Data centre prospects within reach for investors

Data centre prospects within reach for investors

Saigon Asset Management in March announced the launch of a data centre campus with targeted investment of up to $1.5 billion. VIR’s Bich Ngoc talked with chairman and CEO Louis Nguyen on the implementation process of this huge project.

What were the key factors behind your decision to develop Katalyst DigitalHub at Vietnam-Singapore Industrial Parks (VSIP)?

Saigon Asset Management has renamed the SAM DigitalHub to Katalyst DigitalHub to reflect our investment in Katalyst, the company responsible for developing and operating data centres (DCs) in Vietnam. It was launched at the VSIP for three main reasons.

Louis Nguyen

Firstly, Southeast Asia is witnessing unprecedented rising demand for DCs, driven by increasing needs for storage, cloud services, proprietary platforms, and AI computing. As Singapore, the region’s primary DC hub, faces limitations in land and power, the spillover effect has been significant. For instance, Malaysia has secured over $40 billion in approved DC projects over the past three years.

Secondly, we anticipate Vietnam will greatly benefit from this trend as hyperscalers seek to establish new facilities in the region and desired to be Vietnam dues to its large population, booming digital economy, young and tech-savvy demographics, and government support for the tech industry.

Despite the opportunities, there are critical hurdles to address such as regulatory issues, availability of power and renewable energy, water, carrier neutral, subsea cables, and land zoned for scalable DCs.

The new facility is well positioned to tackle these challenges effectively by aiming to become the premier one-stop solution for hyperscalers seeking to be in Vietnam.

Thirdly, most DCs in Vietnam are built on small land parcels and often lack essential infrastructure, including reliable power, water, and carrier-neutral connectivity. The industry is shifting towards large-scale DC campuses, enabling customers to start small and scale seamlessly without the challenges of acquiring land or building infrastructure from scratch.

By partnering with VSIP, we address two critical factors: a 50-hectare land area dedicated to DC development, allowing customers to expand efficiently, and a robust infrastructure framework to support their growth.

Regarding why now, the surge in demand, driven by the Singapore spillover as previously discussed, raises the critical question: which country is prepared to absorb this opportunity? The answer is clear: timing is everything, and the moment to act is now, not later.

Once operational, what role do you envision Katalyst playing in Vietnam’s digital infrastructure landscape?

Our investment thesis centres on advancing Vietnam’s digital infrastructure to meet the country’s surging demand. With the digital economy’s contribution to GDP rising from 12 per cent in 2020 to 19 per cent in 2024, Katalyst is committed to driving this growth.

We are actively developing cloud businesses in collaboration with hyperscalers, investing in and expanding DC operations, and partnering with international operators to strengthen our domestic capabilities.

From an investor’s perspective, what strategic advantages do DCs offer, particularly in Vietnam?

First is demand. Vietnam’s DC market presents significant growth opportunities. Major social media giants have yet to fully utilise DCs within the country. Currently, these companies rely on facilities in Singapore and Malaysia, but as latency challenges arise and demand increases, they will inevitably need to establish large-scale data storage infrastructure in Vietnam. Sectors such as financial services, e-commerce, and healthcare also rely heavily on data storage and processing capabilities.

Additionally, outside of the use of DC for storage, AI computing and edge computing would represent incoming large demand for DC in Vietnam. Katalyst is working with hyperscalers to offer local cloud services to international and domestic customers.

Second is cost efficiency. Vietnam offers some of the lowest construction costs for DC in the Asia-Pacific region, averaging $7 million per megawatt. Land costs are also relatively reasonable, especially in suburban areas of Ho Chi Minh City and Hanoi.

Thirdly, Vietnam’s proximity to major Asia-Pacific markets makes it an ideal regional hub for DC operations. This geographic advantage supports businesses looking to expand their digital footprint across Southeast Asia.

The final factor is the booming digital economy, with over 80 million internet users and high smartphone penetration, Vietnam’s demand for digital services is rapidly increasing. This growth drives the need for advanced data infrastructure, creating opportunities for investors.

VIR