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Hanoi is trực tiếp đá gàrapidly emerging as a key data center hub in the region, driven by its impressive leap from a developing to a developed economy.

This was a key point highlighted during a panel discussion, “Hanoi’s transformation: Charting the Path from Ancient City to Modern Data Hub,” at the Vietnam Datacenter and Cloud (Hanoi) Convention 2024 today [August 15].

Delegates attend the panel discussion. Photo: Phi Nhat

Favorable conditions

Speaking at the event, Nguyen Viet Anh, Director of the International Business Center at Viettel IDC, highlighted that Hanoi is positioning itself as a prominent data center hub in the region, thanks to its strong transition from a developing to a developed economy.

Hanoi's strategic location in the center of the country, combined with a population of over 10 million and significant GDP, provides a solid foundation for the growth of the data center industry, he underlined.

From a market perspective, Viet Anh noted that Hanoi is an economic center and a major hub for businesses, housing around 370,000 enterprises, including approximately 10,000 in the information technology sector, attracting a workforce of about 170,000 well-trained professionals.

“This is a valuable resource for companies looking to invest and establish operations in Hanoi,” he stressed.

Regarding policy, Vietnam’s digital transformation, especially in Hanoi, is advancing swiftly. This transformation is centered on three key areas: digital government, digital economy, and digital society. According to Viet Anh, Hanoi has made notable progress in all these areas.

He cited that the city has implemented regulations and resolutions to promote smart governance and execute its digital transformation strategy. This includes investments in network infrastructure, electrical systems, and talent development, facilitating the establishment of data centers.

Between 2021 and 2025, indicators related to digital technology, such as fixed broadband subscriptions, mobile services, and growth in the digital sector, have shown impressive increases, especially in the continuously expanding cloud service market, according to the Director.

“These factors not only attract investor interest but also reaffirm Hanoi’s potential to become a leading data center (DC) hub in the region,” he underlined. 

In terms of investment policy, Hanoi, alongside Ho Chi Minh City, is leading the way in economic development and attracting high-tech investments. The city is implementing a range of policies to draw investments into advanced technology sectors such as AI, blockchain, 5G, the metaverse, VR, and semiconductor manufacturing—areas generating significant interest from investors, Viet Anh emphasized.

“If data centers are the heart of the digital economy, then the transmission network is its backbone. Hanoi is actively investing in this infrastructure, with plans to add ten new submarine cable lines by 2030, bringing the total to 15. This investment is vital for developing the data center sector,” said the representative from Viettel IDC.

“This condition is crucial for the development of DCs, as DCs and transmission networks must always be synchronized and support each other.”

Furthermore, Viet Anh pointed out that companies often consider land prices and construction costs when choosing investment locations. In this regard, Hanoi stands out with its competitive construction and operational costs. Land prices in Hanoi are significantly lower than in major cities like Ho Chi Minh City and Singapore, where costs can reach up to US$1,500 per square meter.

Viettel's new data center in Hoa Lac Hi-tech Park. Photo: Viettel

Viet Anh said the construction costs for DCs in Hanoi are also advantageous compared to many other locations. While operational electricity costs are not vastly different from the region, generally, electricity prices in Hanoi are considered lower than in many other places. Labor costs for operational engineers and management are also significantly lower, contributing to reduced overall operating costs.

These factors indicate that Hanoi is not only an attractive destination for data center investors but is also on the path to becoming the regional data center hub in the near future, he highlighted.

Addressing the potential of Hanoi as a DC hub, Hoang Viet Tien, Deputy General Secretary of the Vietnam Digital Communcations Association and Senior Vice President of MarsConnect, highlighted the importance of end-users. According to him, the presence of end-users is essential when introducing a product or service to the market.

He added that in Vietnam, the development of the DC industry is strongly supported by regulations and management policies. Currently, both Hanoi and the country are implementing biometric services, cashless payments, and VNeID, and telecom providers are building 5G networks. Tien believes these factors are paving the way for data center development.

Addressing challenges

Despite its strong potential to attract data centers, Hanoi faces a series of challenges, according to Quynh Pham, Head of the Datacenter and Cloud Chapter at SVDCA and Country Manager of EPI.

Quynh pointed out that Hanoi’s humid tropical climate, characterized by 70% humidity and over 144 rainy days each year, poses unique hurdles for data center operations. Yet, these conditions also drive innovation in equipment management.

The city's rising temperatures, often hitting 40-41 degrees Celsius, necessitate specialized cooling systems to maintain efficiency. While this presents an operational challenge, it also offers an opportunity to enhance system resilience.

Quynh added that network infrastructure is another key area for growth. Although Vietnam boasts several fiber optic lines, landing stations are concentrated in the central region, such as the beach city of Danang and Quy Nhon City. This creates opportunities for companies to strategically choose locations that minimize latency and transmission costs.

Regarding human resources, a report from the General Statistics Office in 2023 ranked Hanoi as having the highest living costs in Vietnam (followed by Ho Chi Minh City and Quang Ninh). This also results in a skilled workforce that commands competitive wages and benefits, enhancing the overall talent pool for businesses, according to the EPI Country Manager.

Quynh believes these challenges can be transformed into opportunities. “Hanoi could collaborate with organizations to implement workshops and seminars, supported by industry experts with extensive experience in deploying DCs,” she emphasized.

“The goal of these activities is to better prepare localities, as when investors decide to invest in a country or locality, they consider various factors, including infrastructure readiness, human resources, and policies,” Quynh noted, adding that there is still a lack of coherence and understanding among localities in attracting investments. 

“This is a critical issue that needs to be resolved,” she emphasized.

She also added that information regarding climate conditions, weather, and infrastructure is vital as they directly influence system design and protective measures for future data centers. Additionally, localities need to provide information about development processes and the remaining lifespan of infrastructure.

“When engaging with foreign investors, this information must be provided thoroughly and accurately,” Quynh said. “Additionally, insights into political and legal conditions are vital for offering investors a comprehensive view of the investment landscape.”