Vietnam Opens Doors to Foreign Data Center Investors

Vietnam has made a surprising about-face, welcoming foreign investment in its data center sector after strict data storage rules backfired. The new Law on Telecommunications, effective last week, eliminates foreign ownership restrictions for data and cloud providers, a stark contrast to the 49% cap on foreign investment in many other Vietnamese industries.

This shift comes after previous regulations, including the Cybersecurity Law, mandated companies to store data within Vietnam’s borders. This move, met with strong opposition from tech giants like Facebook and Google, has a history of causing friction with international trade agreements. Additionally, concerns were raised about the ability of domestic data centers to meet the surge in demand and maintain international security standards.

Nikkei Asia reported that according to Leif Schneider, a lawyer at Luther, the local data storage requirement can be expensive for companies. There’s also the challenge of ensuring Vietnamese data centers meet global data security and privacy benchmarks.

However, the new telecommunications law is seen as a turning point. Experts predict an influx of international players in cloud computing and data storage, potentially leading to technology transfers and other economic benefits. Companies like Amazon Web Services and Keppel, a Singaporean asset manager, have already expressed interest in investing in Vietnamese data centers.

Vietnam’s data center sector is poised for significant growth, with foreign investment playing a key role. This move reflects the country’s need to balance data security concerns with the benefits of attracting international tech giants and fostering domestic industry development.

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