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Dinh Vu


Last updated: Tuesday, July 17, 2018


Prospects for Vietnam-Indonesia Automobile, Motorbike Cooperation

Posted: Friday, June 16, 2017

Bilateral trade relations between Indonesia and Vietnam have picked up in recent years, with a two-way trade value of US$5.5 billion in 2016. The two countries’ leaders pledged to lift the value to US$10 billion in 2018.

Automobile and spare parts are key exports of Indonesia to Vietnam, due to rising demands of the middle class for the four-wheeler. In the first quarter of 2017, Vietnam imported 4,400 automobiles from Indonesia, up 81.1 per cent.

At the workshop tVietnam Business Connectivity Workshop - Prospects for automobile and motorbike cooperation” held by the Embassy of Indonesia in Vietnam in cooperation with the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi, Indonesian Ambassador to Vietnam Ibnu Hadi said that Indonesia and Thailand are leading automobile, motorcycle and parts producers in the region. Indonesia has a long cooperation history with Japan and is the largest producer of automotive parts.

The nation has the potential to become a leading manufacturer of components for sports cars, off-road vehicles, light trucks and sedans. In addition, it continues to export locally-assembled cars with 100 per cent imported components.

The Indonesian Ambassador said that Vietnam has a good background to develop the automobile industry, and is working hard to develop this potential industry, plus many preferential policies. In the future, the country will become a “formidable” rival to Indonesia.

He said automotive and parts industries have a fertile ground to grow in the ASEAN region. He hoped that in the near future, Vietnam and Indonesia will achieve close cooperation with Japanese brands active in Indonesia and Vietnam.

Dr Doan Duy Khuong, Vice President of VCCI, said that the Government of Vietnam is aiming to turn the automobile industry into an “economic spearhead” to generate more employment opportunities and promote global value chains.

He added that Vietnam has been a partner and a potential market for automobile and motorcycle sectors. The automotive industry is one of 12 priority sectors in ASEAN.

Data from the General Department of Vietnam Customs showed that automobile and parts imports from ASEAN, mainly from Thailand and Indonesia, have advanced in both quantity and value since 2014. In particular, Indonesia’s automotive parts shipments to Vietnam have increased rapidly in recent years, with the value reaching US$151 million in 2016 and US$53 million in the first four months of 2017. The value was forecasted to further look up in the coming time.

Mr Cao Bao Anh from the Heavy Industries Department under the Ministry of Industry and Trade said the prospect of parts cooperation between Indonesia and Vietnamese companies is huge, especially when ASEAN countries will become a common economy. Vietnam encourages foreign-invested companies to transfer technology, but its domestic firms fail to meet requirements. Therefore, the latter need to understand their capabilities because authorities can only create mechanisms, policies and markets but they cannot change resources connectivity and relationships with suppliers. Vietnamese companies were previously supported to raise their scientific and technological competence and to develop resources and capital, but they cannot be always supported.

Mr Widjanarko Koko, Trade Director of Toyota Indonesia, said, to develop the automobile and parts industry, in addition to raising the localisation ratio, Vietnam should learn Thailand’s experiences in building a parts supply system and maximise benefits of this system. Thailand has more than 2,000 auto parts and accessory suppliers, while Vietnam currently has only 700-800 suppliers. Therefore, Thailand's model is a common lesson for others to build a successful automotive industry.

Anh Mai

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