Potential for Economic Cooperation between Vietnam and Indonesia

Vietnam-Indonesia economic cooperation holds significant untapped potential. To harness this market effectively, domestic enterprises must strategically utilize the incentives offered by free trade agreements (FTAs).

Photo: VNA

In recent times, the traditional friendship and strategic partnership between Vietnam and Indonesia have developed smoothly and positively. Vietnam is Indonesia’s only strategic partner in ASEAN. The two sides regularly exchange delegations at all levels, especially high-level ones, especially in 2023 when the two countries celebrate the 10th anniversary of establishing a strategic partnership.

Regarding bilateral trade cooperation, citing data from the General Department of Customs, the Vietnam Trade Office in Indonesia said that in recent years, two-way trade between Vietnam and Indonesia has grown. Despite Covid-19, bilateral trade turnover continues to grow positively, from US$9 billion in 2019 to nearly US$14 billion in 2023.

In the first 2 months of 2024, total two-way trade turnover reached US$2.36 billion, an increase of 18.1% over the same period in 2023. Of which, exports reached a value of US$1.05 billion, an increase of 37.8 % compared to 2023, and imports reached a value of US$1.26 billion, an increase of 5.6%. Currently in ASEAN, Indonesia is Vietnam’s second-largest export market, after Thailand.

According to the Vietnam Trade Office in Indonesia, “The growth of Vietnam’s exports to Indonesia is mainly due to the fact that the Indonesian economy continues to show positive signs of growth in the first quarter of 2024. At the same time, import demand increases. In addition, Indonesia continues to have a high demand for rice imports in the first three months of the year.”

With existing potentials and strengths, the two countries Vietnam and Indonesia strive to bring bilateral trade turnover to soon reach US$15 billion and higher at US$18 billion before 2028 by reducing trade barriers and facilitating the import and export of each other’s key products, including rice trade.

However, Vietnam’s strong export products such as agricultural products, textiles, food, beverages, household appliances, and consumer industries have not yet penetrated strongly into the market, with a modest export turnover value.

This shows that Vietnam-Indonesia still has much potential to promote economic, trade, and investment cooperation.

Indonesia has a population of over 270 million people, the 4th largest in the world and the largest economy in Southeast Asia.

The counselor of the Vietnam Trade Office in Indonesia said that Indonesia continues to be a potential market for Vietnamese goods if the Vietnamese business community takes good advantage of the benefits that ASEAN and RCEP bring as well as other potentials of the Indonesian market.

Photo: vneconomy

During the meeting between the Minister of Industry and Trade of Vietnam Nguyen Hong Dien and the Minister of Industry of Indonesia Agus Gumiwang Kartasasmita in January 2024, Minister Nguyen Hong Dien emphasized that the two sides need to continue to promote cooperation in industry, especially in areas where Indonesia has strengths that Vietnam needs.

Based on the available potentials and resources of each country, Vietnam and Indonesia can work together to develop the electric vehicle ecosystem, and sustainably utilize minerals for green development such as electric vehicle battery production, as well as cooperation in selling carbon credits.

Indonesian Minister of Industry Agus Gumiwang Kartasasmita said that the two countries still have a lot of potential and room for cooperation in the industrial sector, especially the electric car industry, logistics, and supporting industries.

He believes that businesses from the two countries will promote cooperation in developing the electric vehicle ecosystem and battery production. In addition, the two countries can also continue to promote cooperation in other areas of mutual concern such as digital economy and human resource development.

Rosie Nguyen