Google Considers Construction Of Big Data Centers In Vietnam

JAKARTA - Alphabet Inc., Google's parent company, is considering building a large data center in Vietnam, according to a source who was given an explanation of the plan. If realized, this will be the first investment by a large US technology company in Southeast Asia.

Google is considering setting up a "hyperscale" data center near Ho Chi Minh City, an economic center in southern Vietnam. Sources requesting not to be named because this information has not been published, say that this investment is expected to provide encouragement to Vietnam, which has so far failed to withdraw large capital from within the data center sector due to inadequate infrastructure.

While it is not yet clear when Google will make a decision regarding this investment, the source said that internal talks are ongoing and this data center could be ready to operate by 2027. A Google spokesperson declined to comment on the data center's plans.

The hyperscale data center is the largest in the industry, with power consumption usually equivalent to a big city. Based on estimates from real estate consultant Jones Lang LaSalle, a hyperscale data center with a power consumption capacity of 50 megawatts (MW) could cost between 300 million and 650 million US dollars (IDR 4.6-10 trillion).

Google's move was driven by the large number of clients of domestic and foreign cloud services in Vietnam as well as the country's growing digital economy. Vietnam is also one of the fastest growing markets for YouTube, Google's popular online video sharing platform.

Currently, the largest data center operator in Vietnam based on the computing space is the IDC Becamex industry investment company and the VNPT telecommunications company, both of which are Vietnamese state-owned companies.

In May, Nikkei reported that China's e-commerce company, Alibaba, is also considering building a data center in Vietnam, but Alibaba declined to comment when contacted by Reuters.

Although demand for digital services continues to increase from Vietnam's population of 100 million, foreign investors in this sector generally avoid the country due to frequent power shortages, less attractive investment incentives, as well as weak internet infrastructure that relies on some old submarine cables.

In Southeast Asia, Singapore, Malaysia and Thailand are much more advanced in the industry and have attracted much larger investments than global tech giants. Google itself has announced plans to invest $2 billion in Malaysia to develop its first data center in the country.

Uninteresting regulations related to foreign ownership and data localization have also long been an obstacle, but in a reform approved last November, Vietnamese legislators decided to allow data center operators from abroad to maintain full ownership.

Although there are strict regulations regarding cybersecurity in Vietnam and long disputes with foreign technology companies over data storage in the country, Google is not hindered and even opens representative offices in Vietnam. Google is also recruiting dozens of other engineers, marketing experts, and professionals in the country.

"We now have a team on the ground to better serve our Vietnam-based ad customers and support the country's digital transformation," a Google spokesperson said.

Additionally, Google is offering 40,000 scholarships in Vietnam for basic AI courses and $350,000 for each of the 20 selected AI startups, according to Vietnam's Google Director Marc Woo on LinkedIn last month. The company also has a large supplier network in Vietnam that assembles its products, including Pixel smartphones.