Indonesia’s competitiveness improves, but still well below Singapore, Malaysia



Indonesia’s economic competitiveness has stepped up, according to the recently released Global Competitiveness Report by the World Economic Forum (WEF).

Under the newly introduced Global Competitiveness Index 4.0, Indonesia has a score of 64.9 points and is ranked at 45th, up two places compared to the previous index.

Neighboring countries Singapore, Malaysia and Thailand, however, place higher in second place (83.5 points), 25th (74.4 points) and 38th (67.5 points), respectively.

The report notes that Indonesia benefits from its sheer size and its interconnectedness, which combined with a vibrant entrepreneurial culture and overall business dynamism is said to “bode well for the future”.

However, the country lacks innovation capability, particularly in research and development activities. Indonesia’s R&D spending is less than 0.1 percent of GDP, ranking at 112nd among 140 countries in the index. Countries with the highest spending for R&D are Israel (4.3 percent of GDP), South Korea (4.2 percent), Japan, Sweden (3.3 percent) and Taiwan (3.2 percent).

Another concern is infrastructure. Among G20 economies, Indonesia is the worst performer in terms of physical infrastructure with 66.8 points, or almost 25 points behind Japan as the best performer (91.5 points).

The Global Competitiveness Report is an annual study by the WEF, assessing both microeconomic and macroeconomic foundations, comprising 98 indicators.

The 2018 report methodology includes several relatively novel factors such as idea generation, entrepreneurial culture, openness and agility.

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