Vietnam has announced that foreign investors are now allowed to own data centers within the country. These new rules have emerged because the domestic market has struggled to meet the increased need for data storage.
The recently enacted Law on Telecommunications eliminates the previous 49% foreign ownership cap for data and cloud providers. This new legislation also provides an “unprecedented exception” from licensing requirements, enabling providers to bypass standard market entry restrictions.
The relaxation of these regulations is seen as a response to other laws, such as the Cybersecurity Law, which mandate data localization in Vietnam. These regulations have prompted companies to store data domestically, and have led to notable instances of internet platforms being ordered to block content or provide user data.
Major tech companies like Facebook and Google have opposed these data localization measures, while countries such as Japan and Canada have expressed concerns about compliance with trade agreements that restrict such localization.
The new telecommunications law is viewed as a significant development, likely to attract international investment in cloud computing and data centers, and facilitate technology transfers. Companies like Amazon Web Services and Singapore’s Keppel have expressed interest in investing in data centers in Vietnam.
In Vietnam, data centers are also responsible for content removal, unlike in other regions where this responsibility might solely lie with the platforms themselves. High-tech industrial parks may be ideal locations for data centers, although the significant investment required means that investors should expect a return on investment horizon of at least five to eight years.
(Source: Nikkei Asia)
