Vietnam: a Skyrocketing Economy

Vietnam’s unique geographic position, its growing domestic market, and its young and hardworking population have made the country an attractive investment and trade destination. The Netherlands is Vietnam’s largest EU investor and second largest EU trading partner. The Dutch have built a reputation offering quality products and services in areas in which Vietnam takes a particular interest.

Vietnam is a relative newcomer in the world of FDI. It opened to foreign investors in the late 1980s, managing to attract significant inflows of FDI quickly as a result of progressive liberal reforms. The impact of these inflows has been very strong and foreign investors have been a major force in the economic transformation during the past two decades and in Vietnam’s integration into the world economy. With the ever-closer ASEAN Community, which aims for economic integration amongst its members, implying free movement of goods, services, investment, free flow of capital, and skilled labour, Vietnam has proved to be an attractive location to cater the ASEAN region as an economic powerhouse.


Indonesia: Think Big

Indonesia is both the biggest and most populous country of Southeast Asia. The archipelago has charted impressive economic growth since demonstrating its resilience during the 2008 global financial crisis.  Its massive young population and large middle class with rising levels of disposable income provide the platform for the biggest consumption base in Southeast Asia, a major driver of historical economic growth, and constitute a fundamental reason why many multinationals rank this emerging market as the foreign investment destination of choice in Southeast Asia.

Indonesia has shown stable economic growth in recent years, outpacing other countries in Asia. An increase in domestic consumption has been underpinned by healthy labor market conditions and strong real wage increases. Indonesia is a promising market given its large, young population, a legal system favorable to business growth, pro-business government, abundant raw materials, and strategic geographical position for trade.




With a 20% share of national GDP, agriculture is a highly important sector for Vietnam. It is one of the top exporters of coffee, tea and rubber. With a growing and westernizing middle class, demand for high quality products has seen an increase in Vietnam. To keep up with this demand, Vietnam needs to modernize its agricultural sector. There lie many challenges in productivity, excessive use of pesticides and fertilizers, climate change and water quality and availability. To overcome this, many opportunities lie for companies with the skill and know-how to tackle these issues.



Indonesia has a rich history in agriculture and became a top producer and exporter of many products such as palm oil, natural rubber and many spices. As a result, agriculture uses approximately one third of Indonesia’s land. Agriculture has contributed, on average, $25 billion per quarter to GDP since 2010. However, there is still room for improvement. Supported by the government’s program Nawa Cita, Indonesia is heavily investing ($2.2 billion in 2018) in its agricultural sector with the aim to modernize its agriculture. With a focus on water usage, human resources, fertilizers and machinery, there are many opportunities for organisations to support the government’s ambition.


Due to a growing middle class in both Vietnam and Indonesia, an increasing amount of income is spent on education. Enrollment in local universities increases, just as students seeking education abroad. In both countries, education is put high on the agenda in order to improve amongst others teacher performance, the increase in English education and minimum quality standards. Governments are trying to give higher education institutions more and more autonomy and besides that, both Vietnam and Indonesia allow transnational education and/or cooperation between foreign and local universities. Indonesia currently has the world’s third-largest population under the age of 25, so Indonesia has a large number of potential international students. Furthermore, a large outbound student mobility is happening in Vietnam over the past years, since Vietnams University capacities were reached due to the rapidly growing student population. This promising sector creates lots of opportunities for foreign countries, for example in e-learning, which is a very popular and upcoming way of learning in both countries.


With the rapidly increasing economies of both Vietnam and Indonesia, the energy sector has proved to be essential to sustain growth both in terms of economic output and population of the entire ASEAN region. Conventional energy sources including oil, gas and coal constitute a major share of both countries’ exports and are a chief force behind the ever-increasing GDP of both states. Predictions envision an annually rising energy demand of 8-10% until 2030. Indonesia is the number one coal exporting nation worldwide, whereas Vietnam’s oil and gas sectors contributed to 30% of state revenue, underlining its central spot in government policy-making. With the liberalization of the energy markets by both pro-business governments, major flows of FDI are directed to the region as many business opportunities arise to tackle both the lack of proper infrastructure and onshore processing possibilities. Contrary to the established energy sectors, renewables advance in the energy mix of both states. The Indonesian government aims to obtain a 23% share of renewables by 2025. With its favorable climate and geographic position, its potential for FDI is remarkably high.

Fast Moving Consumer Goods

Under the influence of various factors, the fast moving consumer goods (FMCG) industry in Vietnam & Indonesia is indeed fast moving. The FMCG-industry in these two countries has increased by 6% and 12% respectively in recent years. Rising personal incomes are lifting millions of people into the middle class of Vietnam and Indonesia. Therefore, these two countries have the fastest-growing middle class in Southeast Asia. The rising living standard, increasing purchasing power, young population, stable GDP and economic growth ensure that these two countries are one of the most dynamic emerging markets in Southeast Asia. Therefore, Vietnam and Indonesia have become increasingly attractive for foreign investment. The increasing brand-conscious shopping of the inhabitants of Vietnam and Indonesia is an attribute that foreign companies have been making strong use of recently. The growth and expansion of this industry has already proved to be enormously successful in recent years, but will only become more attractive for foreign companies in the future.

