A COMPARATIVE STUDY OF INDONESIA AND VIETNAM’S POLITICAL ECONOMY TO ATTRACT FOREIGN DIRECT INVESTMENT ON ELECTRIC VEHICLE MANUFACTURING SECTOR IN 2014-2019

Abstract

Electric vehicles have been gaining popularity by the past few years. Most countries have now realized the importance of changing normal fuel-based vehicles into the electric ones. Whether it is for environmental purposes or developing its domestic vehicle industry and ASEAN countries are not exceptions. Indonesia and Vietnam have been joining other countries in the electric vehicle game since 2014, but to develop their industries, both countries need Foreign Direct Investment (FDI). In order to attract more FDI to their respective countries, Indonesia and Vietnam have done changes in their political economy. In exploring one country’s attractiveness, there are several factors to put into consideration. Moreover, the automotive industry is a complex industry to be analyzed. This thesis will contain a qualitative comparative study using competitive advantage theory (Porter’s Diamond Model) that are making Indonesia and Vietnam more attractive from one another and decide which factors can be more potential to receive FDI in the electric vehicle manufacturing sector. By the end of this thesis, it is decided which factors Indonesia and Vietnam have the advantage towards each other in the electric vehicle manufacturing industry.