Bustling Indonesia Jumps 10 Places In World Competitiveness Ranking

Dion Bisara & Eny Wulandari | September 12, 2010
Jakarta. Indonesia has been ranked 44 out of 139 countries in the World Economic Forum’s 2010-11 Global Competitiveness Index, a jump of 10 spots over last year’s position.

The boost reflects expanding business opportunities and speedy economic growth.

Edy Putra Irawady, deputy to the coordinating minister for the economy, said “improvements in public service and education” had also helped.

The GCI report singled out inefficient bureaucracy and corruption as major obstacles to doing business in Indonesia but “appreciated significant improvements we made in those fields,” Edy said.

The report also came down hard on Indonesian infrastructure, ranking it 82nd. Indonesia was at 84th for road infrastructure and 97th for power supply.

“Infrastructure is still a problem. Vietnam jumped faster than us because of improvements in infrastructure,” Edy noted. Vietnam came in at 59 on the overall list, at 14-spot gain over last year.

Coordinating Minister for Economic Affairs Hatta Rajasa said the government was not satisfied with the latest ranking.

“What makes our competitiveness a little behind is our infrastructure,” he said. “Therefore, we are well aware we must fight to improve it.”

With limited budget resources, Indonesia would have a tough time fixing the problem, Hatta said, while stressing the importance of public-private partnerships.

He also cited the difficulty of freeing land for infrastructure as another factor stunting the country’s growth. To address the problem, he said the draft Land Acquisition Act would be submitted to the House of Representatives next month.

Trade Minister Mari Elka Pangestu agreed infrastructure was a big problem, but added that health issues also needed to be addressed.

She pointed to tuberculosis, malaria and infant mortality as issues demanding attention.

But Mari cited improvements in the business climate and the bureaucracy as reasons for the jump in the ratings.

Even with all the infrastructure shortcomings, Edy said the improved ranking would make Indonesia more attractive to investors.

Rahmat Waluyanto, director general of debt management at the Finance Ministry, said it meant the nation’s credit rating would likely rise as well, as the measurements tended to consider the same indicators.

Switzerland topped the overall ranking. The United States fell two places to fourth, overtaken by Sweden (second) and Singapore (third).

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