Since setting up diplomatic ties in 1964, Vietnam and Indonesia have continuously deepened the friendly cooperative relations in all aspects, particularly trade and investment. As the two countries are regaining growth momentum at the back of global economic downturn, the bilateral trade relations are expected to thrive in the time to come.
According to statistics, Vietnam - Indonesia two-way trade revenue increased from US$2.5 billion in 2008 to more than US$4.6 billion in 2012. Specifically, Vietnam earned over US$2.3 billion from exports to Indonesia while the latter raked in over US$2.2 billion. According to the statistics of the General Department of Customs of Vietnam, in the first two months of 2013, Vietnam's merchandise exports to Indonesia reached US$333.61 million. Particularly, telephones and parts generated US$61.84 million, accounting for 18.54 percent of Vietnam’s total turnover to Indonesia and up 59.13 percent from a year earlier, followed by steel with US$57.89 million, contributing 17.35 percent of the share and up 17.63 percent year on year. Rice generated US$15.75 million for Vietnam in the reporting period, accounting for 4.72 percent of the share and down 86.17 percent year on year, while garments and textiles brought in US$13.95 million, accounting for 4.18 percent and up 26.83 percent. Vehicle shipments were worth US$13.48 million, accounting for 4.04 percent and up 51.77 percent; yarn and fibre export valued at US$13.05 million, up 75.71 percent year on year; machinery and equipment raked in US$12.14 million, down slightly 0.9 percent; and chemicals earned US$11.37 million, up 263 percent.
At the Vietnam - Indonesia Trade and Investment Forum organised by the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the Embassy of Indonesia in Vietnam and the Indonesia Investment Coordinating Board (BKPM) in Hanoi in April 2013, Mr Pham Quang Thinh, Deputy Director of VCCI International Relations Department, said Vietnam and Indonesia had supplementary industrial structures. Indonesia has a high demand for rice, steel, garments and textiles from Vietnam, while Vietnam is in need of paper, electronics devices and chemicals that Indonesia is strong at. These are good conditions for the two countries to work together on sustainable and robust development.
He also noted advantages of this market. Indonesia is a large-scale market with a population of nearly 250 million, the fourth most populous country in the world and first in ASEAN. The country has a good merchandise distribution system and has a high demand for imports. In addition, although nearly 40 percent of the labour force live on agriculture and rice is a staple food crop, the country still falls short of rice for domestic consumption. This is a good opportunity for Vietnam to export rice to Indonesia.
However, incomes of Indonesian people are not high, resulting in weak consumption of essential goods. And, this is a disadvantage for imports in this market. Moreover, more than 86 percent of population practise Islam and all foods imported must be certified “halal” (Islamic standards) and regulations on imports are complex and not transparent. This is one of the biggest hurdles for Vietnam’s enterprises to penetrate this market.
In investment, as of March 2013, Indonesia ranked 27th out of 101 countries and territories with investment capital in Vietnam with 34 valid projects and the total registered capital of US$285.1 million. Industry took the lead with 16 projects and US$112.17 million. Indonesia-invested projects have made important contributions to Vietnam’s socio-economic development process. Vietnam also has seven valid projects with a total investment capital of US$106.7 million in Indonesia, mainly focusing on mining, oil and gas, and communications.
In addition, Vietnam and Indonesia are active and responsible members of the ASEAN Community. Regarding investment cooperation, the two sides ratified the ASEAN Comprehensive Investment Agreement (ACIA), which entered into force on March 29, 2012. This could be seen as an important turning point in ASEAN investment cooperation in general and Vietnam - Indonesia cooperation in particular.
Dr Vu Tien Loc, VCCI Chairman & President
Vietnam and Indonesia are important partners for each other in Southeast Asia. In the past years, the two-way relations have expanded rapidly in many fields; especially economic, trade and investment ties have gone into depth and stepped into a new stage of quality. Many Indonesian companies have been doing successful business in Vietnam such as Ciputra and Vietmindo.
The rapid and stable growth of trade and investment in the past time has proven that the two economies have complementary advantages on which both business communities can grow up together. Vietnam - Indonesia ties are of greater significance when ASEAN is moving towards the formation of the ASEAN Economic Community by 2015. I believe that many new areas and new opportunities are still opening up for the two business communities.
VCCI is always ready to work closely with Indonesia’s trade promotion agencies for the development of cooperation ties between the business communities of the two countries.
Mr Mayerfas, Indonesian Ambassador to Vietnam
The bilateral trade cooperation has strongly expanded in the past years, but still falls short of potential and expectations, because the two countries are big markets with growing purchasing power. So, the two countries need to increase efforts to double bilateral trade turnover to US$10 billion in 2015 instead of the US$5 billion goal that both sides set earlier.
In addition, Vietnam is becoming an attractive investment destination for Indonesian companies. I expect and believe that the number of Indonesian companies will certainly increase substantially in Vietnam in the future. Indonesia also always welcomes Vietnamese investors to do business and work in Indonesia, and pledges to create favourable conditions for businesses and create momentum to tighten and promote bilateral trade and economic cooperation ties in the near future.
This year’s Vietnam - Indonesia Trade, Tourism and Investment Promotion Forum will be an important milestone to further boosting two-way trade, tourism and investment relations as expected by the business communities and the leaders of the two countries. The event draws the participation of leading Indonesian businesses operating in cement, pharmaceuticals, cosmetics, foods, beverages, electronics, consumer goods, infrastructure, agricultural machinery, oil and gas, and bamboo product industries. Attending the forum is a good opportunity for Vietnamese and Indonesian companies to access new and accurate information about business and investment environment in Vietnam and Indonesia. This is an opportunity for businesses to meet, exchange information and find the right partners.
Vietnamese
