Indonesia’s middle class has reached approximately 47 million people, with over 60% of the total population within the working-age bracket, creating a young and vibrant consumer market.

With a population of over 285 million and surging food demand, Indonesia represents a highly promising market for Vietnamese food enterprises. However, to conquer ASEAN's largest economy, businesses must overcome strict technical barriers, Halal certification requirements, and implement a systematic market entry strategy.

At the workshop "Indonesia Market Trends and Opportunities for Vietnam's Food Industry," organized by the Ho Chi Minh City Investment and Trade Promotion Center (ITPC) on June 24, experts noted that Indonesia is more than just a potential export destination. The country could also serve as a new growth engine for Vietnamese firms amid the current volatility of global trade.

Deputy Director of ITPC Le Anh Hoang stated that with its massive population, Indonesia is the largest economy in Southeast Asia and one of the region’s biggest consumer markets.

"The rapid expansion of the middle class, combined with modern consumption trends, is driving an increasing demand for processed foods, convenience foods, health-conscious products, and items with natural origins," said Mr. Hoang.

Notably, the upcoming upgrade of Vietnam-Indonesia relations to a Comprehensive Strategic Partnership in 2025 is viewed as a vital foundation to further boost trade and investment cooperation between the two nations. Furthermore, bilateral trade turnover has maintained positive growth in recent years, providing a favorable environment for Vietnamese businesses to expand their presence in Indonesia, particularly in the food and consumer goods sectors.

Vietnam’s Trade Counselor in Indonesia Gian The Cuong advised that Vietnamese enterprises should look beyond the total population and instead identify key regional hubs and specific consumer characteristics.

"Java is currently home to about 160 million people—more than half of the national population—while Sumatra has over 60 million. These are the two largest economic and consumer hubs that Vietnamese businesses should focus on first," Mr. Cuong suggested.

In particular, Indonesia’s middle class has reached approximately 47 million people, with over 60% of the total population within the working-age bracket, creating a young and vibrant consumer market. This demographic is the primary target for processed foods, beverages, nutritional products, and modern consumer goods.

According to the Vietnam Trade Office in Indonesia, the country’s total food and beverage market value is currently among the largest in Southeast Asia.

However, Indonesia is not an easy market to penetrate. One of the most significant hurdles today is the requirement for Halal certification. As the world’s largest Muslim-majority nation, Indonesia is progressively refining and tightening regulations regarding Halal certification for food and consumer products.

“Businesses should not view Halal as merely an administrative procedure. In reality, it is a 'passport' that allows products to enter modern distribution systems and build trust with Indonesian consumers,” Mr. Cuong noted.

Beyond Halal requirements, regulations regarding product registration, labeling, and information disclosure are also strictly managed. The majority of imported food products must be registered with the Indonesian Food and Drug Authority (BPOM) before they can be introduced to the market.

Vietnam's foreign exchange reserves stood at nearly $87.6 billion as of June 18, 2026, according to data released by the State Bank of Vietnam (SBV), as the central bank seeks public feedback on proposed amendments to regulations governing the country's foreign reserve management.

The draft decree, which would revise and supplement provisions of the governmental Decree 50/2014 on state foreign exchange reserve management, introduces a range of changes covering investment mechanisms, market intervention tools, gold reserve management and coordination of foreign currency transactions with the state budget.

The SBV said the existing framework had provided an important legal basis for reserve management over the past decade and helped align operations with international practices. However, the central bank noted that implementation challenges had emerged amid significant changes in both domestic and global economic conditions since the regulation was introduced in 2014.

Official data show Vietnam's foreign exchange reserves rose from $34.3 billion at the end of 2014 to a record high of more than $111.8 billion in January 2022. Nevertheless, reserves subsequently declined as global financial market volatility and exchange-rate pressures intensified, falling to $86.7 billion by the end of 2022 before recovering slightly to nearly $87.6 billion as of June 18 this year.

