Vietnam - Indonesia Upgrades Relations to Comprehensive Strategic Partnership: Economic Development Potential

Vietnam and Indonesia have officially upgraded their relationship to a Comprehensive Strategic Partnership, ushering in a new era of bilateral cooperation, particularly in economy, trade, and investment. With a shared goal of boosting bilateral trade to $18 billion and expanding collaboration in electric vehicles, renewable energy, and the digital economy, this milestone marks a significant step toward sustainable growth and shared prosperity.

1. A Milestone in Bilateral Relations

On March 10, 2025, Vietnam and Indonesia officially upgraded their relationship to a Comprehensive Strategic Partnership, marking a significant milestone in bilateral cooperation, particularly in the fields of economy, trade, and investment.

As two dynamic economies in the region and members of the Regional Comprehensive Economic Partnership (RCEP), Vietnam and Indonesia enjoy favorable conditions for expanding their collaboration. This event not only reflects mutual trust and understanding but also unlocks numerous opportunities for sustainable development and shared prosperity for both nations.

2. Strengthening Economic Cooperation

Boosting Bilateral Trade

Indonesia is currently Vietnam’s third-largest trading partner within ASEAN, while Vietnam ranks fourth among Indonesia’s regional trade partners.

In recent years, trade turnover between the two countries has witnessed remarkable growth. In 2024, bilateral trade reached a record-high of $16.7 billion. Both nations are now working towards the target of $18 billion in trade volume, aiming for a balanced import-export structure.

Vietnam and Indonesia hold great potential for expanding cooperation in various sectors, particularly in the export of key products such as agricultural goods, seafood, and electronics. Additionally, participation in the regional supply chain, especially in supporting industries and manufacturing, will create further opportunities for collaboration and sustainable growth.

Investing in Strategic Sectors

The upgraded partnership paves the way for broader investment opportunities between businesses from both countries, particularly in emerging fields such as the digital economy, green economy, energy transition, and electric vehicle ecosystem development.

Both Vietnam and Indonesia are prioritizing the development of renewable energy and the electric vehicle industry. Indonesia possesses abundant nickel resources, a crucial component for electric vehicle battery production, while Vietnam has significant rare earth reserves, which are vital for high-tech supply chains. This provides a strong foundation for collaboration in battery production and the advancement of the electric vehicle sector in the region.

Vietnam’s leading electric vehicle manufacturer, VinFast, has announced plans to install 100,000 EV charging stations across Indonesia and construct a production facility with an annual capacity of 50,000 vehicles, expected to commence operations in 2025.

Enhancing Industrial Investment and Cooperation

Industrial cooperation and investment have become key pillars in the Vietnam-Indonesia relationship. Over the past decade, Vietnamese investment in Indonesia has reached record levels. Between 2014 and 2024, Vietnam’s total realized investment in Indonesia amounted to $66.3 billion, with key investment regions including East Java (0.2%), West Java (89.9%), Jakarta (5.3%), and Bali (4.1%).

Vietnamese investments in Indonesia primarily focus on sectors such as the electric vehicle industry, trade, hospitality, fisheries, and construction.

Promoting Tourism and Cultural Exchange

Tourism is a promising area for collaboration between the two countries. In 2024, Vietnam welcomed nearly 17.6 million international visitors, including over 184,000 tourists from Indonesia, making Indonesia one of Vietnam’s key tourism markets within Southeast Asia. Conversely, an increasing number of Vietnamese travelers are choosing Indonesia as a preferred destination, particularly Bali.

The upgraded relationship will not only enhance the promotion of national images but also create opportunities for tourism businesses to thrive, while fostering deeper cultural and people-to-people exchanges.

3. Future Prospects

As active members of ASEAN and various international forums, Vietnam and Indonesia have vast potential for deeper cooperation on regional and global issues.

The elevation of their relationship to a Comprehensive Strategic Partnership will allow both nations to coordinate more effectively in maintaining regional peace, stability, and sustainable development. Furthermore, this presents an opportunity for businesses from both countries to leverage their advantages, expand investments, and boost trade, ultimately contributing to economic growth and shared benefits.

With a strong foundation and extensive cooperation potential, Vietnam and Indonesia are set to embark on a future of robust, sustainable, and prosperous development together.