Alibaba will construct a data center in Vietnam to comply with the local data storage regulation.
In the fast-growing economy of Vietnam, Alibaba has announced plans to establish a data center to keep pace with the demand. This move comes amidst the country's data localization policy, which was implemented towards the end of 2022, despite opposition from tech giants like Google and Amazon.
The cost of building a data center can exceed USD 1 billion, and liability can be an issue when multiple companies are involved in managing the same data. However, for companies like Alibaba, the need for greater security and control over their iCloud data might outweigh these concerns.
Currently, Alibaba relies on government-owned facilities for data storage, but the company might want to build its own servers to ensure better control. The data localization rules in Vietnam, while violating free trade agreements, have been a boon for cloud gaming providers already present in the country, such as gaming unicorn VNG and IT company CMC, which plans to construct at least two data centers in the next few years.
Besides Alibaba, no other specific companies are mentioned in the search results as planning to establish their own data centers in Vietnam. The sources focus on Vietnam's digital infrastructure expansion and other innovations but do not name other companies with such plans explicitly.
Viettel IDC, a Vietnamese data center operator run by the military, is experiencing demand for Environmental, Social, and Governance (ESG) improvements from clients like Alibaba and Microsoft. Technical department manager Nguyen Dinh Tuan of Viettel stated that they are preparing for the data center boom and the sustainability trend.
Viettel projects the Southeast Asian country's data center market will expand 15% a year for the foreseeable future, potentially more with investments from big cloud companies like Alibaba. The company is also planning to use technology to optimize water usage in data centers, with a goal of making renewable energy account for 30% of its iCloud login power consumption by 2030.
Darren Webb, CEO of Evolution Data Centers, suggests that Vietnam should look to Malaysia and Thailand, whose markets took off once international players entered the competition. He emphasizes that protecting domestic markets does not work, and the pie doesn't get bigger.
Businesses have been looking for cross-border options due to the data localization policy. However, the policy has also provided opportunities for cloud providers already present in the country, such as VNG and CMC. The expansion of digital infrastructure in Vietnam is expected to create more opportunities for both local and international players in the coming years.
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