D

espite the government’s efforts to boost Indonesia’s competitiveness, the country fell slightly in the International Institute for Management Development’s (IMD) World Competitiveness Ranking in 2018.

The IMD World Competitiveness center in its annual assessment examined 63 countries on four competitiveness aspects namely economic performance, government efficiency, business efficiency and infrastructure. In 2018, Indonesia ranked 43rd out of the 63 countries examined in 2018, compared to its rank in 2017 of 42nd.

The drop is mainly driven by a weakening level of government and business efficiency. Indonesia also scored low in infrastructure.

IMD World Competitiveness Center chief economist Christos Cabolis said the drop might also have been caused by advancements made in other countries.

“Indonesia might have done nothing problematic, but because the ranking is comparable with other countries and other countries around Indonesia might have advanced more, so it affected the final position,” he told
The Jakarta Post over the phone recently.

Cabolis said Indonesia might be ranked higher if it could focus on improving its infrastructure, which not only consists of physical infrastructure such as transportation and energy but also intangible assets.

“I see a lot of room to be improved in infrastructure such as in areas of education, environment, technological and scientific infrastructure where Indonesia’s ranking is low,” he said.

Institute for Development of Economic and Finance (INDEF) economist Bhima Yudhistira said technological infrastructure was one of the key sectors for Indonesia to become globally more competitive as the world was currently moving toward the digital economy and the fourth industrial revolution (industry 4.0).

“The advancement of technological infrastructure, including wider communication networks and higher internet penetration is needed as it is the time for Indonesia to jump from a commodity-based economy to knowledge- and digital-based economy,” he said.

“But how can we win in the digital economy or jump to industry 4.0 if the penetration of internet and communication network is still relatively low in Indonesia?” he added.

Commenting on the ranking, Coordinating Economic Ministry assistant deputy for balance of payments and monetary affairs Edi Prio Pambudi said the government was currently focusing on its National Strategic Projects (PSN) and establishing an Online Single Submission (OSS) system for investors.

“[The PSN] include not only physical development projects like airports, toll roads and electricity programs but also non-physical infrastructure development like education,” he said.

Indonesia is ranked lower than other Southeast Asian countries such as Singapore at third, Malaysia at 22nd and Thailand at 30th. The Philippines was among the lowest ranked in the region at 50th.