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Jobs law yet to reflect in Indonesia’s competitiveness
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Office workers walk near the Dukuh Atas railway station in Central Jakarta in this undated photo. (JP/Seto Wardhana)
E
xperts attribute Indonesia’s recent gain in a global competitiveness ranking to improved infrastructure, a rising number of internet users and cheap labor, rather than to the Job Creation Law issued with the intent of strengthening domestic industries.
At a time when the global economy was badly bruised by the coronavirus pandemic, Indonesia climbed three places to claim the 37th spot in the International Institute for Management Development’s (IMD) World Competitiveness Ranking 2021.
The Switzerland-based IMD World Competitiveness Center, the research center that publishes the ranking since 1989, uses statistics and an executive opinion survey to rank 63 economies every year.
Bayuadi Wibowo, head of research and consulting at the Management Institute of the University of Indonesia's Economy and Business School (LM FEBUI), said an improved tax policy and the country’s cheap labor were the reasons for the rise.
He added that, while Indonesia’s position in the business legislation ranking, which is part of the overall competitiveness score, rose to 40th from 50th last year, asynchronous regulations between central and regional government authorities impeded business attractiveness.
“The government passed the omnibus law [on job creation] to simplify regulations, but it needs to and will create derivative regulations. So, [it should] not let these new regulations complicate business operations,” Bayuadi said during the IMD survey’s online presentation on Aug. 19.
