Where is the suitable place to develop a hyperscale Data Center in Vietnam?

In previous article – a strategic location roadmap for data center development outlines a comprehensive and methodical approach to decision-making in the highly technical and complex field of data center infrastructure. The roadmap not only ensures that investments are made in locations that offer the best potential for operational efficiency, resilience, and growth but also aligns with broader strategic objectives and market dynamics.

Based on the framework, let’s do some analysis about Saigon High Tech Park (SHTP) to see why it is among the potential location for a hyperscale data center:

Macro Level: Vietnam

  • Political and Economic Stability: Vietnam’s stable political climate and economic growth trajectory position it as a favorable destination for high-tech investments. The government’s proactive support for the technology sector, evidenced by initiatives within SHTP, highlights a commitment to nurturing this industry.Referral Source: World Bank, ASEAN briefings, Vietnam Ministry of Planning and Investment.
  • Impacts from Political Economic Pacts: Membership in CPTPP, RCEP, and other international pacts underlines Vietnam’s integration into the global economy, reducing trade barriers and fostering a conducive environment for the technology sector, including data centers.Referral Source: CPTPP and RCEP agreement texts, ASEAN economic reports.
  • Economic Indicators: As one of the fastest-growing economies in Southeast Asia, Vietnam’s rising GDP and burgeoning tech market signify a robust demand for data center services.Referral Source: IMF, World Bank, Vietnam National Bureau of Statistics.

Medium Level: Ho Chi Minh City and Surrounding Areas

  • Natural Hazards: HCMC’s favorable characteristics—such as low seismic risk, manageable storm exposure, and improving infrastructure—make it a viable choice for data center development. The strategic location of SHTP, along with its infrastructure designed for resilience, mitigates the risks associated with natural disasters.Referral Source: Vietnam Institute of Geosciences and Mineral Resources, Vietnam Disaster Management Authority.
  • Utilities and Infrastructure: SHTP’s access to reliable electricity and advanced connectivity infrastructure supports the high operational demands of hyperscale data centers.Referral Source: SHTP documentation, EVN, Ministry of Information and Communications.
  • Labor Market: The availability of a skilled workforce in Ho Chi Minh City, with a concentration of STEM graduates, provides a solid foundation for staffing a hyperscale data center.Referral Source: Vietnam Ministry of Education and Training, local academic institutions, labor market analyses.

Micro Level: Saigon High Tech Park

The park’s designation for data center development, coupled with substantial tax incentives and ready-to-build sites, creates an optimized setting for hyperscale data center operations.

  • Properly Zoned for Data Centers: The land-use purpose within SHTP is specifically designated for data centers, which ensures that the data center development will be compliant with local zoning laws and regulations. This reduces the risk of potential legal and administrative challenges.
  • Tax Incentives: SHTP offers significant tax incentives, including import tax exemption and a reduction in value-added tax (VAT) for imported goods needed to create fixed assets. Additionally, there are corporate income tax (CIT) benefits, starting with a full exemption in the first four years and preferential rates afterward. These incentives can substantially lower the initial and operational costs for a data center.
  • Environmental Considerations: SHTP is a high-tech park which has a commitment to maintaining certain environmental standards. Typically, such parks have regulations and facilities in place to manage the environmental impact effectively.
  • Ready Water Treatment: Data centers require a significant amount of cooling, which often necessitates large volumes of water. The presence of water treatment facilities in SHTP implies that a data center would have access to the necessary water resources and be able to manage its wastewater responsibly.
  • Waste Treatment: Efficient waste treatment facilities are critical for managing the by-products of data center operations, including electronic waste. SHTP’s waste treatment capabilities indicate a readiness to handle such waste, adhering to environmental protection standards.
  • Priority for Power Supplies: Hyperscale data centers consume a large amount of electricity. SHTP’s prioritization for power supplies indicates that the park can provide the necessary energy infrastructure, which is crucial for the uninterrupted operation of a data center.
  • Logistics and Bonded Warehouse: SHTP includes logistics and bonded warehouse areas, which could support the data center operations by providing storage solutions and facilitating the import and export of equipment.
  • Hi-Tech Supporting Industries: The presence of these industries within SHTP means that there could be a local network of suppliers and service providers that a data center can tap into, potentially reducing costs and lead times for maintenance and expansion.
  • Research and Training Incubation: Collaboration opportunities with research and training institutions in SHTP can drive innovation and provide a talent pool for the data center, ensuring access to a skilled workforce for high-tech operations.
  • Land Area and Gross Floor Area (GFA): With a sizable land area allocated for the data center and the potential for a large GFA, SHTP can accommodate the physical size requirements of a hyperscale data center, including its future expansion needs.
  • Land Use Tenor: The 50-year land use tenure provides a long-term horizon for investment planning and stability, which is essential for such a significant capital investment.Referral Source: SHTP official website, Ho Chi Minh City Department of Planning and Investment.
  • Quality of Life and Security: High quality of life and security within SHTP enhance its attractiveness for both local and international talent, fostering a stable and productive workforce.Referral Source: Local real estate and community service reports, Ho Chi Minh City police department.Taking into account the strategic importance of political and economic stability, the positive impacts of economic pacts, and the robust economic indicators, Vietnam, and specifically SHTP, emerges as a strong candidate for the development of a hyperscale data center. The micro-level analysis of SHTP reveals a well-planned infrastructure, generous tax incentives, and a supportive ecosystem for high-tech industries, which are further complemented by a skilled workforce and high living standards.Additionally, the park’s specific allocation for data center development (properly zoned, service land), its existing high-tech focus, and the presence of supporting industries create a synergistic environment conducive to the unique needs of a hyperscale data center. This environment is further bolstered by the ready availability of utilities, prioritization of power supplies, and provisions for water and waste treatment, which are critical for sustainable and efficient data center operations.For organizations aiming to establish a significant presence in the Southeast Asian data center market, SHTP offers a compelling mix of advantages. These include long-term stability and potential for growth, operational efficiencies, and a conducive business environment that aligns with global standards and expectations. Direct engagement with the park’s administration and local government entities will provide the most current data and facilitate detailed planning and analysis, essential for making an informed investment decision and ensuring the long-term success of such a strategic venture.

Leave a Reply

Your email address will not be published. Required fields are marked *