According to the SBV, the U.S. Federal Reserve's prolonged period of elevated interest rates since 2022, combined with geopolitical tensions, supply-chain disruptions, energy price volatility and unpredictable trade policies, has placed considerable pressure on foreign exchange markets.

Despite these challenges, the central bank said foreign exchange reserves have remained a critical buffer for stabilizing the exchange rate, containing inflation and supporting macroeconomic stability.

One of the most notable proposals in the draft decree concerns the profitability principle applied to reserve investments.

Under current regulations, reserve management activities must generate a positive difference between total investment income and costs. The SBV argues that this requirement is not appropriate for gold holdings, as central banks do not earn periodic interest income from gold in the same way they do from bonds or deposits. Instead, gains are primarily realized through revaluation or sales.

The central bank said gold is generally held to diversify reserve portfolios, hedge risks, support monetary stability, and strengthen a country's financial position rather than maximize returns. It therefore proposes excluding gold-related income and expenses when assessing the profitability of foreign reserve investments.

The draft also adds foreign exchange and gold options to the SBV's market intervention toolkit. The central bank said the move would broaden available policy instruments, enhance operational flexibility, and improve the effectiveness of monetary policy implementation during periods of market stress.

In another significant change, the SBV proposes eliminating the requirement to establish a market intervention mechanism for each specific period. Instead, the central bank governor would be authorized to determine intervention measures based on monetary policy objectives, developments in foreign exchange and gold markets, and domestic currency liquidity conditions. The measure is expected to enhance the authorities' ability to respond swiftly to developments in financial markets.

Regarding reserve accumulation, the draft would add Special Drawing Rights (SDRs) allocated by the International Monetary Fund (IMF) as a source of state foreign exchange reserves. It also clarifies the accounting and management framework for SDRs within Vietnam's reserve funds in line with local and international practices.

The proposal further revises regulations governing the relationship between the state budget and foreign exchange reserves. Under the draft, the Ministry of Finance would continue depositing all State Treasury foreign currency holdings with the SBV, except in certain special cases.

After the prime minister approves the amount of foreign currency to be retained for budgetary expenditures, the remaining balance would be sold to the central bank to supplement official reserves. The draft also introduces a mechanism for addressing foreign currency shortfalls in the state budget, aiming to strengthen coordination between the Ministry of Finance and the SBV in managing the country's foreign currency resources.

The SBV said the proposed amendments are intended to modernize the legal framework for foreign reserve management, enhance policy flexibility and strengthen authorities' ability to maintain monetary and foreign exchange market stability while safeguarding national financial security.

Politburo Resolution No. 10 marks a strategic shift in Vietnam’s foreign investment policy, moving beyond mere FDI attraction toward the development of a national investment platform.

Almost seven years ago, on August 20, 2019, the Politburo issued Resolution No. 50-NQ/TW on improving institutions and policies to enhance the quality and effectiveness of FDI cooperation through 2030. The Resolution called for the proactive and selective attraction of FDI, with quality, efficiency, technology, and environmental protection as the primary evaluation criteria. It marked a new direction in the attraction, utilization, and management of high-quality FDI in Vietnam.

Politburo Resolution No. 10-NQ/TW, on developing the foreign-invested economic sector, issued on June 8, 2026, builds on that foundation while reflecting Vietnam’s changing development realities. It marks a decisive shift from an FDI attraction mindset to one focused on building a national strategic investment platform. The emphasis has moved from competing for investment based on administrative boundaries to attracting investment through industrial clusters, value chains, and innovation ecosystems. Quality, efficiency, technology transfer, supply chain participation, and value creation have become the key criteria, while policy support is gradually shifting from input-based incentives, such as tax breaks and land rental preferences, to performance-based incentives tied to investment commitments.

New national context

Vietnam’s large-scale administrative restructuring last year, reducing the number of provinces and centrally-governed cities from 63 to 34 and establishing a two-tier government system, represents a transformative reform effort. These changes play a critical role in reshaping the investment environment and creating new momentum for economic growth.

