Vietnam is emerging as a credible secondary data center hub in Southeast Asia over the next five years, benefiting from rapid cloud adoption and a spillover of investment from more constrained markets such as Singapore and Malaysia, BMI Country Risk & Industry Research said on Monday.
In a report, BMI said Vietnam is well positioned to capture a growing share of regional digital infrastructure investment as hyperscale cloud providers and artificial intelligence (AI) developers seek alternative locations to support expanding workloads.
However, it cautioned that execution risks remain significant, with realized capacity likely to fall short of the country’s ambitious project pipeline unless power infrastructure, grid capacity and international connectivity improve in tandem with demand.
Vietnam currently has about 148 megawatts (MW) of operational data center capacity concentrated in Hanoi and Ho Chi Minh City, according to BMI estimates. A further 79 MW is under construction, while more than 870 MW has been announced or planned.
The market remains dominated by state-linked telecommunications operators including Viettel, VNPT and FPT, but recent regulatory reforms allowing greater foreign participation are attracting international players such as Google, Alibaba, Amazon Web Services (AWS), ST Telemedia Global Data Centers (STT), NTT DATA and UAE-based AI company G42.
“Malaysia’s move to tighten data center approvals and Singapore’s continued land and power constraints are creating opportunities for less-saturated markets such as Vietnam and Thailand,” BMI said.
The shift comes as governments across Southeast Asia compete to attract billions of dollars in digital infrastructure investments linked to cloud computing, AI and high-performance computing.
Vietnam’s prospects have been boosted by the Personal Data Protection Law, which took effect on Jan. 1, 2026. The legislation requires Vietnamese user data to be stored domestically and imposes penalties of up to 5 percent of annual revenue for violations involving cross-border data transfers.
BMI said the regulation is expected to accelerate demand for locally hosted data storage, disaster recovery services and cloud infrastructure.
The research firm forecasts Vietnam’s cloud computing market will expand from $2.1 billion in 2025 to more than $10.2 billion by 2031, representing a compound annual growth rate (CAGR) of 30.1 percent, significantly above the Asia-Pacific average of 17.6 percent.
The country’s data center pipeline is increasingly anchored by hyperscale developments.
In April 2025, Viettel broke ground on a 140 MW hyperscale data center campus in Ho Chi Minh City’s Tan Phu Trung area, part of a broader strategy to build up to 560 MW of capacity by 2030. BMI has since raised its forecast for planned data center capacity in Ho Chi Minh City to nearly 375 MW.
CMC Corporation has also secured approval for a new hyperscale facility at Saigon Hi-Tech Park, with an initial 30 MW phase that could eventually expand to 120 MW. Construction is expected to begin in 2026.
According to BMI, Vietnam has attracted more than $7 billion in announced and proposed AI and data center investments in recent months. These include a $2.1 billion AI campus in Tan Phu Trung Industrial Zone with 200 MW of information technology (IT) load capacity, where construction began in 2025 and capital deployment is targeted by early 2027.
Major global cloud providers are also increasing their presence.
Google and Alibaba are expected to establish their first hyperscale data centers in Ho Chi Minh City, with operations anticipated from 2027, while AWS has already launched a Local Zone in Hanoi to support lower-latency cloud services.
Despite the strong growth outlook, BMI warned that Vietnam faces several structural challenges.
Power supply remains one of the most significant constraints. The report noted that data center economics are becoming increasingly exposed to energy costs following a government decision in February 2026 to classify data centers under commercial electricity tariffs, a move that reportedly increased operating costs by more than 50%.
Grid capacity is another concern, particularly as Vietnam seeks to support energy-intensive AI workloads and hyperscale facilities.
“We believe there is a series of industry risks that may affect the delivery of planned IT load within the prescribed timelines, including power constraints and construction-related considerations,” BMI said.
To address these challenges, the government is pursuing several initiatives, including the implementation of a direct power purchase agreement (DPPA) framework, expansion of renewable energy capacity and development of nuclear power projects under the Ninh Thuan 1 and 2 small modular reactor program.
The reactors could potentially provide between 4 gigawatts and 6 gigawatts of carbon-free baseload power between 2030 and 2035, helping support future AI and cloud infrastructure demand.
Private-sector investment is also accelerating. In June, Foxconn and Brookfield announced plans to develop up to 1 GW of wind, solar and battery storage projects in Vietnam, while Samsung has signed one of the country’s first large-scale direct renewable energy purchase agreements.
BMI expects Vietnam’s electricity mix to remain dominated by thermal generation over the next decade. Thermal output is forecast to grow by 6.6 percent annually between 2026 and 2035, with liquefied natural gas-fired power plants accounting for much of the new capacity additions.
The report said Vietnam’s long-term appeal remains tied to its rapidly digitalizing economy and the government’s ambition to build domestic technological capabilities.
However, competition is intensifying as Malaysia, Thailand and the Philippines pursue similar strategies to attract investments spilling over from Singapore, Southeast Asia’s largest digital infrastructure hub.
BMI said operators that prioritize energy efficiency, sustainable design and secure access to power and connectivity are likely to enjoy a structural advantage as Vietnam’s market evolves.
“On balance, we expect the competitive structure to remain anchored by state-linked incumbents, but become materially more contested at the hyperscale and AI-grade tier as foreign operators and global cloud providers scale their presence,” BMI said.
While challenges remain, the research firm expects Vietnam to play an increasingly important role in Southeast Asia’s digital infrastructure landscape as demand for cloud services, AI computing and data sovereignty continues to rise across the region.
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