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RI climbs 10 notches in world competitiveness ranking
Indonesia’s competitiveness index rating climbed 10 places to number 44 of 139 countries, above Vietnam and India in a Global Competitiveness Index (GCI) 2010-2011, a minister said
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ndonesia’s competitiveness index rating climbed 10 places to number 44 of 139 countries, above Vietnam and India in a Global Competitiveness Index (GCI) 2010-2011, a minister said.
“It is surprising because it indicates our bureaucracy reform programs are yielding [positive] results,” Trade Minister Mari Elka Pangestu said after a press conference in Jakarta last Friday, adding that business climate had also improved in Indonesia.
According to the GCI 2010-2011 report published by the World Economic Forum, Indonesia’s current position was helped by a healthy macroeconomic climate and the country’s ability to maintain it during the economic crisis.
Indonesia’s ability to keep up during the crisis also brought the country to number 34 for macroeconomic health, 18 places above its previous ranking.
As reported earlier, the Central Statistics Agency (BPS) said Indonesia’s economy grew 5.9 percent year on year in the first half of 2010, exceeding government estimates.
It was also predicted that growth should top 6 percent, which would exceed the government’s 5.8 percent target, by year-end.
Indonesia has also been regarded as one of the best investment destinations for labor-intensive industries due to its huge labor force and relatively stable political and social environment.
In April, the Indonesian Footwear Association (Aprisindo) said three sport shoe brands had relocated their production base from mainland China to Indonesia. The brands include Mizuno and Asics Tiger, both from Japan, as well as the US’ New Balance.
Aprisindo said that because of the relocation, shoe exports were predicted to rise by 11 percent to
US$2 billion this year from $1.8 billion last year.
In addition, six footwear firms from Taiwan and South Korea have relocated factories from Vietnam and China to Indonesia with a total investment of $550 million.
Apart from factory relocation, Korean steel producer Pohang Steel & Iron Company, recently signed a joint agreement with Indonesia’s PT Krakatau Steel to construct a steel plant in Cilegon, Banten.
However, despite the healthy economic growth, the GCI 2010-2011 reported that infrastructure still posed one of the major problems in Indonesia.
“Indonesia should not be satisfied with [its current competitiveness ranking],” Investment Coordinating Board (BKPM) chairman Gita Wirjawan said via telephone Thursday, adding that Indonesia still needed to improve three main structural developments.
“First, we need to develop our infrastructure,” he said, adding that other countries were scared off by Indonesia’s poor infrastructure development.
Gita also said that related regulations needed to be improved and simplified, adding that one-stop service for licenses (PTSP) had been implemented in only 17 provincial capitals.
“We are targeting to implement [the PTSP] in all provinces and 40 municipalities,” he said, adding that the government should also adjust redundant and complicated laws to attract investment.
Gita also said Indonesia’s ranking with the World Bank’s International Finance Corporation in 2010 was still poor compared to neighboring countries.
“Indonesia sits at 122 out of 183 countries in doing business, while Singapore sits at number one, Thailand is 12, Malaysia 23 and Vietnam 93,” he said, adding that Indonesia could only attracted a total of $20 billion in both foreign and domestic investments this year while the country had a target of $55 billion in 2014.
“We still have a lot of work to do,” Gita said. (map)
