Vietnam wants closer economic ties with Indonesia

Lilian Budianto, The Jakarta Post, Jakarta | Thu, 09/02/2010 10:41 AM

Vietnam and Indonesia are two old friends that have now emerged as vibrant economies. The two Southeast Asian countries have many similarities, from shared historical themes to similar economic problems. Vietnam gained its independence on Sept. 2, 1945, just two weeks after Indonesia became a nation.

Vietnamese Ambassador to Indonesia Nguyen Huu Dzung said those characteristics made Indonesia a strategic partner for Vietnam — and both countries could cooperate more closely for their mutual benefit, especially in economic matters.

One example of potential mutual cooperation is pegging a price ceiling for rubber and coffee, since the countries are among the world’s largest exporters of the products,

he said.

“We want to enhance relations with Indonesia in several aspects, from politics to the economy to people-to-people contacts,” said Dzung in an interview as the embassy prepares to celebrate Vietnamese Independence Day on Thursday.

As two emerging economies in Southeast Asia, the countries should avoid competition for markets that might hurt both sides, Dzung said, adding that low labor costs have made Vietnam and Indonesia Southeast Asia’s top investment destinations.

Indonesia’s foreign direct investment was US$10.82 billion in 2009 with Singapore as the biggest investor, followed by the Netherlands and Japan. Vietnam’s foreign investment reached $9.8 billion in 2009, with the US and the Cayman Islands as the top investors.

“We have to benefit from our situation by working closely. I see we have lots of economic potential that I want both countries to explore,” he said.

Dzung said both Vietnam and Indonesia have worked closely under the Friendly and Comprehensive Partnership, which was signed in 2003. The agreement has led to more than 40 additional agreements, which cover corruption and transnational crimes, among other issues.

He said that bilateral relations have been focused on the economic issues due to common interests and the large potential, although both continue to work closely in other sectors.

Trade volume has risen steadily to $2.5 billion in 2009 from $1.2 billion in 2005, despite the recent global economic crisis, he said.

Indonesia exports mainly chemical products, spare parts and steel to Vietnam, while importing rubber and agricultural products from Vietnam.

Indonesia has 22 projects in the food, plastic and property sectors in Vietnam worth $198 million.

Vietnamese companies have also developed projects in Indonesia in the energy, mining and fisheries sectors.

“Indonesia is a promising market due to its huge population and so does Vietnam. We also have a large population,” he said.

The Vietnamese government recently said it would develop eight nuclear power plants by 2030 in order to support increased economic growth while Indonesia is still wrestling with safety procedure concerns.

Dzung said the existence of its nuclear power plants should not be a matter of concern because Vietnam was a member of International Atomic and Energy Agency (IAEA) and would abide by all regulations and procedure standards of the UN nuclear watchdog.