The FDI landscape is expected to benefit significantly from the elimination of fragmented local interests. Larger provincial units with stronger economic capacity can support integrated transportation and logistics networks instead of the fragmented development model of the past. Compliance costs associated with investment, construction, and environmental procedures are being streamlined. Licensing processes for industrial park projects are expected to become considerably faster, reducing both opportunity cost and waiting times for foreign investors. Expanded planning space also enables the formation of seamless supply chains, making it easier for multinational corporations to secure land and establish integrated industrial ecosystems.

The administrative restructuring has also streamlined government operations and optimized resource allocation. The reduction in provincial-level administrative units and the elimination of district-level authorities are expected to save trillions of VND in budget expenditures. These resources can then be redirected toward critical infrastructure development, including airports, seaports, expressways, healthcare facilities, and education systems that improve workforce skills to support FDI activities.

The new two-tier governance model, consisting of provincial and commune-level authorities, eliminates intermediate administrative layers. At the same time, stronger decentralization empowers local governments to address bottlenecks related to land acquisition, site clearance, electricity and water supply, internet services, wastewater treatment, and waste management more efficiently, particularly in industrial parks and standalone investment projects. This helps unlock local resources and improve project implementation.

Raising R&D spending

Politburo Resolution No. 10 positions the FDI sector as a critical link in Vietnam’s ambition to become a regional innovation and operations hub.

Global experience demonstrates that countries with higher R&D expenditure as a share of GDP tend to achieve faster and more sustainable advances in economic development as well as science, technology, and innovation. According to the United Nations Conference on Trade and Development (UNCTAD), Israel and South Korea lead the world in this regard, with R&D spending accounting for 6.3 per cent and 5.0 per cent of GDP, respectively.

Most of this investment comes from private enterprises, including foreign-invested enterprises (FIEs) and high-tech companies. Other economies with high R&D intensity include Taiwan (China), with 3.8 per cent of GDP, the US with 3.5 per cent, Japan with 3.4 per cent, Switzerland with 3.35 per cent, China with around 2.68 per cent, Singapore with approximately 2.0 per cent, and Thailand with 1.2 per cent. Vietnam’s ratio remains comparatively low, at roughly 0.4-0.53 per cent of GDP, ranking it 66th globally.

To achieve a breakthrough and avoid the middle-income trap, Vietnam should aim to raise R&D spending to at least 2 per cent of GDP, comparable to Singapore’s current level, in the years ahead. Politburo Resolution No. 10 introduces several breakthrough mechanisms to directly and indirectly do so.

First, it prioritizes investment in core technologies. Vietnam will focus on attracting investors that possess foundational and source technologies, particularly in semiconductors, AI, and big data. These investors may include both large corporations and specialized small and medium-sized enterprises (SMEs) that possess unique technological capabilities and strong R&D capacity, enabling them to maintain competitiveness and integrate deeply into global value chains.

Second, the Resolution promotes the development of a global talent ecosystem. Administrative procedures should be simplified and accelerated, visa and residency requirements eased, and work permit regulations reviewed and reduced for high-tech experts, scientists, foreign entrepreneurs, and overseas Vietnamese with relevant qualifications, regardless of whether they retain Vietnamese citizenship.

Third, the Resolution seeks to strengthen technology transfer and domestic-foreign business links. A national supplier development program should be introduced to encourage Vietnamese enterprises to establish partnerships, joint ventures, and collaborations that enhance their ability to absorb technology from FIEs. This, in turn, would improve the R&D capabilities of the domestic private sector.

Reforming investment promotion

Politburo Resolution No. 10 marks a major shift from a passive approach that waits for investors to arrive to a proactive strategy focused on cultivating, partnering with, and attracting strategic investors, often referred to as “eagles.”

This transformation is reflected in several key directions.

From broad promotion to targeted engagement: Mass investment promotion campaigns are being replaced by focused outreach, negotiation, and relationship-building with leading multinational corporations, major financial institutions, and large investment funds.