Financial Services

Continued strong economic growth, ongoing reform and a large population have combined to create a dynamic and quickly evolving financial environment in Vietnam and Indonesia. The financial services sector has become one of the major determinants of economic performance in these developing countries. Central banks ensure efficient management of monetary policies, inflation control and increase support for economic stability. Transparency of local banks ensures that the financial services sector is operating in accordance with international norms. Not only does the financial services sector provide funds for production, consumption and innovative investments, it is also serving as a platform for public savings. The life insurance sector is assessed to be one of the fastest growing sectors of the Vietnamese economy and therefore offers a lot of opportunities. Governments in both countries have set an ambitious goal to provide the entire population with a basic insurance at the end of 2020. The financial services sectors of Vietnam and Indonesia have become more and more integrated into the global market, leading to more investment opportunities for both local and foreign investors. Although both financial markets are developing rapidly, challenges such as accessibility to financial services still persist. Dutch expertise in this field could help both countries to progress in the international market.

Healthcare & Life Sciences


With a large, young but aging and increasingly affluent population, Vietnam’s life sciences and health market has significant growth potential. According to Business Monitor International (BMI), Vietnam’s healthcare expenditure was estimated at $16.1 billion in 2017, which represented 7.5% of the country’s GDP. BMI forecasts that healthcare spending will grow to $22.7 billion in 2021. Vietnam is currently undertaking a plan to improve their healthcare provisioning, based on their four levels of facilities, in order to provide better primary care at local levels to reduce the burden on central and provincial medical facilities. However, public hospitals and clinics in Vietnam are frequently underfunded and poorly equipped. Therefore, the Vietnamese government encourages the import of medical equipment since local production cannot meet demands. Several medical education and research institutions are open to experimenting with new systems and innovative methods. These end-users present an excellent strategic opportunity to develop partnerships, given their desire to explore new technologies. Moreover, the integration of internet and smartphones in Vietnam provides a solid foundation for eventual healthcare IT applications.



Indonesia’s health care industry is on the rise. State-driven developments, as well as activity in the private sector, are triggering impressive growth across the health industry. The government’s National Health Insurance program and its target to provide universal healthcare to all 264 million Indonesians by the year 2019 is a major opportunity for hospital operators and pharmaceutical companies as the customer base will be enlarged significantly. According to estimates from Frost and Sullivan, the value of Indonesia’s health care market value will reach $21 billion in 2019, up from $7 billion in 2014. Business potential for small- and medium-sized companies from the EU exists both in the planning phase of new hospitals and in the area of technical equipment. In the field of medical technology, for example, Germany was the number one supplier country for Indonesia in 2016, ahead of China, Japan and the USA, with an import volume of more than $142 million. Indonesia’s pharmaceutical market is ranked as the largest market in the ASEAN regions, with the market value expected to hit $10.1 billion by 2021.


Manufacturing, for both Vietnam and Indonesia, constitutes as one of the main components of its GDP growth. Both export-based economies are triggered by its young and rapidly expanding workforce, low wages and increasingly pro-business governments. This accumulated into better circumstances for FDI and the breakdown of protectionist legislation. Moreover, especially for Vietnam, the well-educated population has caused a major influx of electronics companies and its strategic location on trade routes has made it the worlds’ leading textile producer. With an average annual industry-output growth of 10.3%, Vietnam is a most interesting destination for all sorts of manufactured goods. Indonesia on the other hand, with its rich endowments of natural resources, has seen a resurgence of its industry over the last decade supported by pro-business policies. The creation of the well-known free-trade zones are meant to foster manufacturing, combining favorable administrative conditions, a rapidly growing workforce, strategic locations and well-organized infrastructure. Moreover, with a growing middle-class, Indonesia is one of the most promising markets in Southeast Asia.



Due to the penetration of smartphones and the internet, increasing purchasing power and a young and tech-savvy population, Indonesian e-commerce sales have increased by 50% in the past four years. In addition, McKinsey projected that Indonesia’s e-commerce market would rise nearly eight-fold between 2017 and 2022. With governmental investments and policies stimulating internet and smartphone usage, Indonesia’s e-commerce promises grow quickly and steadily.

We see the same trends happening in Vietnam. E-commerce revenue is expected to double between 2017 and 2021. Despite its late start, smartphone penetration rates will steadily increase over the coming years. This will fuel the market for e-commerce considerably.



Indonesia is the second-largest car manufacturing nation in Southeast Asia and the ASEAN region. Toyota, Isuzu, Daihatsu, Honda and Suzuki all have large factories in Indonesia. With this comes demand for parts and materials. Due to the rising capita GDP, Indonesia is currently shifting from a merely export orientated country to a major (domestic) car sales market. Here lie attractive opportunities for car manufacturers.

The same goes for Vietnam. Car sales are predicted to grow 22.6 percent by 2025. This is based on the growth in middle class, GDP and disposable income. Car import tariffs finally reduced to zero percent in early 2018. More than 350,000 cars were bought in 2018. This market is expected to grow by 10 percent in 2019. With only 23 cars per 1,000 people combined with a growing middle class, many opportunities open up for all car manufacturers.



