Chinese e-commerce giant Alibaba Group Holding Ltd. is planning to build a data center in Vietnam to safeguard data storage, Nikkei Asia reported. The physical space for its computer servers will be leased from local telecom companies Viettel Group and VNPT Group.
Alibaba Cloud’s solutions architect lead Dang Minh Tam said the company uses the “colocation” model — the practice of leasing space in data centers from operators — to work with the two state-owned companies, enabling customer data to be stored locally. The data will also be backed up on servers across the region.
Alibaba’s plan to build a data center in Vietnam comes as the company seeks to capture demand in one of Asia’s fastest-growing economies. The timeline for the project has yet to be disclosed, but the cost is expected to exceed $1 billion.
“Vietnam is a huge potential market,” Tam said in an interview. “There is a lot of room to grow.”
One reason that companies like Alibaba are increasingly looking to build their own server farms, beyond considerations of cost, is to increase data security and control. Legal liability can be an issue when multiple companies are involved in handling the same data, said Leiff Schneider, a counsel at law firm Luther.
“Contracts need to be clear about who takes what risk and what responsibilities,” he said, speaking at a data center and cloud conference in Ho Chi Minh City last week.
Alibaba plans to spend over $1 billion on a data center in Vietnam
Meanwhile, local companies share Alibaba’s upbeat outlook. Viettel IDC said potential clients ranging from Alibaba to Microsoft are demanding improvements in “ESG” — environmental, social and governance — factors. For example, technology can be used to monitor and optimize water usage.
Viettel currently uses little renewable energy but aims to increase its share of electricity consumption from such sources to 30% by 2030, said Nguyen Dinh Tuan, its technical director. “We need to get ready for the explosion of data centers, we need to get ready for the green trend,” he said.
Vietnam’s data center market is projected to grow 15% annually for the foreseeable future, and that figure could be even higher if a major cloud player like Alibaba commits to an investment.
Source: Nikkei Asia