Data-driven investment promotion: The Resolution calls for the development of a comprehensive digital database of strategic investors and customized engagement strategies tailored to specific markets, countries, territories, and industry segments.

Strengthening on-site investment promotion: Greater emphasis is placed on supporting existing investors, resolving operational challenges, and encouraging high-quality expansion projects. Rather than repatriating profits after meeting tax obligations, investors are encouraged to reinvest earnings in Vietnam. This is regarded as one of the most effective ways to build confidence among global investors.

Establishing a dedicated Investment Promotion Agency (IPA): Following the enactment of the Law on Foreign Investment in 1987, the government established the State Committee for Cooperation and Investment (SCCI) in 1989 to manage and attract FDI.

However, after nearly four decades of attracting, managing, and utilizing foreign investment, Vietnam still lacks a true national investment promotion agency that meets international standards. Investment promotion activities have largely been carried out through Investment Promotion Centers (IPCs) under the former Ministry of Planning and Investment, now the Ministry of Finance, and various local agencies that often combine investment promotion with trade and tourism activities.

Under the government’s recent institutional restructuring, the Foreign Investment Agency (FIA) and related investment management functions were transferred from the Ministry of Planning and Investment to the Ministry of Finance. As of 2026, the Ministry of Finance is responsible for developing, approving, and coordinating the National Investment Promotion Program.

The experience of Malaysia and Thailand, widely regarded as ASEAN’s most successful investment promotion models, demonstrates the value of a single national agency with strong authority and a business-oriented philosophy.

Malaysia’s investment promotion system is centered on the Malaysian Investment Development Authority (MIDA), established in 1987 under the Ministry of Investment, Trade and Industry. MIDA serves as the primary point of contact for investors and has authority over investment applications, approvals, and tax incentives.

Thailand’s Board of Investment (BOI), meanwhile, operates under the Office of the Prime Minister, with the Prime Minister serving as its Chair. This gives the BOI substantial authority to overcome bureaucratic obstacles and coordinate effectively across ministries and local governments.

Against this backdrop, establishing a dedicated national IPA that operates independently and according to international standards is increasingly necessary for Vietnam. Such an agency would eliminate fragmentation between the Ministry of Finance and local authorities, serving as a single focal point for national investment attraction strategies during Vietnam’s next phase of development.

It would also professionalize investment marketing efforts, build teams of highly-skilled negotiators and market specialists, and target investors and projects that align with Vietnam’s development priorities. It could also coordinate solutions to issues in land clearance, tax incentives, investor disputes, industrial parks, free trade zones, and local authorities.

Defining roles

Politburo Resolution No. 10 redefines the relationship between different levels of government by assigning the central government responsibility for institutional design and digital governance while local governments focus on implementation. This framework applies across all FDI activities, including research, manufacturing, and services.

At the national level, authorities must strengthen efforts to combat transfer pricing, trade fraud, and environmental violations while withdrawing incentives from projects that fail to meet commitments on technology transfer, product standards, or environmental protection.

Local governments, meanwhile, should transition from a purely administrative role to that of a strategic partner for investors. Their responsibilities include licensing support, site clearance, infrastructure preparation, utility provision, environmental services, and workforce development to ensure investor needs are met efficiently.

Proactive local governance may take the form of “green lane” mechanisms, similar to expedited customs clearance channels, enabling major investment projects to obtain approvals within as little as 48 hours. Local authorities should also promote regional connectivity and facilitate the integration of domestic enterprises into the production and service networks of FIEs operating in their jurisdictions.

With the implementation of Politburo Resolution No. 10, attracting $200-$300 billion in registered foreign investment and disbursing $150-$200 billion in capital, equivalent to roughly $30-40 billion annually, appears both realistic and achievable during Vietnam’s next development phase from 2026 to 2030.

(*) Mr. Le Huu Quang Huy is Vice President of the Vietnam Industrial Park Finance Association, former Director of the Investment Promotion Center for Central Vietnam, and former Economic Counselor at the Embassy of Vietnam in Japan.