Indonesia is ranked 32nd out of 63 countries assessed by the IMD’s World Competitiveness Center. (JG Photo/Dion Bisara)

Indonesia's Great Leap Forward in World Competitiveness

MAY 29, 2019

Jakarta. Indonesia has leaped over its peers in Asia-Pacific in terms of competitiveness thanks to improvements in government efficiency, infrastructure and business conditions, Switzerland-based International Institute for Management and Development, or IMD, revealed on Wednesday.

Indonesia is ranked 32nd among 63 countries assessed by the IMD’s World Competitiveness Center, up 11 places from 2018.

"Indonesia leapt eleven places to 32nd, enjoying the region’s biggest improvement, thanks to increased efficiency in the government sector as well as improvement in infrastructure and business conditions," the institute said in a statement. 

"The Southeast Asian country is characterized by the lowest cost for labor across the 63 economies studied," IMD said. 

President Joko "Jokowi" Widodo has been seeking to improve the country's competitiveness to raise more investment and boost its economy.

The effort has met with several setbacks in the past years, particularly in simplifying permit issuance across hundreds of regional governments. 

On the flip side, the IMD said in its 2019 World Competitiveness Report that stagnant economic growth and low credit expansion growth may pose challenges to Indonesia's $1-trillion economy.

Deficiencies in basic domestic industry and the chemical industry, as well as low labor productivity and low competencies in human resources have also held back Indonesia’s competitiveness. 

The country may also need to address its "inconsistency of regulation implementation and law enforcement" and "changes in national policy direction and government structures," should it want to improve its competitiveness even further. 

Indonesia follows the trend in the Asia-Pacific region, where 11 out of 14 countries studied by the IMD have advanced or maintained their competitiveness ranking. 

Singapore leads the ranking in the region, followed by Hong Kong, China and Taiwan. Indonesia was placed 10th behind Korea and Japan but ahead of India and the Philippines. 

IMD's World Competitiveness Center used 230 indicators, measured by surveys of business respondents and official data, if available, from 63 countries to evaluate "the extent to which a country fosters an environment where enterprises can achieve sustainable growth, generate jobs and, ultimately, increase welfare for its citizens."

The report grouped the indicators in four key factors to determine weaknesses and strengths of a country: its economic performance, infrastructure, business efficiency and government efficiency.