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Vietnam’s Data Center Market Liberalization lifts 49% foreign ownership cap
Vietnam has lifted the 49% foreign ownership cap on data centres to attract investment for AI development, though access to US-manufactured GPUs poses challenges; Huawei and Alibaba likely dominate investments.
Vietnam’s data centre market is undergoing significant liberalisation as the government aims to bolster the nation’s ambitions in artificial intelligence (AI).
Key View
- Vietnam has liberalised its data centre market by lifting the previous 49% foreign ownership cap, enabling full foreign investment in data centres, as per the newly effective Law on Telecommunications.
- The initiative seeks to ignite global investor interest to realise Vietnam’s AI goals but we note that such ambitions will be hard to achieve insofar the country cannot access US-manufactured GPUs.
- While the liberalisation of its data centre market is beneficial, we believe that in the coming years Mainland China-based cloud vendors such as Huawei and Alibaba will remain the main foreign investors in Vietnam’s digital infrastructure market.
By creating a more open and competitive landscape, Vietnam hopes to attract foreign investments and advanced technologies. The government’s new policies encourage local firms to innovate while collaborating with international partners. This shift is critical for the establishment of robust infrastructure that supports AI applications across various sectors, enhancing productivity and fostering economic growth.
Despite the promising outlook, the liberalisation of the data centre market brings inherent risks. The rapid expansion may lead to security concerns, particularly regarding data privacy and protection. As international players enter the market, maintaining compliance with local regulations becomes a challenge, potentially exposing critical data to breaches. Policymakers must therefore strike a balance between fostering innovation and ensuring that adequate safeguards are in place to protect sensitive information.
Moreover, competition may create disparities in access to modern technology, especially for smaller entities lacking resources. Striking this balance will be key to ensuring that all players in the market can benefit from the advancements made in AI and data management. As Vietnam progresses on this journey, it must remain vigilant, addressing these challenges while leveraging its data centre market to achieve its AI objectives.
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