Vietnam and Indonesia Promote Economic Ties

Vietnam and Indonesia established diplomatic ties at consular level in 1955 and officially upgraded to the ambassador level in 1964. To date, the relationship between Vietnam and Indonesia has continuously developed in all aspects. Especially since 1990, the two-way ties were brightened by exchanges of visits by high-ranking leaders of both nations. The Vietnam - Indonesia cooperative relationship has been further strengthened and mutually supported at regional and international forums, especially in ASEAN cooperation framework. Indonesia highly appreciates the role of Vietnam in ASEAN and sees Vietnam as a mighty and influential nation in the regional grouping. Indonesia finds it necessary to advance their multifaceted ties. Since their establishment of diplomatic relations, the two sides have inked many contracts on cultural and commercial cooperation and agreements on economic, maritime, civil aviation, forestry, educational and criminal prevention cooperation. These signatures are expected to heighten the two-nation relationship to strategic and comprehensive partners in the coming time.

 

In 2008, GDP growth rate of Indonesia slowed down to 6.2 per cent because of the economic crisis. However, this rate was encouraging amid difficulties. Ms Mari Elka Pangestu said Indonesia will strive to speed up economic development investment, consolidate and expand domestic production, and intensify international trade to maintain a good growth in 2009.

 

Regarding export in the first quarter of 2009, Indonesia’s importing and exporting activities were pessimistic and were expected to be given a facelift in the coming months as Indonesia is preparing for a speedier growth. The country will seek all measures to boost credit funds and cut unnecessary spending to raise funds for production and business expansion for companies.

 

Notably, Indonesia attaches much importance to consumption of domestic commodities as it is vital for an economy. Thus, domestic consumption stimulus acceleration becomes the most important task. Besides, Indonesia also applies other stimulus measures in tax, encourages agricultural development and develops agriculture. Like Vietnam, Indonesia reduces the personal income tax. Specifically, in 2008 billion, the personal income tax was 30 per cent but this year it was trimmed to 25 per cent and would be maintained until 2010. The tax cut, applied to certain groups of taxpayers, is aimed to boost consumption of domestic goods.

 

In the opening address to the fifth meeting of the Vietnam - Indonesia Joint Committee for Economic, Scientific and Technological Cooperation held on April 25, Minister Vu Huy Hoang talked about commercial ties as well as regional cooperation and highlighted progresses in bilateral ties and multilateral cooperation frameworks such as ASEAN and APEC.

 

Since their diplomatic relations establishment, the friendship between Vietnam and Indonesia has continuously consolidated. Especially, the commercial and economic development investment cooperation is treasured and has heightened. The two-way trade turnover rose 2.6 per cent year on year in 2008 to US$2.522 billion, in which Vietnam earned US$793 million USD, down 28.2 per cent while spending US$1.729 billion, up 27.7 per cent. Based on export growth to Indonesia, the Ministry of Industry and Trade forecast that Vietnam will earn US$1.75 billion from exports to Indonesia. Vietnam’s key imports from the Southeast Asian nation include fertilisers, chemicals, timber, machinery, equipment, textile materials, garment materials and leather while its main exports are rice, crude oil, pepper, vegetables and fruits. At present, Indonesia is one of the important trade partners of Vietnam in Southeast Asia.

 

Indonesia has invested in 14 projects with a combined registered capital of US$170 million, including nearly 92.4 million that has already been disbursed. The country is now the 32^nd largest investor amongst 86 countries and territories with investment in Vietnam. Vietnam also has three oil and gas investment projects in Indonesia with a registered capital of US$46.18 million. It is expected to advance its investment in this potential nation.

 

In the first quarter of 2009, Vietnam’s investment grew 3.1 per cent from a year earlier, while industry expanded 3 per cent and import-export scaled up 5 per cent.

 

At the joint meeting, participants from both nations discussed several issues in two-way relations and pushed forward concrete solutions to strengthen the friendship ties in commerce, investment, transportation, agriculture, information technology, tourism, energy, education, health and others on the basis of mutual benefits. The two countries pledged to provide favourable conditions for enterprises of each other to do business. Minister Vu Huy Hoang proposed several important cooperative ideas. He asked Indonesia to supply coal for Vietnam to fuel thermal power plants for the long term and requested the regional country to reach a consensus in fishery activities to ensure security for fishermen of the two nations. Indonesian Trade Minister Mari Elka Pangestu commented that Vietnam and Indonesia had many things in common in tourism and agriculture and proposed further cooperation in these fields in the coming time. At the end of the meeting, the two sides signed the minutes and stressed the importance of bilateral cooperation for the future development of both Vietnam and Indonesia. The two ministers also inked a memorandum of understanding on trade and investment cooperation under which the two countries will advance cooperation in agriculture, mining, supporting industries for export-oriented garment, textile and footwear industries and commit to apply close measures to eradicate rice trade frauds, and minimise negative impacts on their rice markets. Minister Vu Huy Hoang and Minister Mari Elka Pangestu also agreed that the sixth meeting of the Joint Committee for Economic, Scientific and Technological Cooperation will be held in Bali, Indonesia in June or July 2010.