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he Indonesian government and businesspeople were told to watch Vietnam closely as its economy may exceed Indonesia’s in the near future due to rapid growth rates of the economy and exports.

Indonesian Ambassador to Vietnam Ibnu Hadi said he had recently informed the government to send delegations of businesspeople and other stakeholders to Vietnam to establish better economic cooperation in the midst of competitive business nowadays.

“Vietnam is experiencing positive movement in its economic figures,” Ibnu said on Thursday. “If we are not careful, maybe [within] three [to] five years they may overtake Indonesia.”

He added that Vietnam, with a population of 93.7 million in 2017, had exceeded Indonesia in terms of exports.

Ibnu said their export value reached US$214 billion in 2017 while Indonesia, with a population of 255.1 million in 2015, booked only $168 billion.

Also in 2017, Vietnam’s economy grew by 6.81 percent while Indonesia grew by 5.07 percent, well below the target of 5.20 percent.

Ibnu, speaking on the sidelines of a four-day meeting of Indonesian diplomats from around the world, added that the Vietnamese economy grew quite rapidly because it had a good atmosphere for export, investment and
tourism.

According to data cited by the Indonesian Embassy, Vietnam reaped foreign direct investment (FDI) worth $35.9 billion in 2017, lower than Indonesia’s FDI of $42.5 billion.

However, Ibnu added, Vietnam’s foreign investment trend had been consistently higher than Indonesia’s since 2012.

According to the 2018 Ease of Doing Business Index issued by the World Bank, Vietnam ranked 68th while Indonesia is at 72nd.

Ibnu said that was because Vietnam’s production costs were relatively lower than Indonesia’s due to some aspects, including lower wages, more advanced utility and an easier permit process.

“If you enter the industrial zone, the investor does not even need to go to the investment
office because in the zone all [business-related matters] will be assisted.”

Vietnam also managed to boost its economy because its national security was stable, he said.

Security factors and low accommodation costs have also allowed Vietnam to become the latest most-visited country for tourism in Southeast Asia, Ibnu added.

“Vietnam has become one of the exotic destinations. It gives alternatives after Bali in Indonesia and Bangkok in Thailand.”

Aside from those factors, Vietnam had also become a rival to Indonesia in agricultural and marine commodities, he said.

Vietnamese shrimp exports, for instance, reached $3.8 billion in 2017, more than double that of Indonesia’s. Indonesia’s export value was still higher in 2016.

Ibnu said other than shrimp, Vietnam had also beaten Indonesia in the export of fish, coffee and pepper.

On coffee production, Ibnu added that Indonesia suffered from lower productivity making it now the world’s fourth largest exporter while Vietnam was second.

Vietnam produced 2.5 tons of coffee per hectare, thanks to an advanced agricultural system, while Indonesia produced only 700,000 kg, Ibnu said.

He also warned that Vietnam might overtake Indonesia’s position as the world’s second largest exporter of natural rubber. The largest exporter is Thailand.

Ibnu added that the government had to pay attention to the issues and that more countries were going to exceed Indonesia’s economic achievements.

“Indonesia is progressing, but other [countries] are progressing even more,” he said.

Indonesia, however, still had a larger gross domestic product (GDP) of around $1 trillion, while Vietnam had some $250 billion in 2017, according to the International Monetary Fund.

On Jan. 31, President Joko “Jokowi” Widodo publicly vented his anger about Indonesia’s dismal export performance and told the envoys on Feb. 5 to explore more economic opportunities in an attempt to boost the country’s export, when opening a four-day meeting at the Foreign Ministry.

He said as a middle power country and ASEAN’s leading country, Indonesia’s export was still far below Vietnam, as well as Malaysia, the Philippines and Thailand.