Vietnamese businesses conquer the most populous market in the region

Indonesia, the most populous country in Southeast Asia, is becoming an attractive market for businesses from oil and gas to retail and construction materials from Vietnam.

PV Drilling will operate two rigs at the same time in Indonesia from 2025 - Photo: PV DRILLING

Confidently compete with foreign rivals

PV Drilling has just approved a plan to contribute capital to establish a joint venture PT Petro Vietnam Drilling Indonesia, after two years of operating in the oil and gas industry in the archipelago country. In this joint venture, PV Drilling contributes 40% of the capital (28,000 USD), PT Quest Semesta Raya contributes 40% and Mr. Yosep Arianto contributes 20%. The joint venture will provide jack-up rig rental services and well drilling techniques to support oil and gas exploitation. With 2 rigs providing services from 2025, PV Drilling expects to become the largest drilling contractor in Indonesia. In Vietnam, thanks to owning 4 jack-up rigs, 1 semi-submersible tender assist rig and 1 land rig, PV Drilling currently holds about 70% of the domestic drilling market share. However, the domestic oil and gas investment environment is increasingly difficult. Since 2019, no new oil and gas contracts have been signed. In the long term, businesses like PV Drilling have been looking for ways to expand their markets. In the third quarter of 2024, of PV Drilling's total revenue of more than VND2,300 billion, the proportion from the domestic and international markets was almost equal. Of which, foreign markets began to exceed VND1,000 billion and gross profit was more than VND317 billion. Malaysia brought in the largest revenue in foreign markets, followed by Brunei and Indonesia. These markets all have different protectionist policy barriers. PV Drilling's management said that in Indonesia, using local resources in the host country is extremely difficult for foreign businesses. To adapt to the market's characteristics, the company has established a joint venture Admin Jo with a local partner to perform drilling contracts, tax declarations and tax refund procedures. Service providers in the oil and gas industry from Vietnam are confident of competing on par with other international drilling contractors such as Borr Drilling, Vantage, Japan Drilling, etc. Indonesia is the largest oil and gas producer in Southeast Asia, with an output of about 700,000 barrels of crude oil per day; a sharp decline from the peak of 1.5 million barrels per day in the 1990s. The government of this country aims to increase daily production to 1 million barrels of crude oil and 12 billion cubic feet of gas by 2030, opening up opportunities for oil and gas drilling contractors such as PV Drilling.

Wholesale steel to retail electronics

Ton Dong A, a galvanized steel manufacturing enterprise that accounts for more than 15% of the domestic market share, has expanded to the most populous country in Southeast Asia. This company contributed 51% of the capital, equivalent to VND 25 billion, to establish PT Indo Vina Steel Company, specializing in wholesaling rolled steel. Another notable Vietnamese enterprise when it comes to the journey to conquer the Indonesian people is Mobile World, with the EraBlue electronics retail chain of 76 stores. The largest electronics and phone retailer in Vietnam has been holding losses for its business operations in Indonesia for more than 2 years. The market of more than 280 million people is showing signs of improvement. Mr. Doan Van Hieu Em, CEO of the company, said that for more than 6 consecutive months, the retail chain in Indonesia has achieved the goal of "bringing money home to mother". According to an analysis report by KB Vietnam Securities Company, the third quarter of 2024 was the first quarter that Mobile World recorded a profit of VND 148 million from the EraBlue chain. The size of the Indonesian mobile phone and electronics market in 2024 is estimated at VND453,400 billion, 1.6 times larger than that in Vietnam thanks to its large population. However, 60% of the market share belongs to traditional stores, the rest belongs to EraBlue and competitors such as Electronic City, Best Denki, Hartono, etc. The demand for electronics products in Indonesia is forecast to increase in the coming time thanks to the increase of the middle class and higher per capita income than Vietnam. The analysis team of KB Securities Vietnam Company believes that after going abroad in Laos with Bluetronics, Mobile World has found a potential market in Indonesia with a large and fragmented market size.

According to the Foreign Investment Agency (Ministry of Planning and Investment), in the first 11 months of 2024, Vietnam invested in 151 overseas projects, with a total registered capital of nearly 600 million USD, an increase of approximately 52% over the same period last year. In terms of investment territories, enterprises from Vietnam have invested in 31 countries and territories. Some markets that are attracting attention and capital are Indonesia, Laos, India..., in which Laos leads with nearly 162 million USD, Indonesia with more than 137 million USD (accounting for nearly 30%).

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Source: https://tuoitre.vn/doanh-nghiep-viet-chinh-phuc-thi-truong-dong-dan-nhat-khu-vuc-20241216065019298.htm