Vietnam, Indonesia can work together to become regional economic locomotives

Budiarsa Sastrawinata, chairman of the Indonesia - Vietnam Friendship Association (IVFA), who is also well known as the CEO of Ciputra Group, made the statement during a recent media interview held ahead of President Nguyen Xuan Phuc's forthcoming state visit to Indonesia from December 21 to December 23 at the invitation of Indonesian President Joko Widodo.

According to Sastrawinata, many Indonesian firms have come to Vietnam in order to explore investment opportunities. At present, Indonesia remains one of the ASEAN member states with the largest investment in the Vietnamese market, primarily in the fields of oil and gas exploration and production, coal mining, banking, hotels, wood processing and exporting, and garments.

During a recent meeting with Vietnamese Prime Minister Pham Minh Chinh, President Widodo emphasised that Indonesia is committed to continuing to promote mutually-beneficial bilateral ties which can benefit the people of the two countries. This includes bolstering medical co-operation amid the COVID-19 pandemic continuing to spread globally.

Sastrawinata said that the ASEAN economy should not be dominated by a single economy, meaning ASEAN members desire more trading partners, including trade between ASEAN's own member states.

He also assessed the development steps made in terms of joint diplomatic relations over recent times, as well as the potential to boost co-operation moving forward.

Since the first establishment of diplomatic ties on December 30, 1955, the traditional friendship between the two countries has been built on a solid foundation laid by President Ho Chi Minh and President Sukamo. Indeed, this has been nurtured by generations of leaders and people of the two countries, the IVFA chairman went on to say.

Both sides share many similarities as they are both members of ASEAN, the Asia-Pacific Economic Cooperation (APEC), and many other regional and international organisations and forums.
Sastrawinata highlighted Indonesia as an important partner of Vietnam, expressing great appreciation for the Vietnamese role and position as one of the countries with great influence in the regional bloc.

Both sides have signed numerous collaboration agreements across multiple fields, with many bilateral co-operation mechanisms having been established.

Both nations have therefore augmented bilateral ties in terms of economics, trade, and investment in recent times.

This is reflected in the high level of bilateral relations based on the Indonesia-Vietnam strategic partnership in Southeast Asia, as well as increasing bilateral trade exchanges. In addition, the strengthening of co-operation in a number of fields such as negotiations on the delimitation of the exclusive economic zone, the elimination of illegal fishing activities, co-operation to promote ASEAN, and the enhancement of ties in the maritime domain between the two countries.

Over the next 10 to 20 years, bilateral economic, trade, and investment relations will increase, thereby bringing benefits to both sides.

The two nations have a number of conditions that support the promotion of bilateral relations, such as large populations, growing economic achievements, increased purchasing power and geographical proximity to other ASEAN members.

The two sides should therefore seek to further strengthen high-level visits as a means of deepening understanding and dealing with any arising issues as soon as possible.

Indonesia will continue to encourage its businesses to invest in Vietnamese economic development. It has also invited a number of Vietnamese first to invest in many fields, such as seafood, agriculture, and other export items.

However, the two countries have yet to maximise their traditional close relationship towards specific co-operation, especially in the economic and trade fields.

Sastrawinata stated that the two sides should hold more promotional activities, while investment and tourism capital flows from Vietnam to Indonesia also need to be promoted.

Meanwhile, Indonesian entrepreneurs have yet to fully exploit economic potential and investment opportunities in the Vietnamese market.

Co-operation between the two countries should not be limited to large corporations, but should instead involve small and medium enterprises and startups that are able to take advantage of the current advancement of digital technology, thereby boosting cross-border linkages.

In terms of culture, both countries must strengthen the exchange of national heritages by organising many joint events in a bid to help the two countries’ tourism sector develop further.

People-to-people exchanges are very important and the IVFA will make effort to help promote the relationship between the respective people and governments of the two countries, he said.

According to him, the strategic partnership was maintained even during the COVID-19 pandemic and will grow faster and stronger for the ultimate benefit of the two countries as well as for peace, stability, and prosperity in Southeast Asia.

Indonesia and Vietnam have agreed upon new plans aimed at facilitating businesses of the two countries to conduct trade and business activities and seek investment opportunities in order to expand and diversify investment. There will be a specific focus on fisheries, infrastructure construction, renewable energy, high technology, and digital transformation.

The two sides will also consider opening new routes for tourism, trade, and investment activities.

Currently, there are roughly 40 Indonesian companies based in Vietnam, most of which are in the southern region and operate in the fields of parts manufacturing, manufactured products, fast moving consumer goods, chemicals, plastics, and aluminum, pharmaceuticals and cosmetics to transport, tourism, and logistics.

These companies typically produce goods and services for the Vietnamese market, as well as for exports.

As one of the fastest growing economies in the region thanks to export-oriented manufacturing, foreign direct investment, and growing domestic demand, Vietnam is capturing the attention of foreign investors worldwide.

Despite disruptions over the past few years, many Indonesian companies remain eager to expand their presence in Vietnam, mainly through mergers and acquisitions.