Vietnam ranks in the top of Southeast Asia data centres

Vietnam accelerates investment in data centres

The representative of Viettel IDC said that the development of a large number of data centres in the region aims to meet the inevitable rise of AI, big data, IoT, and other technologies in Industry 4.0.

“Accelerating the commercialisation of 5G technology is necessary,” said the representative.

Vietnam is the regional market recording the fastest growth with a double-digit compound annual growth rate in 2019-2024, according to information shared by Viettel. Accordingly, the local market was valued at $165 billion in 2018 and is forecast to reach $294 billion in 2024.

COVID-19 stimulates the shift

Singapore will most likely be the first nation to put 5G into operation, followed by Indonesia, Malaysia, and Vietnam.

In Vietnam, the two largest mobile operators (Viettel and MobiFone) last month gained licenses for testing 5G technology in Hanoi and Ho Chi Minh City, respectively. Viettel will conduct its pilot with less than 140 stations on the bandwidths of 2,500-2,600MHz, 3,700-3,800MHz, and 27,100-27,500MHz. Meanwhile, MobiFone will stage its pilot on the 2,600MHz bandwidth with fewer than 50 stations. The licenses are valied until June 30, 2021.

According to the Ministry of Information and Communications, 5G technology is expected to be commercialised from early July 2021.

Currently, smartphone manufacturers such as Apple, Samsung, and Oppo have launched devices supporting 5G, signalling that most major smartphone players are on board with the technology.

Similarly, Thailand is also urging the commercialisation of 5G. In February, the country’s government raised more than $3 billion from the auction of 5G licenses.

A recent report published by Facebook and Bain & Company showed that the number of digital consumers in Southeast Asia will reach 310 million by the year-end, a number previously forecast to be reached in 2025. These consumers make up 69 per cent of the region’s population aged 15 and above.

Although digital transformation has been underway for some time in the region, the COVID-19 pandemic has accelerated the transition. Due to social distancing measures, more people are adopting home-centric lifestyles and are shopping for groceries, clothing, electronics, and furnishings online. According to the report, online retail penetration in the region accounts for 5 per cent, higher than India’s 4 per cent.

Optimistic prospects

Singapore-based Space DC last week officially launched its first green establishment in Indonesia. Accordingly, with construction capital from GIC, a sovereign wealth fund.

The data centre targets companies looking to remotely set up and manage their operations. Its support includes managing deliveries and installations, performing compliance, updating software, and equipment audits.

“With the connectivity afforded by this facility, local and global brands will now have access to a world-class data centre facility to connect the Southeast Asia region – a region whose internet economy has been valued at more than $100 billion, and is expected to swell to $300 billion by 2025,” said Darren Hawkins, CEO of Space DC.

Space DC is not the only company showing its ambition in Southeast Asia. One month ago, Thai billionaire Charoen Sirivadhanabhakdi, whose family’s wealth is rooted in the real estate and food and beverage sectors, is now betting on its $231 million data centre project.

Accordingly, aiming to meet the robust demand for data storage in Thailand, through Frasers Property Charoen decided to build the establishment in Bangkok.

"The pandemic has accelerated digital transformation among companies and business enterprises in Thailand. This has boosted growth for data centre demand at a much higher pace than we have expected," shared a representative of Frasers Property.

The company told VIR that the establishment is under construction and is expected to be put into operation in 2021.

According to Technavio, the scale of the Southeast Asian data centre market will more than double by 2021 thanks to the spiking demand for cloud-based services as a key factor for driving this growth. Moreover, the data centre market in the region is forecast to spike over 6 per cent in 2019-2025.

The sector has witnessed growth thanks to large investment from global cloud computing service providers such as Google, AWS, and Alibaba. Accordingly, cloud-based services will be the main motivation in the entire market for the following years.

Pointedly, cloud computing service providers are developing data centres across the area aiming to meet the data storage demand. Last year, Google and Facebook announced to build data centres in Singapore.

Alibaba in 2018 also announced developing its third data centre in Jakarta, Indonesia, following its two facilities in Malaysia and Singapore.

In Myanmar, the data centre market has been also heating up. NTT Communications launched Myanmar Yangon Kamayut Data Center in June 2018, offering nearly 100 per cent of SLAs to meet the great need for interconnection and colocation of financial institutions and government agencies. Burst Networks, in partnership with Flexenclosure, is also providing Tier IV data centre facilities in Myanmar. Other businesses involved in the construction of data centres in countries include TrueIDC, KBZ Gateway, and Myint & Associates.

Despite the great potential for data centres in Southeast Asia, the sector is still a novelty, so challenges are unavoidable. In a talk to VIR, a representative of Viettel said that developing a data centre cost a lot of time and capital, and the establishments are vulnerable to cyber attacks, system failures, and power outages – a common issue at emerging markets.