Advantages for exports to Indonesia

According to Trung, since the two countries upgraded their bilateral relations to a strategic partnership on June 27, 2013, economic cooperation between Vietnam and Indonesia has continued to expand. In 2014, Vietnam exported an estimated US$2.9 billion worth of products to Indonesia, a rise of 18.7 percent compared with 2013.

Major Vietnamese exports to Indonesia included telephones and components (US$845.5 million); iron and steel (US$351.4 million); rice (US$150.6 million); clinker and cement (US$123 million); as well as textiles, garments and footwear materials (US$118.4 million). Indonesian importers prefer to source these products from Vietnam rather than from China or Thailand for their quality and competitive pricing.

In 2014, the Vietnam Trade Office in Indonesia organized several activities to promote Vietnamese exports to Indonesia. In August, the office coordinated with the Foreign Investment Agency under the Ministry of Planning and Investment and the Indonesia Investment Coordinating Board to organize a workshop in Jakarta to promote investment into Vietnam. The workshop drew the attendance of nearly 200 representatives from Indonesian businesses. In September, the office gave a demonstration on investment opportunities in Vietnam at a workshop held by the Financial Services Authority of Indonesia to attract investment into Cambodia, Laos, Myanmar and Vietnam. The workshop attracted the participation of hundreds of Indonesian businesses and banks.

Through these activities, many Vietnamese companies have signed business contracts or found cooperation partners. These activities also helped Indonesian businesses better understand Vietnamese investment attraction policies and mechanisms.

Advantages

In the opinion of Truong Xuan Trung, Indonesia is a market of great potential for Vietnamese businesses. Therefore, Vietnamese businesses should have suitable long-term export strategies to take full advantage of the ASEAN Trade in Goods Agreement (ATIGA), under which exports from other ASEAN countries to Indonesia have become tax-free since 2010.

Although Vietnamese seafood, rice, and other agricultural products have won the trust of Indonesian consumers, domestic businesses have not taken effective action to boost exports. “They need to take an active part in trade and investment promotion activities organized by the Ministry of Industry and Trade in the framework of cooperation agreements signed by the ministry and Indonesian institutions. This will help domestic businesses promote exports in accordance with the demand of Indonesian consumers,” Trung said.

Household consumption in Indonesia accounts for 65 percent of the country’s gross domestic product (GDP). Indonesia is a large market with high purchasing power, and its requirements on the quality of goods are not as strict as those of developed countries. Vietnamese businesses need to make the most of opportunities from ATIGA and the AEC. “The Vietnam Trade Office in Indonesia is willing to create favorable conditions for Vietnamese businesses to penetrate this potential market,” Trung said.

By Hung Cuong