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Indonesia's Competitiveness Improves

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Indonesia's Competitiveness Ranking in 2021 slightly increased from its position compared in 2020, which was ranked 40. The 2021 World Competitiveness Yearbook (WCY) survey conducted by the Institute Management Development (IMD) puts Indonesia's competitiveness at 37th out of a total of 64 countries recorded. The survey in Indonesia was carried out by the Management Institute of the Faculty of Economics and Business, University of Indonesia, which has  acted as IMD's partner in Indonesia over the last five years.

According to the Management Institute, the results of the ranking assessment are based on a data analysis on Indonesia's economic performance until 2020 and the assessment of business actors regarding the perception of the business environment they are facing. Meanwhile, the competitiveness assessment method is based on the assessment of 4 main components including, Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure.

The survey results show that there is an increase in Indonesia's ranking on the components of government and business efficiency. The government's efficiency rating has increased from 31st in 2020 to 26th in 2021. It is stated that the public financial policy factor, which is quite effective in responding to pandemic conditions, is a component that supports this rating increase.

Meanwhile, the business efficiency component increased from 31st in 2020 to 25th in 2021 due to optimism for future business transformation.

However, unlike the efficiency of government and business, the performance of the economy and infrastructure has decreased. Indonesia's economic performance ranking in 2021 is at position 35th, a decrease compared to 2020  which was at position 26th. The downgrade is driven by labor conditions, international trade, and domestic price levels. Indonesia's infrastructure ranking has also shifted from position 55th in 2020 to position 57th in 2021, due to the readiness factor for health and education infrastructure in the face of the Covid-19 pandemic.

The Covid-19 pandemic has brought about a significant impact on the decline in economic and infrastructure performance which is an important component in the assessment of competitiveness rankings. Hopefully, the well-managed handling of Covid-19, especially the acceleration of vaccination which is being carried out by the  government, will be able to make Indonesia's competitiveness ranking improved this year. Even so, it will be better next year.

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