From aid to trade: Denmark cashing in on changing fortunes in Southeast Asia

Denmark well positioned to benefit from steady growth in ASEAN countries

Alexandra Pedersen

Sep 8, 2015

The Association of Southeast Asian Nations (ASEAN) has seen steady economic growth over the last couple of decades and, as a Nordic country with strong business ties to many of the countries, Denmark is well placed to benefit from the growing prosperity.

Asian relations
Some of the big players in ASEAN have close relations with Denmark, and the steady growth in countries like Indonesia and Thailand rubs off on Danish industry.

Since 2009, Indonesian exports to Denmark have grown by seven percent annually, and Danish exports to Indonesia have increased even more, with a growth rate of 18 percent annually.

Gateway to the region
According to Dr Bomer Pasaribu, the ambassador of Indonesia in Denmark, his country has a lot to offer European trading partners.

“Indonesia, as an emerging country, is ready to play a main role as the gate for Europe to ASEAN. It offers production of high quality products and competitiveness in all business sectors.”

Untapped potential
But he continues to explain that, while relations between Denmark and Indonesia are continuously improving and remain positive, the two countries have yet to exploit each other’s potential for trade.

“Currently, both Indonesia and Denmark are not major export destinations for each other,” he said.

“The reason is that each country has yet to exploit the potential of each other. Nevertheless, we are optimistic that future co-operation between Indonesia and Denmark will increase.”

Indonesia has the largest population of all the ASEAN countries, and it remains at the top when it comes to economic growth as well.

Finding each other
But despite low levels of trade with Denmark, Pasaribu believes there is a mutual ambition for Indonesia and Denmark to find each other in the near future.

“The Indonesian economy has been growing and has had the same goal as Denmark: that is more green industry. It therefore sees Denmark as an important European partner in this regard,” he said.

Nordic trailblazer in Vietnam
In 2013, Denmark became the first Nordic country to have a comprehensive partnership agreement with Vietnam.

John Nielsen, the Danish Ambassador in Vietnam, explained that the agreement provides Danish companies with a unique and solid platform to benefit from Vietnamese growth.

“More than 135 Danish companies are in Vietnam and the number is growing. There is a clear positive trend when it comes to the business relationship,” he said.

“I think it’s important also to stress that there are still some challenges for Danish companies in Vietnam, even though we see this positive trend. There are still problems with corruption and a cumbersome administration.”

From aid to partnership
Denmark has for years been among the biggest providers of development aid to Vietnam, but has recently been phasing out the development assistance and focusing more on political and commercial relations.

Nielsen explained that the economy has hit a bump in the road though, and the growth rate is back to six percent, which is lower than previous years.

“There are still problems with the banking sector, public institutions that are not efficiently run, corruption, and the education system, which is not up to the standards of some comparable countries in ASEAN,” Nielsen said.

He continues to be positive, however, and believes in higher growth rates in the future and increased business relations between Denmark and Vietnam as well as other ASEAN countries.

Royal backers
Denmark’s increasing interest in the region has been underlined by Queen Margrethe and Prince Henrik teaming up with a Danish business delegation for a trip to Indonesia in October to help boost Danish business in an important growth market.

With just over 250 million inhabitants, Indonesia has developed into an exciting growth market for Danish companies over the past decade, but at the moment the fourth-biggest country in the world ranks just 62nd in Danish export markets.

The Danish delegation will be in Indonesia from October 21-24 and will give the Danish business sector an opportunity to show off Danish technology and solutions that can contribute to further growth in the nation.