Indonesia fell four places in the World Economic Forum (WEF)'s Global Competitiveness Report 2016-2017. In the latest edition, which was released on Wednesday (28/09), Indonesia ranked 41st. The WEF stated that despite the many reforms to the nation's business environment, the performance of Indonesia in the index remains one of contrasts. The WEF's competitiveness report assesses the competitiveness landscape of 138 economies, providing a unique insight into the drivers of these nation's productivity and prosperity.
Indonesia performs well in terms of market size (10th), macroeconomic environment (30th), innovation (31st), and financial development (42nd). However, in other areas it remains weak - or weakened - such as the health and basic education pillar (100th, declining 20 places from last year's ranking), labor market efficiency, the low labor force participation rate of women (115th), and the technological readiness pillar (91st). The WEF noted that ICT penetration remains low as only one-fifth of the Indonesian population uses the Internet, while there is only one broadband connection for every 100 Indonesians.
Most problematic factors for doing business in Indonesia:
The WEF also highlighted its concern about rising protectionism regarding global trade. Data indicates that the degree to which the world's economies are open to international trade has been falling over the past ten years, and this could hurt future prosperity.
Many of the competitiveness challenges that are faced today stem from the aftermath of the global financial crisis. Productivity and growth are still not picking up in the advanced economies, and the consequences of low - or negative - productivity growth in many emerging economies are now evident. Weak macroeconomic figures were a reason for advanced economies to implement ultra loose monetary policies, which in turn fueled a commodities boom that masked many of the competitiveness challenges of commodity-exporting emerging markets.
The WEF emphasizes that vulnerability to commodity price fluctuations in emerging economies and the promises of the Fourth Industrial Revolution underscore the importance of innovation as a source of competitiveness and economic diversification to reignite growth.
Global Competitiveness Index 2016-2017:
|United States||3 =|
|Indonesia|| 41 ↓
Source: Global Competitiveness Report 2016-2017