Vietnam's Economy is Sprinting: Can Indonesia Overtake?

That morning, when Vietnam’s economic growth figures were released—7.83 per cent (year-on-year), the highest in the last 16 years—many in Indonesia fell silent. It was not because they could not understand the numbers, but because those figures acted like a mirror: reflecting questions we have long avoided—why can they achieve this, while we remain stuck around 5 per cent? Yet, two decades ago, Indonesia held a far superior position. We were larger, richer in resources, and more strategically positioned geopolitically. However, today, Vietnam is sprinting, while we are walking briskly—but not yet running. Is this merely a matter of luck? Or is there something fundamentally different? Vietnam has chosen a path that is not always popular: export-based industrialisation. Since the early 2010s, they have positioned themselves as part of the global supply chain. They do not merely sell raw materials but serve as a place where the world’s goods are produced. They recognise one key thing: high growth does not arise solely from domestic consumption but from productivity that transcends national borders. Indonesia, on the other hand, remains comfortable with the strength of its domestic market. We often repeat the narrative that ‘a large market is our strength’. That is true, but a large market without strong production will only become a market for other countries’ products. This is where the differences become apparent. Vietnam does not only open its doors to investors but also ensures they feel at home. Relatively simple regulations, quick permitting, and consistent incentives make Vietnam a magnet for global investment. Major companies from around the world do not just come but build long-term production ecosystems. They have no doubts because the state acts as a facilitator, not an obstacle. Indonesia is not short of pro-investment regulations. We have various policy packages, fiscal incentives, and the OSS system. However, the problem often lies not in the policies on paper but in their implementation on the ground.