Opportunities and challenges for Vietnam, Indonesia to boost bilateral trade

President Nguyen Xuan Phuc’s visit to Indonesia from December 21-23 is expected to create new opportunities for Vietnam-Indonesia relations, particularly bilateral trade which is expected to reach 15 billion USD by 2028.
Opportunities and challenges for Vietnam, Indonesia to boost bilateral trade ảnh 1Workers make garment products for export. (Photo VNA)

Hanoi (VNA) – President Nguyen Xuan Phuc’svisit to Indonesia from December 21-23 is expected to create new opportunitiesfor Vietnam-Indonesia relations, particularly bilateral trade which is expected toreach 15 billion USD by 2028.

According to the Asian-Africa Market Department under theMinistry of Trade and Industry, Vietnam-Indonesia trade revenue sees positivegrowth, from 5.5 billion USD in 2015 to 11.5 billion USD in 2021.  

In the first 11 months of this year, it reached 12.8 billion USD, a year-on-year increase of 25%, and is expected to reach 14billion USD by the end of this year.

The Vietnam-Indonesia Joint Committee on economic,scientific, and technological co-operation has effectively contributed toaddressing issues of the two countries’ trade relations during the past time.

Vietnamese enterprises have been actively participatingin trade promotion fairs and exhibitions held in Indonesia.  

Notably, Vietnamese processed and manufactured goodsexported to Indonesia see the highest export value which accounts for over 60%of Vietnam's total export turnover to Indonesia.

Vietnam mainly exports to Indonesia machinery, equipment,tools, and spare parts; computers, electronic products, and components; phonesand accessories; means of transport and spare parts; other common metals andproducts; and textiles.

Other Vietnam's exports include construction materials,especially iron, steel, and products made of iron/steel. 

Regarding agricultural products, Vietnam still hasadvantages in exporting rice, coffee, cashew nuts, high-tech vegetables andfruits, organic vegetables, and seafood.

Tran Phu Lu, vice director of the Investment and TradePromotion Centre of HoChi Minh City (ITPC), saidthat Indonesia is an Islamic country with the world’s largest Muslim population,and the Indonesian government is quite stringent whenit comes to Halal regulations.

All food, beverages, pharmaceuticals, cosmetics,chemicals, and organic items sold in Indonesia must have Halal certification.

Indonesia spent 220 billion USD on Halalproducts in 2018 and the figure is expected to top 330 billion in 2025, Lu said,adding that the country is a promising market for Vietnamese exporters,especially those with products granted Halal certificates.

The market is a less demanding than the US, EU, orJapan. Meanwhile, Vietnam and Indonesia share Asian cultural similarities andclose geographical distance which helps reduce transportation costs andincrease the competitiveness of goods.

Moreover, they are both ASEAN countries, and thus canenjoy preferential tariffs within the bloc, Lu said.

Le Bien Cuong, vice head of the Asia-Africa MarketDepartment, said that as the two countries are positive members of multilateralcooperation agreements and free trade agreements, so tariff barriers between thetwo countries are mostly lifted, which facilitated their trade and cooperationin developing supply chains, production chains and boosting export to the thirdcountry.

However, the structure of Vietnam andIndonesia's exports has many similarities, especially in the agricultural and fisheryindustry, so the exports of the two countries compete with each other,Bien said.

Moreover, Indonesia has been applying restrictivemeasures and barriers to Vietnamese exports.

According to the Vietnam Trade Office in Indonesia, thecountry implements the policy of self-reliance in food (reducing the need toimport agricultural, forestry, and fishery products). Therefore, to enter Indonesia, Vietnamese products will have to compete with those from other ASEANcountries. 

Indonesia is also a highly protectionist market with manynon-tariff barriers, especially with frequent application of trade remedies.

To access and enter the market, Vietnamese exporters needto apply for Indonesia’s Halal certificate and the Indonesian National Standard(SNI) - the only nationally applicable standard in Indonesia and mandatory forvarious products.

Vietnamese enterprises are also urged to closely workwith Vietnamese agencies if Indonesia launches trade remedies against theirproducts.

By 2021, Indonesia has conducted 11 trade remedy casesagainst Vietnamese products.

Particularly in 2021, although Indonesia did not initiateany new cases, it issued a conclusion to impose taxes on four trade remedycases. The items investigated by Indonesia are mainly steel products, BOPPwrapping film, cigarette rolls, EPS granules, and clothing./.

VNA

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