Indonesia, Vietnam, and the race for Southeast Asia's next decade

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Hi, I'm Jetni. I work in business development at a Southeast Asian fintech, on banking, lending and e-commerce across Vietnam, Indonesia, Cambodia, Myanmar and Malaysia. Frontier is where I share what I see from inside the region. This first issue is the map: where the region stands, where the money is going, and which two countries I think everyone should be watching.

The IMF expects the world economy to grow about 3.0% in 2026. Advanced economies are projected at 1.7%, and Latin America at 2.4%. Emerging and developing Asia is the outlier: 5.6% in 2025 and about 5.2% in 2026.

Southeast Asia sits inside that fast lane. In its October update, AMRO forecasts ASEAN growth of 4.9% for 2026, almost three times the pace of the rich world. Vietnam (8.0%) and Indonesia (5.3%) lead the pack; Thailand trails at 2.4%.

Investors have noticed. FDI into ASEAN hit a record US$243.9 billion in 2025, up 9.7%, while flows into developing economies overall rose just 2.1% and global FDI rose 6.0%. In a year of tariff chaos, the region grew its share of the world's investment.

Here is 2025 FDI by country, largest to smallest, next to each economy's growth.

Why the two move together. FDI builds factories, data centres and supply chains; those create jobs and exports; exports and wages lift GDP. It works the other way too: fast growth signals a growing consumer market, which pulls in more investment. Vietnam is the textbook case of that loop: electronics FDI turned it into an export machine, and 8% growth keeps pulling in more.

Why the chart doesn't line up perfectly. Three exceptions tell you more than the rule:

The lesson: FDI is a leading indicator, not a guarantee. It tells you where companies are betting. Whether the bet turns into growth depends on what the country does with it.

Together these two countries hold over 390 million people (more than half of Southeast Asia) and a combined GDP of about US$2 trillion. They are winning for different reasons.

The pull is strongest for companies whose home market has slowed. KBank's CEO has pointed to Thailand's long-term growth of about 3% as the reason to push into Vietnam and Indonesia.

The big-ticket version, briefly. Two Thai banks show what it takes at the top end.

The more interesting story: mid-sized brands. You don't need a banking licence to play this game. Three regional brands, each a fraction of a bank's size, show how smaller companies are getting in.

ZUS started in 2019 as a delivery-first coffee kiosk in Malaysia. It now runs more than 1,000 stores across the region and raised RM250 million (about US$57 million) in 2024 to expand. In May 2026 it opened its first Indonesian store, at Puri Indah Mall in Jakarta, in partnership with Kapal Api Group, one of Indonesia's biggest coffee companies.

Indonesia is a hard coffee market: homegrown chains like Kopi Kenangan and Fore are strong, and customers are price-sensitive. Rather than fight that alone, ZUS borrowed a local giant's distribution and adapted its menu. The goal is to grow from about 1,000 outlets to roughly 4,000 by 2030.

Lesson: in a crowded market, rent a local partner's reach instead of building your own.

Karmarts is a family-run, SET-listed Thai beauty company with 21 brands, nine of its own, led by Cathy Doll. In 2023 Japan's Marubeni invested, specifically to help it build sales channels in Vietnam and the wider region. In 2025 the company reported strong sales growth in Vietnam, the Philippines, Indonesia and Japan, driven largely by Shopee, Lazada, TikTok and social commerce.

Lesson: you can test a market through marketplaces and social commerce long before you sign a lease.

ChaTraMue is an 80-year-old Thai tea brand that claims about 70% of its home market. It opened its first Vietnamese store in District 1, Ho Chi Minh City, in June 2023, shipping its raw materials from Thailand, and now has stores in Hanoi too. Most of its overseas growth comes through franchising: 114 stores in 11 markets by mid-2025. In July 2025 it entered Indonesia, and not through Jakarta: its first store opened at Galaxy Mall in Surabaya, the country's second-largest city, where it had already tested demand at local bazaars.

Lesson: franchising lets a brand move fast with little capital, if the product travels well.

Put those cases side by side and a pattern appears. There are roughly four ways in, and they scale with how much money and risk you can take.

For most readers of this newsletter, routes 1 to 3 are the realistic ones, and many brands use them in that order: test online, then franchise or partner once the numbers work.

Two rules of thumb: in Vietnam, foreign ownership caps on banks push investors toward side doors like consumer finance; in Indonesia, majority control is possible, so buying a bank outright is on the table. And whatever the route, plan for approvals to take longer than you think.

With their population, land area and rising income per person, Indonesia and Vietnam have become the countries everyone is watching. Global investors are going in, and so are their own neighbours: Thai banks, Malaysian coffee chains and Thai consumer brands are all pushing into the two fastest-growing big markets in the region.

Who knows what the next decade holds? But if these two can keep growing at anything like this pace, I think both could sit in ASEAN's top three, and Indonesia could reach the world's top ten. Indonesia is already the world's 7th-largest economy by purchasing power, and Goldman Sachs projects it to be 4th by 2050. Vietnam is still fourth in ASEAN in dollar terms, but the IMF has it roughly level with Thailand by 2027.

As for Thailand, my home market, I'll be honest. The money is still coming: Thailand drew a record US$19.1 billion of FDI last year. But it isn't turning into growth. AMRO expects just 2.4% this year, the same as last year and next year: stuck in low gear, and the second-slowest in ASEAN, ahead of only Brunei. Our income per person (about US$8,000) is now well above Vietnam's and Indonesia's, so we can't compete on cost anymore.

Tourism will always be part of who we are, and it pays the bills. But it won't carry us forward. If we want to stay in the race, we have to put our weight on talent: people who can build new businesses, new products and new industries that compete, and win, inside ASEAN and beyond. Cheap labour got us here; it won't get us to the next level. What will is a steady stream of new initiatives, started by Thais, that the rest of the region wants to buy, copy or invest in. That's the Thailand I want to bet on, and it's a big part of why Frontier exists: to spot those opportunities early, wherever in the region they show up.

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— Jetni