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Lower competitiveness a second blow for Indonesia
The WEF report shows that Indonesia lags behind Singapore (first), Malaysia (27th) and Thailand (40th). At the same time, Vietnam soared 10 spots to rank 67th.
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Workers at a garment factory in Ungaran, Semarang, Central Java, carry out short daily exercise in between work on Thursday, Oct. 3. Supply chains of the fashion industry have started to give more attention onto workers' welfare amid rising consumers' awareness on ethical production practices.
(Jakarta Post/Ardila Syakriah)
P
resident Joko “Jokowi” Widodo’s administration has to swallow another bitter pill at the end of its first term as the country’s competitiveness ranking fell this year, following a gloomy economic outlook conveyed by the World Bank.
The World Economic Forum (WEF) global competitiveness index published on Wednesday places Indonesia in 50th place out of 141 economies, down five spots from last year, with a score of 65 out of 100, a 0.3-point drop from 2018. The decline was primarily due to stagnating performances in variables that include “enabling environment”, “human capital”, “markets” and “innovation ecosystem”.
“The decline in the competitiveness index should ring alarm bells for the government to step up its reform agenda,” said Bank Central Asia (BCA) chief economist David Sumual.
“[The government] can’t do business as usual now. We’ve already lost six to seven months of momentum because of a dragging political process,” he added, referring to a trail of political events following the presidential election in April.
The latest WEF report is a second blow for the government, which is struggling to attract more foreign direct investment and boost exports to jack up the country’s sluggish economy. Indonesia’s gross domestic product (GDP) expanded by only 5.05 percent in the second quarter, the slowest rate in two years.
In a presentation recently handed to Jokowi, a copy of which was obtained by The Jakarta Post, the World Bank highlighted the country’s complicated regulations as one of the causes of Indonesia’s lagging competitiveness compared to its peers. This steered foreign direct investments to other countries, it said.
Read also: Foreign investments flow to neighbors instead of Indonesia: WB