ICT, with a focus on business process outsourcing, was seen as a prime area that is projected to continue growing in Vietnam. Mathematics and IT are the top choices of Vietnamese students. With more than 290 universities offering IT studies and 55,000 students enrolled each year, Vietnam is a leading IT service destination in Asia. To facilitate this, Vietnam houses three high-tech parks, “software cities”, which contain the right infrastructure, HR training centres and many software and IT firms.

Indonesia has also become a large spender on Information Technology (IT) in Southeast Asia. Indonesia’s growing digital economy has contributed significantly to the nation’s growth and the republic is digitizing rapidly. It is forecasted to add 50 million new internet users between 2015 and 2020. Social media usage in the country is also among the highest in the world.


Smart Cities

Several cities in Vietnam and Indonesia will be joining the ASEAN smart cities network.

Both countries are facing global trends that pressure cities to find innovative and sustainable solutions to improve its resilience against current and future challenges. Vietnam and Indonesia are rapidly developing in areas like mobility, data and information infrastructure, start-up ecosystems and climate change. Nevertheless, to transform its cities into smart cities, these cities need advanced technology, training and government reform. The Netherlands can offer an integrated approach for the planning phase of developing future-proof cities.



Vietnam’s tourism industry surges as the economy booms. With 3000 kilometers of coastline, beautiful beaches, dynamic growing cities, mountainous highlands, and diverse cultural and historic sites; it is no surprise the government has identified tourism as a key industry for Vietnam. Since 2010, the number of international tourists has grown three-fold from 5 million to more than 15 million in 2018. Despite this rapid growth, there is room for further expansion in the sector which is currently restrained by issues such as infrastructure, human resources, airport capacity, and branding. Major opportunities lie within new hospitality developments and online tourism. Hotel investment is set to rise. The Vietnam Hotel Association reports that with marine and beach tourism on the rise, coastal cities hold significant investment opportunities. Moreover, the online tourism market is predicted to grow from $2.2 billion in 2015 to around $9 billion in 2025.


The Indonesian tourism industry also flourishes and has become a major driver of the economy and a central feature of the government’s economic growth strategy. Indeed, tourism is the fourth largest national foreign exchange contributor, after palm oil (CPO), oil and gas and mining (coal).  To facilitate further growth, the Indonesian government is hoping to replicate the success of Bali as a tourist destination in a number of other locations spread across Indonesia. Furthermore, if all goes according to the Ministry of Tourism’s plans over the coming decade, tourism will nearly double in value, with forecasts from the WTTC indicating a total GDP contribution of just under $113.1 billion by 2027. Achieving the planned growth of tourism requires substantial investment in infrastructure, notably in the area of transport connectivity.

Transport & Logistics

The logistics industry is one of the fastest growing industries in Vietnam and Indonesia. Both countries have exerted efforts and resources on improving its infrastructure: in Indonesia this has been part of a major program highlighted by President Joko Widodo in his national development agenda. However, poor infrastructure in both countries is increasing logistics costs. Here lie opportunities in logistic services including in- and outbound transportation and warehousing to decrease logistic costs. Opportunities can also be found in transportation improvement and investment in infrastructure. With Schiphol Airport being a top-ranked European airport and excellent showcase of Dutch technology and planning, the Netherlands is well-positioned to offer the required solutions for Vietnam’s needs in airport development.



With over 26% of land below sea level, Vietnam faces the same types of issues as the Netherlands. Therefore, the Dutch water industry bears attractive opportunities to provide knowledge, expertise and technology in water management to help tackle the water challenges that Vietnam is facing and contribute to the country’s sustainable development. The following subsectors are of interest for doing business in Vietnam: delta, water and agrifood, resilient cities, wastewater treatment, drinking water, and technology development.

In addition, Vietnam is an interesting location for Dutch maritime companies due to its long coastline, strategic geographical position and skilled low-cost labour force. The Vietnam-Netherlands cooperation program on maritime and inland waterways creates a billion opportunities. Vietnam is a major trading hub, with its ports facilitating inter-Asian shipping routes to take advantage of growing intra-Asia trade volumes. This explains the popular perception of Vietnam to become one of the most important maritime countries in Asia by 2020. Moreover, Vietnam is currently the second largest in shipbuilding in ASEAN and ranks 4th in the world. Promising subsectors that may be interesting for Dutch companies include, but are not limited to: shipbuilding industry, inland waterway development and port development.



Since President Widodo’s presence in office in 2014, huge investments have been made in Indonesia’s maritime sector, mainly to improve its ports to boost economic activity. Due to its low labour costs and high number of islands to be served, the archipelago has huge growth potential in this sector. Foreign investment could develop economies of scale which would allow the country to profit from being in one of the world’s busiest waterways. The Netherlands have been working together with Indonesia, providing their latest know-how on logistics, port development and maritime training programs. Moreover, the growing need for better flooding management and more efficient water supply in the country is met by the implementation of several projects in collaboration with Dutch entities.