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View all search results‘State-directed’ approach harms RI’s competitiveness
Experts say the government’s preference for state-led solutions not only exacerbates cumbersome governance but also hurts business efficiency – thereby dragging down Indonesia’s global competitiveness.
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A student holds a poster depicting President Prabowo Subianto during a protest against government policies, including state budget spending, fuel price hikes, the free meals program and expanded military roles in civilian affairs, on June 12 in Jakarta. (Reuters/Ajeng Dinar Ulfiana)
E
xperts have pointed to the current administration's inclination toward state-centric development as a key factor behind Indonesia’s plunging competitiveness in a recent global ranking, arguing that economic interventionism not only complicates governance but also hurts business efficiency.
Economist Intelligence Unit (EIU) Asia analyst Tay Qi Hang told The Jakarta Post on Thursday that external factors did impact the country’s competitiveness, but the drop signified Indonesia-specific concerns born from various policies that “weighed on investor confidence”.
He noted that firms were being “more cautious because the policy direction has become less clear” and big government initiatives reflected how “policymaking is becoming less predictable and more state-directed”.
In its latest World Competitiveness Ranking, the Institute for Management Development (IMD) listed Indonesia in 48th spot out of 70 countries ranked, tumbling from 27th in 2024 and 40th last year.
The decline happened across all four main gauges save for Economic Performance, which stagnated at rank 24 for the past two years. The rank for the other three indicators have worsened significantly since President Prabowo Subianto took office in late 2024.
The most extreme drop took place in the Business Efficiency gauge, where Indonesia was ranked 14th months before Prabowo’s presidency began, then plunged to 26th eight months into his term and now sits in 50th place.
Read also: RI lost 21 spots in competitiveness ranking under Prabowo's tenure
