Not only have foreign investors and international financial institutions diligently praised Vietnam’s aggressive and lucrative incentives, including generous land ownership and leases for foreign direct investors and individuals, but also Indonesians. Vietnam is often regarded as a model of economic growth for other ASEAN members. 

Many Indonesian ministers, senior Bank Indonesia officials and conglomerates have often pushed the government to catch up on Vietnam’s amazing economic progress by changing its half-hearted reception to foreign investors and individuals.

The government, however, has its own justification. It says Vietnam enjoys more freedom in the policy-making process and implementation because it has a single-party system, the Communist Party of Vietnam. Indonesia, on the contrary, is a democracy in which regions are autonomous vis-a-vis the central government.

But the recent demonstrations in major Vietnamese cities, including Hanoi and Ho Chi Minh City, show that the Vietnam government cannot freely force its will on the public. The protesters were angered by the government’s plan to grant up to 99-year land leases to foreigners in three special administrative and economic units in Van Don in Quang Ninh province, Bac Van Phong in Khanh Hoa province and Phu Quoc in Kien Giang province.

Although refraining from referring to China, the protesters suspected that the government wished to grant more freedom to Chinese investors to control Vietnam’s economy. There is also speculation that the government let the protests happen as ties between Vietnam China are frayed, especially due to the South China Sea dispute.

But it is clear that Vietnam is facing a serious problem, although Communist Party chief Nguyen Phu Trong tried to play down the fear. “No one is that foolish to hand over land to foreigners for them to come and mess things up,” Reuters quoted him as saying.

Vietnam allows foreigners or foreign companies to buy property or lease land for industrial purposes. According to international news agencies, Vietnam offers maximum land lease terms of up to 70 years. Indonesia is more restrictive in dealing with foreigners, prohibiting them from owning land and giving them only limited rights to use it.

It is true that Indonesia need deregulation in order to compete with its neighbors, including Vietnam, in luring foreign investment. But as the mass protests in Vietnam have taught, we need to learn from not only their achievements but also the price they have to pay for progress.