Data centers are witnessing a surge in investment during 2022 and 2023, with local and foreign enterprises actively participating. Vietnam has emerged as a prominent destination among emerging economies to establish colocation hubs, projected to achieve a market size of approximately $1.5 billion by 2026.

1. What does a data center mean?

A data center refers to a physical infrastructure consisting of buildings, cable systems, and other necessary equipment. Its primary function is to store, exchange, and handle data belonging to one or multiple unrelated organizations or individuals.
Two main types categorize data centers. The first type, enterprise data centers, involves companies constructing and owning them to meet their internal needs and serve clients or customers. The second type is service data centers that offer data storage and computing services to various companies and users.

2. Establishing a data center with foreign-owned capital – Licensing process

When forming a data center with foreign-owned capital, the investor has the flexibility to choose from several corporate forms to conduct their business. The choice of corporate structure depends on the number of investors involved. The subsidiary can be established as a single-member limited liability company (LLC), a two-to-50-member LLC, or a joint stock company (JSC). The LLC is the simplest format, while the JSC requires a minimum of three shareholders and has a more complex corporate structure, which may be more suitable for complex ownership scenarios.

3. Upcoming Law on Telecommunications 

The upcoming revisions to the Law on Telecommunications have raised concerns regarding the inclusion of data center services. The draft proposes incorporating these services, which could potentially lead to changes in licensing requirements. If implemented, the new draft would impact various aspects of the data center business, including investment structure, foreign capital involvement, telecoms licenses, and more.

4. Conclusion

Data centers are clearly making their way to Vietnam, with the country witnessing a growing interest in this sector. As global digitalization continues to advance, the need for robust data infrastructure becomes crucial. With Vietnam’s strategic geographical location, increasing connectivity, and a young and tech-savvy population, the country holds immense potential in becoming a regional hub for data center operations.

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Harley Miller Law Firm “HMLF”
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