2022 04 April

Vietnam: Foreign Investment in Data Center Business

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The below is a generic list of the key licenses, permits, declarations generally needed by a foreign investor (alone or in JV) to set up and operate a data center in Vietnam. This is not meant to address any specific situation and does not constitute a legal advice.

Obtaining an IRC and an ERC
  • The foreign investor needs to (i) obtain an investment registration certificate (“IRC“) for the investment project of establishing and operating the data center in Vietnam and (ii) obtain an enterprise registration certificate (“ERC“) to establish the local entity in Vietnam to operate the data center in Vietnam with relevant business lines mentioned below.
  • The laws of Vietnam and Vietnam’s WTO Commitments do not provide for any specific business lines on data center operation. Some relevant business categories may include systems and software consulting services, data processing services, data base services, and other computer services not elsewhere classified. These business categories are not subject to restrictions on foreign investors’ market access. A real estate investor will also need to register real estate business as one of its business lines.
Self-declaration of the conformity with regulatory technical standards
  • The foreign investor or its local entity is not required to obtain any licenses or permits, but the local entity will be required to self-declare the conformity of the data center with regulatory technical standards and obtain a notice of receipt for the same before starting operations.
  • Legal basis: Circular No. 03/2013/TT-BTTTT dated 22 January 2014 issued by the Ministry of Information and Communication on application of technical regulations and standards to data centers.
  • Procedure:
    • Submission of a dossier for declaration of conformity to the Vietnam Telecommunications Authority (“VTA”) whether directly or by post.
    • Within 7 working days after receipt of a valid and complete application, the VTA should issue a notice of receipt of the conformity declaration (the “Notice”).
  • Official fee: none.
Consent of the Personal Data Protection Commission for cross-border transfer of personal data (Potentially)
  • Under the draft version dated 9 February 2021 of a proposed decree on personal data protection (“Draft PDPD”), a foreign investor may need to obtain a written consent of the Personal Data Protection Commission (to be established) for cross-border transfer of personal data.
  • The Personal Data Protection Commission would be established by the Government of Vietnam. Its functions will be, amongst other, giving feedback to and approving personal data protection measures applied by the data processor in necessary cases and request the Director of the Department of Cybersecurity and High-Tech Crime Prevention (under the Ministry of Public Security).
  • Cross-border transfer of personal data is defined as the transfer of personal data of Vietnamese citizens to a location outside of Vietnam. The Draft PDPD does not touch on the transfer of personal data from overseas to Vietnam.
  • The Draft PDPD is still a draft and has not been finalized or been passed as law yet.
Approval/Discussion with Electricity of Vietnam (“EVN”) for buying electricity for the operation of the data center

Considering that that the operation of a data center would require excessive usage of electricity, we recommend the local entity to reach out to the EVN entity of the province where the data center is located for a specific guidance on this matter.  We note that Vietnamese law does not specifically require that a special electricity sale agreement be required for this purpose. We have also informally checked this question with EVN but has not yet obtained a meaningful confirmation from EVN.

Key regulatory requirements in relation to the development of a rooftop solar power project for self-consumption

Inclusion in Power Development Plan (for projects with capacity from 1MW or higher)

Pursuant to Decision 13/2020/QD-TTg, on mechanism for encouragement of development of solar power in Vietnam, dated 6 April 2020, in case the capacity of the rooftop solar power project (“Project”) is 1 MW or higher, the developer of the Project is required to obtain this approval. 

Construction Permit

  • Vietnamese law on construction requires a developer to obtain a construction permit issued by the competent State agency before commencing a construction work, except in the cases where the construction permit is exempted.
  • Installation of a roof-top photovoltaic system on an existing building may not be considered as a construction work, a construction permit may not be required.
  • However, since there is no regulation explicitly stipulating that a construction permit is not required for installation of a roof-top photovoltaic system on an existing building, the relevant authorities, at their discretion, may require a construction permit.
  • The developer of the Project may be is required to obtain the construction permit.

Fire Safety Requirements

Under Vietnamese law, any power plant project (including solar power) having a voltage of 110 kV or higher must obtain approval of the fire safety design of the plant from the relevant local fire fighting and prevention department, prior to commencing installation or construction*.

*Item 18 of Annex V, and Article 15 of Decree 136/2020/ND-CP providing guidelines for a number of articles of Law on Fire Prevention and Fighting and Law on Amendments to Law on Fire Prevention and Fighting dated 24 November 2019 of the Government of Vietnam.

 

The information provided in this article is for information purposes only and is not intended to constitute legal advice should be obtained from qualified legal counsel for all specific situations.

 

Contact
Huynh Dai Thang

Thang Huynh

Partner & Head of Hanoi Office

thang.huynh@dfdl.com

 

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