Indonesia has been slow to attract foreign direct investment (FDI) to Vietnam due to several reasons. Recently, US artificial intelligence (AI) computing company NVIDIA decided to invest in Vietnam instead of Indonesia.
According to the Vietnam Briefing newspaper, NVIDIA has recently shown stronger interest in the Vietnamese market than Indonesia, along with other tech giants expanding into Southeast Asia. These developments reflect the Vietnamese government’s aggressive technology development strategy and the country’s great economic potential.
On December 5, NVIDIA signed a memorandum of understanding (MOU) with the Ministry of Planning and Investment to establish two cutting-edge AI centers in Vietnam. Vietnam Research and Development Center (VRDC), NVIDIA’s third global AI research hub, and AI Data Center. Nvidia CEO Jensen Huang and Vietnamese Prime Minister Pham Minh Trinh also attended the signing ceremony.
While neither side has disclosed the value of the deal, which Phan and Trinh toasted with glasses of bia hoi at a Hanoi restaurant afterwards, it is a sign of Vietnam’s future as a regional technology hub with one of the world’s leading AI companies. represents a firm vote of confidence in
In a subsequent statement, Nvidia expressed “confidence in the bright future of artificial intelligence in this country.” In a statement, Mr. Huang praised Vietnam’s “vibrant ecosystem of researchers, startups and business organizations.”
According to Reuters, Chinh said AI will boost economic growth and support Vietnam’s green transition. Reuters quoted Chin as saying, “We not only want to conquer AI, but also space and oceans. AI will turn the sun, wind and waves into clean energy.” .
Nvidia has been eyeing investment in Vietnam for some time. Mr. Huang, who visited Hanoi late last year, said his company is committed to investing in Vietnam and making the country his “second home.” In particular, he said he plans to expand partnerships with Vietnam’s top technology companies and support the development of human resources to develop AI and digital infrastructure.
This partnership between the Vietnamese government and the US semiconductor giant aims to foster technological breakthroughs while strengthening the country’s technology infrastructure and talent pool.
NVIDIA further demonstrated its strong commitment to Vietnam by acquiring VinBrain, a subsidiary of Vingroup specializing in AI integrated medical solutions. Founded by former Microsoft developer Steven Truong, VinBrain developed DrAid, an AI-powered diagnostic tool currently used in leading hospitals in Vietnam and around the world, and gained recognition through the NVIDIA Inception program.
According to the Indonesia Business Post news website, the research center will leverage Vietnam’s rich science, technology, engineering and mathematics (STEM) engineering resources to support local businesses such as industries, start-ups, universities and businesses. The company will focus on AI software development while involving the ecosystem. Government agency.
“We are very happy to open the Nvidia R&D Center to accelerate Vietnam’s AI efforts,” Indonesia Business Post quoted Huang as saying, adding that Nvidia is also making significant AI innovations. The company is committed to working with local partners to create new products.
Previously, in April, Vietnamese technology company FPT announced plans to build a US$200 million AI factory using Nvidia graphics chips.
Ironically, Mr. Huang visited Indonesia last month as a keynote speaker at the Indonesia AI Day 2024 event on November 14, 2024. The event was hosted by Indosat Old Hutchison (IOH) in Jakarta. At the event, Mr. Huang received a special call from President Prabowo Subianto to explore investment opportunities in Indonesia.
Indonesia seems to be lagging behind Vietnam in attracting foreign investment. Tuku Reefky, an economist at the Institute of Economic and Social Research at the University of Indonesia (LPEM UI), said there are many major obstacles contributing to Indonesia’s lag in foreign investment, especially in AI development, namely the employment sector, financing and innovation situation. listed. , legal certainty, and level of corruption.
“Administrative procedures in Indonesia are much longer than in Vietnam. “To start a business, 11 documents are required in Indonesia but only 8 in Vietnam. In terms of taxation, Indonesia requires investors to complete 26 tax documents. We are asking for submissions, but Vietnam only has six,” Indonesia Business Post reported, quoting Reefky.
He also stressed that the quality of Indonesia’s human resources (HR) has been declining and is now lagging behind Vietnam. “The quality of HR in Indonesia, which was previously better than Vietnam, is now starting to lag behind, and this will continue for the next few years,” he said.
The issue of openness to foreign investment is also attracting attention. Based on the Restrictions Index, Indonesia is one of the most closed countries to foreign investment among the G20 countries, only better than the Philippines.
Reifky assessed that unless major reforms are implemented immediately, Indonesia will continue to miss out on major opportunities, as is currently happening with Nvidia.
“Vietnam is increasingly doing well in attracting investment, but Indonesia faces structural challenges that must be addressed immediately,” he said.
As competition in Southeast Asia becomes increasingly intense, Indonesia needs to take concrete steps to simplify administrative processes, improve the quality of human resources, and ensure legal stability.
“These reforms are important to increase investment attractiveness, especially in the rapidly growing technology sector,” Reifke concluded.
According to Vietnam Briefing, Vietnam was ranked 39th out of 139 countries in the UK-based Oxford Insights AI Readiness Survey, which assesses governments’ digital capabilities, technology capabilities and data infrastructure, an increase of 19th from the previous year. It is said that it has increased. Vietnam ranks among the top five countries in Southeast Asia, with over 5,000 engineers, 7,000 AI experts, and around 500 startups in this field.
According to VnExpress newspaper, the Vietnam Software and IT Services Association announced that revenue from software and IT services has increased six times over the past decade, reaching nearly $16 billion last year.
According to Vietnam’s Ministry of Information and Communications, at least 500,000 more technical workers will be needed by 2025.
