More like: your company (or government agency) is critical infrastructure or of a certain size, so there are obligations on how you maintain your records. It’s not like the US or other countries don’t have similar requirements.

(Without knowing the precise nature of these laws) I would expect that they don't forbid you to store backups elsewhere. It's just that they mandate that certain types of data be backed up in sufficiently secure and independent locations. If you want to have an additional backup (or backups of data not covered by the law) in a more convenient location, you still can.

Certain data records need to be legally retained for certain amounts of time; Other sensitive data (e.g. PII) have security requirements.

Why wouldn't government mandate storage requirements given the above?

No it doesn’t. It does however need to follow the appropiate standards commensurate with your size and criticality. Feel free to exceed them.