Vietnam has opened up its data center market to foreign investors, allowing 100% ownership, following the implementation of controversial data storage regulations. This development is expected to attract major industry players like Amazon.com Inc.’s AMZN Amazon Web Services and Keppel.
What Happened: Vietnam’s new law on telecommunications, which came into effect last week, removes any foreign ownership restrictions for data and cloud providers, reported Nikkei. This is a significant departure from the 49% foreign ownership cap in other sectors.
Additionally, the law offers these providers an “unprecedented exception” from licensing, effectively exempting them from the usual market entry constraints, according to law firm VDB Loi. This change is largely attributed to other regulations, such as the Cybersecurity Law, which mandates companies to store data within Vietnam.
Despite opposition from major tech companies like Meta Platforms Inc.’s META Facebook and Google parent company Alphabet Inc GOOG GOOGL, the Vietnamese government has stood firm on data localization. This has led to a surge in demand for local data centers, which the domestic market has struggled to meet.
“The requirement to store data locally can increase operational costs for companies,” Leif Schneider, counsel at law firm Luther, said according to the report. “Additionally, there is the challenge of ensuring that domestic data centers adhere to international standards of data security and privacy.”
The law states that cloud and data providers are not responsible for the content stored on behalf of their customers but must block content at the request of competent state agencies. Additionally, companies are prohibited from monitoring the information of those using their service unless requested by the state.
Why It Matters: The global cloud computing market is witnessing significant investments and expansions. For instance, Amazon Web Services is negotiating with the Italian government to invest billions of euros to expand its data center operations in Italy. This move aligns with Amazon’s strategy to enhance its cloud services across Europe.
Similarly, Google announced a $2 billion investment to establish its first data center and Google Cloud region in Malaysia. This initiative aims to support local businesses and public sector organizations, propelling Malaysia’s digital aspirations.
Moreover, Microsoft Corp. MSFT plans to invest $3.2 billion in Sweden to enhance its cloud and AI infrastructure. This investment will also include training 250,000 Swedes in AI skills, further boosting the country’s digital capabilities.
The demand for advanced data center infrastructure is also evident in the rising investments in Nvidia Corp. NVDA technologies. Analysts have highlighted that for every dollar spent on Nvidia’s infrastructure, cloud service providers can earn five dollars in GPU hosting, indicating lucrative opportunities in the data center market.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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