A momentous year for Indonesia ties
A momentous year for Indonesia ties
Bilateral cooperation between Vietnam and Indonesia is in its heyday, with an upcoming celebration in 2025 to mark the 70th anniversary of diplomatic relations.
If I were to describe 2024 for Indonesia-Vietnam relations, it would be a year of breakthroughs. Following our economic recovery in 2023, our economies reached significant heights in 2024.
Trade and investment between Indonesia and Vietnam in 2024 grew exponentially, driven by our rapid economic growth and vision towards the future. Total bilateral trade turnover between the two countries for 2024 is estimated to have reached at least $16 billion, almost a 16 per cent increase. This figure not only puts us on course to meet our $18 billion total bilateral trade target by 2028, but also indicates reaching it much earlier.
Two-way investment has also seen unprecedented figures. Indonesian investment in Vietnam as of November was estimated at $12.4 million, with one of the most notable investments including Vaksindo’s veterinary vaccine factory launched in June dedicated to developing research-based vaccines for animals. Vaksindo is a multi-year investment of Japfa Group, an established and well-known Indonesian company in Vietnam.
Denny Abdi, indonesian Ambassador to Vietnam |
Last year also marked a significant milestone for Vietnam’s investment abroad. In Indonesia, this figure reached $41.81 million. The largest contributors include VinFast’s electric vehicle ecosystem investment in Indonesia, marked by the launch of the factory in Subang in July and the launch of the Xanh SM electric taxi service in December.
Yet it is not just the amount of the investment that one should focus on, but the significance and impact of such projects. Investments like Vaksindo and VinFast are primary examples of the future trend for Indonesia and Vietnam cooperation, which will focus on harnessing research and technology, and in developing ecosystems.
Vaksindo’s research-based animal vaccine manufacturing facility expands the already established Feed-Farm-Food ecosystem of Japfa group in Vietnam, whilst Xanh SM’s electric taxi service is part of VinFast’s framework in developing the electric vehicle ecosystem. Such innovations and ecosystems produce high-added value - an essential element towards economic growth.
Hence, reflecting on the significant achievements of Indonesia-Vietnam relations in 2024, the outlook for trade and investment cooperation this year is highly promising.
As both countries are striving towards even more rapid economic growth to reach the shared vision of becoming high-income countries by 2045, a much stronger trade and investment should be expected, especially as the countries are set to commemorate the 70th anniversary of diplomatic relations in 2025.
Collaboration in the development of a regional electric vehicle ecosystem will continue to be a priority in Indonesia-Vietnam relations, especially given both countries’ commitments to transition to clean energy. In this sense, cooperation in renewable energy will also be essential, as Indonesia and Vietnam are striving to reach our respective net-zero targets.
I also expect more collaboration in new areas, including in semiconductors and technologies such as AI.
In line with the Indonesian government’s policies, such as the school meal programme, we should expect collaboration in food security to grow even stronger. While cooperation in fisheries will focus not only on increasing the volume, but also on collaboration in developing sustainable fisheries.
While Indonesia and Vietnam share similar economic development, the two countries possess different economic structures. For an economy driven by trade, Vietnam’s challenges in 2025 are in navigating global economic uncertainties, such as inflation and supply chain disruptions, which pose risks to its trade flow.
For Indonesia, whose economy for the past few decades has been propelled by its abundance of raw materials, the challenge is to produce high value-added products and shift itself into an industrial economy.
The key towards leveraging this lies in strengthening our partnership, to complement each other and play into each respective strengths, to develop an economic regional supply chain that is resilient, has a multiplier effect, and benefits people in the region.
The Indonesia-Vietnam strategic partnership established in 2013 has been a solid foundation to our trade and investment cooperation and reflects the deepening of economic ties.
Following a period of breakthroughs and multiple bilateral targets exceeded, Indonesia and Vietnam are working towards a comprehensive strategic partnership in 2025. Such a partnership will better reflect the strides and achievements made, as well as the commitments of both countries towards their shared future.
I am optimistic that 2025 will be a defining year for the Indonesia-Vietnam partnership and will act as a milestone for our past achievements and cooperation, as well as a momentum towards our shared vision for sustainable growth and prosperity.
