This file photo shows Jakarta's skyline as seen from Jalan Rasuna Said, South Jakarta, on June 4, 2021. (B1 Photo/Joanito de Saojoao)

Indonesia Improves in World Competitiveness Ranking


JUNE 17, 2021

Jakarta. Indonesia has jumped three places in a global competitiveness ranking in 2021 thanks to its economic resilience amid the Covid-19 pandemic, the improvement in government efficiency, and rising confidence among its businessmen, Switzerland-based International Institute for Management and Development, or IMD, announced on Thursday.

The largest economy in Southeast Asia moved up three places to 37th among 64 economies assessed by the institute based review on recent statistical data and interviews with business executives operating within their respective territories. 


"Indonesia improved its overall competitiveness ranking by 3 positions in 2021 thanks to improvements in business efficiency, economic performance (despite the difficult economic conditions), government efficiency (specifically, some enhancements in business legislation), and for an increase in business confidence among Indonesian executives," Christos Cabolis, the chief economist at the IMD World Competitiveness Center, said. 

Indonesia's performance was in contrast to some of its neighbors, which saw their competitiveness ranks dropped due to the Covid-19 pandemic. Singapore lost the top position it held for two years in a row to Switzerland. The pandemic created havoc on the island nation's job market and undermined its service-based economy. 

The Philippines's economy also saw the unemployment rate doubled to more than 10 percent and deterioration in public finance and businesses' productivity, which lead to a seven-place drop to 52nd place — the sharpest drop in the region. 

Other neighboring countries fared a bit better. Malaysia's improved two positions to 25th place thanks to improvement in business efficiency and relatively healthy public finances, IMD said in a statement on Thursday. 

Thailand also gained one spot to 28th place, as it showed an increase in labor force growth, kept government deficit low, and developed scientific infrastructure. 

Cabolis said Indonesia must pay special attention to human resources and research and development to catch up with its more advanced neighbors. 

"To maintain and increase its competitiveness, Indonesia should improve its educational and healthcare systems [...] as well as augmenting its investments in R&D and knowledge generation and the productivity of its private sector," Cabolis said. 

IMD ranked Indonesia at 60th in Health and Environment subfactor and 58th in Education subfactor, showing how far behind the country lags behind its peers. 

The country was also only ranked at 50th position in terms of the Scientific Infrastructure subfactor, reflecting the country's lack of investments in research and development and knowledge generation. Regarding the productivity and efficiency of its private sector, the country ranked at 49th place. 

The institute also warned that the Covid-19 pandemic brought deeper inequality in the country, posing a new challenge to Indonesia's economy.  IMD also noted that it remains to be seen how the government would implement the landmark 2020 Law about Job Creation, also known as omnibus law, clearly and consistently. 

The institute also said that the country's current account — the broadest measure of a country's international trade — recorded a "pseudo surplus" that masked its "domestic industrial indolence."  

IMD's World Competitiveness Center used more than 200 indicators grouped four key factors in determining weaknesses and strengths of a country: its economic performance, business efficiency, government efficiency, and infrastructure. The competitiveness ranking aimed to gauge how well a country create an environment that can sustain growth, generate jobs and increase its citizen welfare.