to its proximity to five operational submarine cable routes, with two additional systems under construction; and the US$ 290 million Asia Direct Cable (ADC) which began operations in April 2025 with 50 Tbps capacity. Spanning 9,800 kilometers, the ADC links seven countries directly connecting to Singapore, Hong Kong, and Japan.
As of August, there are 41 active data centers with a total capacity of 221 MW spread among 12 major operators including Viettel IDC, VNPT, FPT Telecom, CMC Telecom, NTT DATA, ST Telemedia Global Data Centres, and international players. Capacity is projected to almost double from 524.7 MW in 2025 to 950.4 MW by 2030, representing a CAGR of 12.61 per cent. Almost 90 per cent of new facilities are concentrated in Hanoi and Ho Chi Minh City. Meanwhile, the co-location market is estimated to grow at a CAGR of 28.72 per cent reaching almost US$ 680 million by 2030, and an occupancy rate projected to exceed 90 per cent by 2030.
The Vietnamese government itself is going all out through its National Data Center No. 1, in Hanoi’s Hoa Lac Hi-Tech Park. Spanning over 20 hectares with 1,300 server racks, it is one of Southeast Asia’s largest national-level facilities. Inaugurated in August, it consolidates national databases and supports government digitization initiatives.
Sustainability Turning Point
As with other nations experiencing rapid buildout of digital infrastructure, the power bottleneck has started to rear its ugly head. The country currently experiences frequent outages during peak demand periods, writes Pham. It would take years to remedy the situation notwithstanding the government’s commitment to add about 6.6 GW of power capacity. “A 100 MW data center facility could consume as much electricity as 270,000 average Vietnamese households,” says Pham, who is also the Country Manager at Enterprise Products Integration Pte Ltd.
However, she adds that Vietnam’s data center industry “is indeed at a turning point”.
“The revised Power Development Plan VIII (PDP8) sets the path to carbon neutrality by 2050, with renewables expected to account for 28–36 per cent of the energy mix by 2030, and up to 75 per cent by 2050. A key driver is the new Direct Power Purchase Agreement (DPPA) framework, effective July 2024, which allows data centers to procure renewable power directly—both through physical and virtual contracts. This regulatory breakthrough is especially significant now that foreign operators can own 100 per cent of data center infrastructure under Vietnam’s new Telecommunications Law.”
“We are already seeing early adoption. Viettel’s Hoa Lac Data Center (30MW) is the first in Vietnam to commit to 30 per cent renewable power, achieving a PUE of ~1.4. More broadly, Vietnam now has 16 GW of solar installed, making solar and wind Power Purchase Agreements (PPAs) increasingly attractive and competitive with grid electricity,” the data center expert elaborates.
Of significance also is Vietnam’s recent adoption of nuclear energy in the form of small modular reactors (SMRs) to complement its renewables. Ninh Thuan 1 and 2 nuclear projects offer scalable and carbon-free baseload power ideally suited to the needs of AI-driven data centers that require 24/7 reliability and high rack densities, says Pham. “By 2030–2035, we could see 4–6 GW of nuclear capacity online, complementing renewables and strengthening grid stability.”
Vietnam’s industry is starting to transition from traditional air cooling to direct-to-chip and immersion liquid cooling, however, it will still take time to see wide adoption as no large-scale facility has yet deployed them, according to Pham. “For now, most operators rely on incremental improvements like closed-loop cooling systems, rainwater harvesting, and wastewater reuse—with Viettel IDC already implementing pilot projects at Hoa Lac (as per their sustainability report).”
Then again, when it comes to water, it is not as pressing an issue as power availability, notes the data center association’s chief. “But operators are still targeting Water Usage Effectiveness (WUE) below 2.5 m³/MWh to align with global best practice.”
Pham feels that with the government’s expanded targets for 10,000–16,300 MW of battery storage by 2030, and stricter regulations on water reuse and discharge, Vietnam is shaping one of Southeast Asia’s most sustainable data center ecosystems.
Indeed, Vietnam’s green data center market size is projected to grow at a CAGR of 15.3 per cent from 2025-2033 driven by government regulations, corporate sustainability demands and advancements in renewable energy technologies, according to a recent report by IMARC Group, a market research company. Foreign hyperscalers like AWS, Microsoft Azure, and Google Cloud Platform, with their ambitious global carbon neutrality goals, are driving renewables adoption and ultra-efficient facilities (targeting PUEs below 1.3) making it mandatory for their Vietnamese deployment.
Conclusion
Favourable factors such as regulatory reforms, attractive tax incentives, competitive development costs, rapidly growing domestic demand and upcoming capacity four times the existing capacity underpinned by strong government support, position Vietnam data center market as one of the region’s most dynamic and fastest growing. This is seen by the unprecedented boom in hyperscale and AI data center projects in the first nine months of 2025.
Note: w.media’s Vietnam Cloud & Datacenter Convention is happening this Thursday (tomorrow) in Ho Chi Minh City. Meet some of the industry’s top leaders there.
“I always value w.media events as a platform to bring together diverse stakeholders. I look forward to discussing how Vietnam can balance rapid growth with sustainable practices, and also to hearing perspectives from other regional markets.” – Cindy Pham, Head of Data Center And Cloud Computing Chapter, Southern Vietnam Digital Communications Association.
“Uptime institute has been supporting the data centre growth in Vietnam for the last 13 years and will continue to support the investment of new data centres to Vietnam with our tiered certifications, sustainability assessment and strategy execution, operational excellence and cybersecurity assessments.” – Gary Wong, Sales Director, Uptime Institute.