Indonesia, Vietnam improve overall relationship in 2005

Indonesia, Vietnam improve overall relationship in 2005

Veeramalla Anjaiah, The Jakarta Post, Jakarta

The year 2005 witnessed immense activity in the relations between
two Southeast Asian giants -- Indonesia and Vietnam.

In May, President Susilo Bambang Yudhoyono visited Hanoi and
his Vietnamese counterpart, Tran Duc Luaong, paid back the favor
in April to enhance cooperation between the two countries.

With its impressive economic growth at an average of 7 percent
during the last decade, Vietnam has gradually emerged as an
important country in Southeast Asia both strategically and
economically. It is also on the verge of becoming a new economic
hub in Asia.

Indonesia, meanwhile, which lost most of its economic strength
in the late 1990s due to 1997 Asian financial crisis, has made
large improvements democratically, holding its first-ever direct
presidential elections in 2004 and making some serious efforts to
reform its investment climate.

There is also another dimension to the increased activity in
the two countries' bilateral relations this year.

Both Indonesia and Vietnam are celebrating 60 years of
independence in 2005 and they are also commemorating 50 years of
diplomatic relations.

On Dec. 30, 1955, Vietnam and Indonesia established consular
relations and subsequently upgraded them to full diplomatic
status in August 1964.

"With the passage of time, the deep-rooted sympathy,
friendship, mutual respect and understanding, and the desire for
cooperation have always been treasured by our governments and
peoples and are a dominating theme in our bilateral relations,"
Vietnamese Ambassador to Indonesia Nguyen Hoang An said recently
in Jakarta.

Indonesia has Southeast Asia's largest economy, and Vietnam --
the third-biggest nation in the region in terms of population --
enjoy a convergence of strategic interests, which could provide
the basis for building cooperation between the two countries.

This was reflected in the several high-level visits between
the two countries this year and the increasing bilateral trade.

Both presidents' visits in 2005 also opened new chapters in
the history of both countries' relations.

Prior to this in June 2003, during the visit of then president
Megawati Soekarnoputri to Vietnam, the two countries signed
various documents, including the historic Declaration on the
Framework of a Friendly and Comprehensive Partnership, an
Agreement on the Delimitation of the Continental Shelf and an
Agreement on Visa Exemptions for Both Countries' Citizens.

Both these agreements and high-level visits have contributed
to the strengthening of areas like trade, tourism and people-to-
people exchange programs.

Bilateral trade, a key element in the relations, has surpassed
the US$1 billion-mark for the first time in 2004, from $883.70
million in 2004, and is predicted to increase further this year.

This is in part thanks to a memorandum of understanding signed
by both countries' chambers of commerce and industry in 2005.

However, Indonesia and Vietnam are not only friends, they are
also fierce competitors. They produce many of the same products
-- rubber, rice, coffee, tea, crude oil and manufactured goods --
and compete for foreign direct investment from the same group of
investor countries.

While there is obviously little interest in trading these
commodities, there is still room to trade in sectors like oil and
gas, tourism, energy and mining and others.

The competition for investment has caused some disappointment
on the Indonesian side, as several Japanese and South Korean
companies have recently shifted their manufacturing plants from
Indonesia to Vietnam, whose attractions are cheap-but-skilled
labor, low production costs and less red tape.

In order to woo foreign investors, Indonesia must improve its
investment climate. With its recent successes, Indonesia could
also learn from Vietnam on how to attract and reap more benefits
from investors.

With its 83 million population and as the second-fastest
growing economy in Asia after China, Vietnam has much to offer to
Indonesia.

"Thanks to the Doi Moi (Renovation) policy, from 1991 to 2000,
our country doubled its GDP (Gross Domestic Product) with an
annual growth rate of 7.5 percent. Since 2001, average GDP growth
has been sustained at over 7 percent. In 2004, it was 7.6
percent," Hoang An said.

The Doi Moi policy's main aim is to transform Vietnam's
centrally planned, closed and import-substitute economy into an
open, socialist-oriented, multi-sector market and an export-
oriented trader; to integrate its national economy into that of
the Southeast Asia and the world. Another objective is to achieve
rapid economic growth, while ensuring social progress and justice
for the sake of human development; to ensure sustainable
development.

On the security front, both countries have agreed to increased
cooperation in the forms of official visits, exchanges of
information and by sharing experiences in dealing with terrorism
and transnational crimes.

Impressive bilateral progress has already been made in
fisheries, science and technology, education and training,
tourism, sports, health, agriculture, transport, the postal
system and telecommunications, natural resources and civil
aviation sectors.

Around 15,000 Indonesian tourists visited Vietnam last year,
however, there is no information on how many Vietnamese visited
Indonesia recently.

Several Vietnamese students have also received scholarships to
study in various educational institutions in Indonesia.
People-to-people exchanges, especially involving businesspeople,
are also on the rise.

From the geographical as well as the ASEAN point of view,
officials believe Indonesia and Vietnam need each other. Both
countries' close partnerships in economic, political and defense
sectors will not only strengthen ASEAN but also provide a
counterbalance to China's increasing influence in the region.

Vietnam, a highly proud and nationalistic state, has the
distinction of having defeated three major powers -- France, U.S.
and China -- during the last century.

Susilo is expected to visit Vietnam again in 2006 to attend
the APEC (Asia Pacific Economic Cooperation) Summit in Hanoi.
This could give a big boost to the relations between both
countries and Hoang An is optimistic about future relations.

"I do believe that these relations will be further
strengthened and developed (next year) to serve our two
countries' interests, as well as to contribute to the stability
and development of the whole region." Hoang An said.