Indonesia's Minister of Economic Affairs, Airlangga Hartarto, attributes the significant rise in Indonesia's competitiveness ranking in 2023 from 44th to 34th among 64 ranked countries to the successful implementation of the Job Creation Law (UU Ciptaker). This elevation is based on the World Competitiveness Ranking 2023 research by Switzerland's Institute for Management Development (IMD) and Indonesia's FEB UI Management Institute. Airlangga emphasizes that this achievement is a result of effective policies, including the Job Creation Law, contributing to improved domestic economic performance, government efficiency in taxation policies, top-ranked business efficiency, and infrastructure enhancements. Despite these advancements, the challenge of reducing the high Incremental Capital Output Ratio (ICOR) of 7.6% remains, with Airlangga highlighting the need to lower it to 5% to foster better growth and capital efficiency.
According to the IMD and FEB UI, Indonesia's competitiveness score of 70.75 places it higher than countries like Japan, Spain, India, and Italy, yet it falls below Malaysia and Thailand. Leading nations in competitiveness include Denmark, Ireland, Switzerland, Singapore, and the Netherlands. Indonesia's improved ranking is based on a thorough evaluation of economic performance up to 2022 and perceptions of the business environment from industry representatives. The assessment encompasses four components: Economic performance, Government efficiency, Business efficiency, and Infrastructure. Indonesia has progressed in all areas, with notable advancements in economic performance and business efficiency. The former, propelled by GDP growth, stable fuel prices, and increased exports and investments, rose from 42nd to 29th place, a 13-rank leap. The latter improved from 31st to 20th place, an 11-rank jump, driven by factors like expanding workforce, professional remuneration, labor productivity, and financial accessibility.
