Australia is set to provide funding for the development of two data centers in the Pacific Island of Vanuatu.

As reported by the Australian Broadcasting Corporation (ABC), Australia is providing AU$120 million (US$79m) to Vanuatu’s government for the data centers as part of a security pact between the two dubbed the “Nakamal Agreement.” In total, Australia will provide the island nation with AU$500m (US$330m) in projects over the next decade.

Details about the data centers are sparse, but they will be located in the capital of Port Vila, and on the island of Santo.

Other areas of investment include climate resilience, key infrastructure, security support, labour mobility, and budget support.

ABC adds that the deal follows efforts from China to court the island and present itself as a commercial and security partner for Vanuatu. The Australian government hopes that the agreement will secure Australia’s position as a security partner for the country, following a previous 2022 agreement with the nation that was scrapped by Vanuatu.

Griffith Asia Institute Adjunct Associate Professor Tess Newton Cain said of the new deal: "The process is the main difference - this has been signed off by both the National Security Council and the Council of Ministers, which did not happen in 2022.

"It is also being designated as much broader than simply a security agreement with commitments made across several domains, including climate resilience, economic development, and budget support."

Vanuatu is a South Pacific island nation that was formerly known as the New Hebrides and consists of more than 80 islands.

The local government has a data center located near the Meteo Department Building in Port Vila. According to a document from the government, it houses nine racks, and there is a second smaller data center to provide redundancy. The government data center is connected to a landing station, which has direct access to an Equinix data center in Sydney.

In 2023, local ISP 3 Link teamed up with Wave to roll out 5G coverage in Vanuatu.