Vietnam – Indonesia Investment and Trade Forum: Many Cooperation Opportunities

MrPham Quang Thinh, Deputy Director of the International Relations Department of VCCI, said that since the establishment of diplomatic relations in 1964, over 49 years of cooperation and mutual support, Indonesia has always been a kind friend and dependable partner of Vietnam. The relations between Vietnam and Indonesia have become more intimate; friendly cooperation in all aspects is increasingly developing, especially in trade and investment.

 

Vietnam always attaches importance to the comprehensive cooperation with Indonesia. At international forums, Indonesia and Vietnam always closely support each other. The relationship between Vietnam and Indonesia is more meaningful in the context of ASEAN moving towards the ASEAN Economic Community by 2015.

According to Mr Thinh, the annual trade turnover between Vietnam and Indonesia has increased from US$2.5 billion in 2008 to more than US$4.6 billion in 2012, in which Vietnam exported to Indonesia a total product value of more than US$2.3 billion, accounting for 51 percent of total turnover; imports from Indonesia were over US$2.2 billion.

 

"Indonesia has a great demand for commodities like rice, steel, textile which are Vietnam’s strength. In contrast, Indonesia has many advantages in wood paper, electronic goods, chemicals which are capable of creating good cooperation with Vietnam," said Mr Thinh.

 

According to Mr Dang Xuan Quang, Deputy Director of the Foreign Investment Department - Ministry of Planning and Investment, Indonesia’s investors entered Vietnam since Vietnam opened its market from the 1990s. As of March 2013, Indonesia ranked 27th out of 101 countries and territories investing in Vietnam with 34 valid projects with the total registered capital of US$285.1 million. Indonesia has invested in 11 of the 21 sectors of the classification system in Vietnam, in which industrial processing and manufacturing ranks first with 16 projects with the total registered investment capital of US$112.17 (accounting for 39.34 percent of total investment capital). Following it is the service sector of accommodation and food with 1 project and total registered investment capital reached US$65,89 million (accounting for 23.11 percent of total investment capital). There is one project in the health sector and social assistance, with registered capital of US$52.6 million (accounting for 18.45 percent of total investment capital). The projects of investors from Indonesia have made important contributions to the socio-economic development of Vietnam.

Besides, Vietnam also has 7 projects being implemented in Indonesia with total investment capital of about US$106.7 million, focusing mainly on mining, oil and gas and communications of large groups of Vietnam, such as Vietnam Oil and Gas Group and VTC Media Corporation.

 

Mr Quang shared that to further improve the investment and business environment, the Government of Vietnam has identified the key issues to be addressed immediately including improving macro-economic situation associated with innovating growth model through groups of restructuring solutions (investment, financial market, state-owned enterprises). In addition, it continues to make three breakthrough steps (infrastructure, human resources and administrative reform). At the same time, the government is trying to remove difficulties in the economy, improve the efficiency of the state management of foreign investment activities, and complete the legal system and policies. Specifically, Vietnam is expecting to have investment law, enterprise law and other specialized laws amended and supplemented towards transparency and consistency approved by the parliament in 2013.

 

Mr Quang added that under the current investment law of Vietnam, the fields of investment receiving incentives include production of new materials, new energy, production of high-tech products, aquaculture, agro-forestry, fisheries using high-tech, modern engineering and ecological environmental protection, and labour intensive production. Preference is also given to infrastructure construction and development and important projects. It is also crucial to develop education, training, health, fitness and sports, traditional industries and some other areas (Internet connection, public transportation, legal consultancy, basic chemicals, paper, textile, leather, etc.). For investment projects in the field receiving incentives, there are tax incentives for corporate income tax at the rates of 10 or 20 percent and duty-free import of machinery and equipment to create fixed assets of the project. Also there is land rent exemption.

 

Vietnam and Indonesia are two active and responsible members of the ASEAN community. Regarding investment cooperation, two countries have passed the ASEAN Comprehensive Investment Agreement (ACIA) which came into force on 29th March, 2012. This is considered a turning point in the important investment cooperation between ASEAN countries in general, and Vietnam and Indonesia in particular. Cooperation between Vietnam and Indonesia has great potential to grow and many advantages to complement each other. Therefore, the two governments are going to push relations to another level towards strategic partnership, further strengthen investment promotion activities, trade, and encourage cooperation between the private sectors of the two countries.

 

"The Foreign Investment Department is committed to doing its best to create a favourable and equal business environment whose competitiveness is high compared with other countries in the region. Also it will continue to promote stronger relations in investment and business between the two countries, and establish communication channels between administrative agencies in charge of investment promotion and business communities of the two countries," said Mr Quang.