Where are the interesting new data centre markets in Asia?



Steve Wallage, MD, Danseb Consulting

At Danseb Consulting, our work in Asia has got a lot more interesting in the last year or so. There used to be a significant focus on the ‘usual’ hubs such as Singapore, Hong Kong, Tokyo and Sydney. Then we saw a lot of interest in China and India. More recently, projects have included Indonesia, Thailand, Malaysia and Korea. Whereas some of the emerging data centre markets we analyse are predominantly dependent on international users and attracting the elusive hyperscalers, the emerging Asian markets can also typically boast a large domestic market. For example, Vietnam, with limited data centre competition today, has a population of nearly 100 million. They can also point to strongly growing GDP.

However, that is not to say that Vietnam does not have major attractions for international users and hyperscalers. Already, four of the top five websites in the country are run by the US hyperscalers. And the Chinese hyperscalers are equally keen to do well in the country. There is also a ‘stick and carrot’ approach from government. The carrot, or incentive, is strong government support for IT usage, such as Vietnam’s 2050 Vision, which commits to having the infrastructure and laws in place to support IT and cloud development. The stick is the new Cyber Security Act, which means international companies need to use Vietnamese data centres.

In terms of data centre options in the Vietnamese today, there are over 30 co-location facilities and we have seen investment from Japanese players such as NTT and KDDI. However, there are four weaknesses in current offerings:


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1. Most are small and unable to meet large requirements;

2. Vast majority are owned by telcos, who are typically more focused on other services;

3. The build and design quality is often relatively poor – for example, Vietnam has only two data centres which have been certified by the Uptime Institute (both for Tier III and for design only), and this is much lower than neighbouring markets such as Malaysia (9), Thailand (5) or Indonesia (28) 4.

The operations at existing data centres is often relatively weak, not helped by serving a mix of internal and external customers. Clearly, Vietnam is not without its challenge. The World Bank Ease of Doing Business 2020 report ranks it 70th (of 190 countries) in an assessment of which Singapore was ranked 2nd and Hong Kong 3rd. However, at Danseb Consulting, we view it as potentially a highly attractive market with relatively limited competition today.

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