Advantages of Vietnam’s exports to Indonesia

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The close geographical distance to Indonesia helps Vietnamese enterprises reduce transportation costs and increase the competitiveness of goods. Photo: VNA

Mr. Pham The Cuong, Commercial Counselor to Indonesia, said that Indonesia is a potential market with the 4th largest population in the world, especially the working-age population accounts for 60% of the population. High and stable economic growth promotes increased demand for consumption and imports.

Notably, the middle class (50 million people) is growing rapidly, creating a driving force for consumption and economic growth. Moreover, import demand is quite large, including imports of consumer goods.

According to Mr. Pham The Cuong, Indonesia is a more easy-going market than the US, EU, Japan and has an Asian culture. In addition, the close geographical distance also helps Vietnamese enterprises reduce transportation costs and improve the competitiveness of goods.

Vietnamese goods gradually assert their position in Indonesia with increasing export turnover value; have a comparative advantage with many agricultural and aquatic product groups. Additionally, the two countries have also connected direct flights, which is also an advantage for enterprises to penetrate deeper into this market.

Although it is a potential market, Indonesia is a highly protected market such as quotas, import licenses; Halal certificate (must be issued by competent Indonesian authorities); the Indonesian National standard (SNI), regulations on import ports (for some product groups); and regularly applies trade defense measures.

Therefore, in order to boost exports to the market, enterprises need to apply for Halal certificates and SNI.

To prevent fraud or commercial disputes, Mr. Pham The Cuong recommends that businesses should be vigilant when they see that price and contract negotiations take place quickly, with little bargaining, accepting high prices; not provide legal documents of the business under many different legal entities.

Before signing a contract, businesses need to require Indonesian partners to provide a certificate/business registration book (NIB) and tax identification number (TIN). Conduct partner verification through the Trade Office, the Indonesian Chamber of Commerce and Industry, Indonesian associations, and the Vietnam National Credit Information Center (CIC).

Notably, he recommended that businesses should not to transfer deposits to personal accounts; implement strict contract terms, and pay attention to the terms protecting the interests of the businesses; in which, there must be provisions on disputes and complaints.