Indonesia or Vietnam: Next Economic Powerhouse?

Indonesia and Vietnam are two giants of southeast Asia. Both of these nations share a similar history of colonialism, civil wars, and harsh economic situations. Also, in modern times, both of them have shown incredible growth.
For Indonesia, two colonial powers, the Dutch and the Japanese oppressed the local Indonesian population. Even after independence, the suffering of common citizens did not change. Soon after the independence, the military took control of the country. Though under military rule Indonesia did see some growth, still it was a doctorship. After the end of military rule in 2004, Indonesia held its first election, and the economic growth after that was just remarkable. With GDP of 250 billion dollars in 2004 to a trillion dollar economy today. That's a massive growth in such short period.
Now if you look at Vietnam, after the end of the colonial period, we all know what happened during the Vietnam war, how country became the battleground for the soviet union and US. Vietnam got divided into south and north with different ideologies and political structures. Even after post-reunification things hadn't changed because of the destruction during the war. Vietnam's gross domestic product (GDP) in 1984 was valued at only $18.1 billion with a per capita income estimated to be between US$200 and US$300 per year. With today's standard, these numbers are pretty bad. But similar to Indonesia, Vietnam also got out of deep poverty in a very short amount of time. So what did both nations have done?
Well for Vietnam it was started with the doi-moi policy. These reforms are mainly focused to facilitate the transition from a centralized economy to a "socialist-oriented market economy. Doi Moi combined government planning with free-market incentives. It was something new for a country but it worked. By the late 1990s, the success of the business and agricultural reforms under Doi Moi was incredible. More than 30,000 private businesses had been created, and the economy was growing at an annual rate of more than 7%. Yet Vietnam didn't stop there they invested heavily in infrastructure and human capital. And those investments paid off, with the necessary infrastructure and with market-friendly policies, Viet Nam became a hub for foreign investment and manufacturing in Southeast Asia. Many Japanese, Korean, American, and European companies have set up manufacturing units in the country which has helped them to increase their exports. This drastic change in growth has helped the country to improve its per capita income to 2800 us dollars which shows incredible growth in the last 20 years.
Now if you talk about Indonesia then their path has been little different. As you know, Indonesia is a resource rich country. Indonesia is a leading exporter of coal, natural gas, crude oil , palm oil and many more. And export of these commodities made a lot of money for Indonesia in the 2000s commodity boom. Which results in higher GDP numbers and helped the country overall to overcome the Asian financial crisis. Indonesia's service and manufacturing sector is also rising rapidly from the last few years. Industries such as oil refineries, textiles, mining, footwear, plywood, rubber and chemical fertilizers are among the top of the list. But compared to Vietnam, Indonesia has something that Vietnam dont. The massive young workforce. You see, countries like Vietnam are dependent on its young workforce for economic growth. But unfortunately Vietnam has one of the fastest aging populations in the world. It is estimated that the country's aging population could go from 7% to 14% by 2035 and then it could officially be an aged society. On the other hand, Indonesia's case is totally different. Indonesia's higher population is the driver of the economy by being a consumer based economy. It is estimated that by 2030 Indonesia will have a consumer class of 135 million. A growing middle class is also contributing to rapid urbanization which is helping Indonesian people to shift from low paid agricultural jobs to higher paying service and industrial jobs.
So by looking at this we can say that, on the one hand Vietnam growing because of its good policies and business friendly environment which attracting many manufacturing companies, similar to how china grew in the past.
On the other hand Indonesia grew on its commodity exports. Also having one of the biggest consumer markets in southeast Asia, Indonesia is also slowly shifting to a manufacturing and service based economy. Although it has a long way to go to compete with Vietnam in this segment. But we also cannot deny that with the large young workforce Indonesia can diversify its economy to a great extent.
So, in the end we can say, both countries had a different paths for their economic journey and considering all the factors both have shown remarkable growth.
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Видео Indonesia or Vietnam: Next Economic Powerhouse? канала Global Economics