The rise in competitiveness puts Indonesia as the country with the highest competitive leap in the world.
After experiencing a slowdown due to the COVID-19 outbreak that hit nearly all countries in the world, the world economy is now on the road to recovery. Although also affected, Indonesia is fortunate because it is able to continue to accelerate in the expansion zone, including in the second half of 2023.
One of the indicators can be seen from the achievement of the Indonesian Manufacturing Purchasing Managers' Index (PMI) released by S&P Global in July or at the beginning of the third quarter of 2023. Indonesia's Manufacturing PMI was recorded at 53.3, a significant increase compared to the previous month of 52.5.
On the other hand, Manufacturing PMI in many countries, such as the US, Canada, Brazil, Europe, Germany, France, UK, Japan, South Korea, China, Malaysia, Vietnam, South Africa, and Turkey experienced contraction. Indonesia's Manufacturing PMI in July was the highest since September 2022.
Indonesia's Manufacturing PMI, which has remained expansive in the last 10 years, is inseparable from the competitiveness of the country's manufacturing industry in the global market. Data from the International Institute for Management Development (IMD) shows that Indonesia scored a competitiveness score of 70.75 points in 2023.
This score put Indonesia at 34th place, out of 64 countries assessed by IMD. When compared to the previous year, Indonesia's competitiveness ranking rose 10 points, and at the same time became the highest in the world.
The increase in competitiveness score is not only supported by Indonesia's manufacturing PMI, but also by other variables such as institutions, infrastructure, macroeconomic environment, health, education, goods market efficiency, labor market efficiency, financial market development, technological readiness, and so on.
In his State of the Nation Address delivered at the Parliament Complex in Jakarta on Wednesday (16/8/2023), President Joko Widodo talked about the increase in Indonesia's competitiveness in the global arena. "The increase in competitiveness puts Indonesia as the country with the highest competitiveness leap in the world," Jokowi said.
According to the Head of State, to compete with other countries we must at least have three main foundations. The increase in competitiveness did not happen spontaneously. But rather due to the support of the three main foundations, namely infrastructure, downstream and industrialization, and digitalization. These conditions will also be a great help in achieving the golden Indonesia 2045.
So, what are the parameters of competitiveness? IMD Indonesia also details them as follows, first Indonesia's economic performance and government efficiency scored 57.86 points and 57.79 points respectively. Then, business efficiency and infrastructure in the country amounted to 72.85 points and 34.89 points, respectively.
Other components that support the increase in Indonesia's competitiveness ranking are also inseparable from the improvement in the ranking of all major components, namely the economic performance component, efficient government, efficient business, and infrastructure availability.
In addition, the increase in competitiveness was also followed by the prospect of Indonesia's investment financing that grew attractively, especially with the affirmation of Indonesia's sovereign rating by various international rating agencies.
With these indicators, it is understandable if the Head of State is optimistic that the country will reach a golden era in 2045, known as Indonesia Emas 2045.
Moving Towards the Golden Indonesia
On one occasion, Coordinating Minister for Economic Affairs Airlangga Hartarto explained that one of the strategies to achieve the Golden Indonesia 2045, or to place Indonesia as a high-income developed country, is to take advantage of the demographic bonus.
Various steps are being taken to reach this vision, one of which is when the Indonesian Government has expressed its intention to become a member of the Organization for Economic Co-operation and Development (OECD), as directed by President Joko Widodo.
According to Airlangga, the plan to become a member of the OECD has been responded positively by the OECD considering the constructive cooperative relationship between the government and the OECD, Indonesia's leadership role in various global forums, and Indonesia's good economic performance.
Furthermore, the government will be actively involved in global discussions, where Indonesia will have the opportunity to participate in determining the global standards followed by OECD countries. Being a member of the OECD will also provide reputational advantages and increase investor confidence as Indonesia adheres to superior and trusted policy standards.
"OECD as an organization of developed countries always promotes regulatory and policy standards that encourage quality economic growth," Airlangga said.
In the framework of the OECD membership process, the international organization has also shared with Indonesia the experiences of other OECD member countries in utilizing demographic advantages and the things that need to be noted by Indonesia in order to become a developed country and to have a high per capita income.
"Until now, the OECD assesses that Indonesia is still categorized as an upper-middle income country with a per capita income of US$4,580 in 2022," added Airlangga.
Meanwhile, Airlangga explained that the cooperation framework between the Indonesian Government and the OECD is based on the Framework Cooperation Agreement (FCA) and the Joint Work Program (JWP). The areas of cooperation between the two parties are arranged by adjusting Indonesia's national priority agenda.
Translator: Aisah Amanda
