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NEWS UPDATES Asean Affairs                               8  September 2011

Indonesia drops on competitiveness scale

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Indonesia has dropped two places in this year’s Global Competitiveness Report, bringing a sudden halt to an impressive climb that had seen it climb 11 places during the last two years.

“Indonesia remains one of the best-performing countries within the developing Asia region, behind Malaysia and China yet ahead of India, Vietnam and the Philippines,” the World Economic Forum wrote in its report.

The Geneva-based non-profit foundation annually compares the operating environments for businesses in 130 economies across the globe.

The report, which was released on Wednesday, ranked Indonesia 46th in global competitiveness, just behind Portugal.

However, the WEF mentioned several key factors that were dragging down the nation’s investment climate: corruption, poor public services and over-burdened infrastructure, including ports, water and electricity.

It also cited the nation’s poor preparedness to adopt sophisticated business information and communication technology.

“Despite efforts to tackle the issue, corruption and bribery remain pervasive and are singled out by business executives as the most problematic factors for doing business in the country,” the WEF’s report said.

Business leaders said the report showed that progress in Indonesia’s business climate in the past two years had been hampered by familiar hurdles, such as delays in purchasing land for the development of highways and seaports.

Chris Kanter, the deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said he did not see any major breakthrough in infrastructure development.

“Infrastructure, again, is wiping out our achievements of the past few years,” he said. “One of the obstacles is land acquisition. Why does it take so long to revise the law? How can this nation delay on something that is so critical for development?”

Chris is also the chairman and founder of Sigma Sembada Group, one of the country’s most prominent transportation and logistics contractors.

Harry Warganegara, the head of international trade at the Indonesia Young Entrepreneurs Association (Hipmi), said the report fit his perception of Indonesia’s declining competitiveness.

“By my reckoning, we should have dropped five places or more,” Harry said, adding that he agreed with the WEF that the biggest culprit was corruption and sluggish bureaucrats.

“We are a high-cost economy,” Harry said. “There are unofficial or quasi-official tariffs everywhere. Oranges from Medan are more expensive than oranges imported from China. That says it all.”


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