The 2024 IMD World Competitiveness Ranking (WCR) reveals that Indonesia has significantly improved its position, climbing to 27th place globally.
Indonesia has made a notable leap from 34th place in 2023 to 27th in 2024. In Southeast Asia, Indonesia now ranks third, trailing only Singapore and Thailand, with Singapore holding the top spot.
The top five countries in Southeast Asia according to the WCR 2024 are:
- Singapore (1st globally)
- Thailand (25th globally)
- Indonesia (27th globally)
- Malaysia (34th globally)
- Philippines (52nd globally)
Arturo Bris, Director of the World Competitiveness Center (WCC) at IMD, noted that nations like China, India, Brazil, Indonesia, and Turkey have seen rapid growth, significantly impacting trade, investment, innovation, and geopolitics.
“Countries such as China, India, Brazil, Indonesia, and Turkey have grown rapidly and now play significant roles in these arenas,” Bris said in an official statement on Tuesday, June 18, 2024.
In 2024, Indonesia’s and Malaysia’s positions have switched, with Malaysia dropping to 34th from 27th place due to factors like currency weakness, political instability, and policy uncertainty. Conversely, Indonesia rose from 34th to 27th place.
Bris attributed Indonesia’s improved ranking to better economic performance, attractive capital influx, and GDP growth. He highlighted that while Southeast Asia generally performed well economically, Malaysia's ranking fell.
Globally, Indonesia’s ranking is close to the UK (28th), and it surpasses Japan (38th) and India (39th). The UK’s ranking has recently improved following a post-Brexit decline.
Japan’s Competitiveness Waning
Japan’s decline in competitiveness is linked to its slower pace in digital transformation and reduced technology exports. Once dominant in world technology, Japan now lacks leading multinational tech companies in areas like AI, microchips, and cloud computing.
Although India has gradually improved its ranking over the past five years, its progress is slower compared to Indonesia primarily due to economic and business efficiency factors such as tax structure, banking, judicial governance, job opportunities, and business management efficiency.
The IMD World Competitiveness Center assesses rankings based on economic performance, government efficiency, business efficiency, and infrastructure. Indonesia’s rise is largely due to high scores in business efficiency (14th), government efficiency (23rd), and economic performance (24th), though it still lags in infrastructure, especially in health, environment (61st), education (57th), science (45th), and technology (32nd).
In business efficiency, Indonesia excels with labor availability (2nd), effective company management (10th), and supportive community values (12th). However, it needs to improve financial performance (25th) and productivity (30th). Regarding government efficiency, its lowest scores concern business legislation (42nd) and social fairness.
In tax policy (12th) and public financial policy (18th), which includes the efficiency of central and commercial banks, Indonesia performs well.
The IMD WCR 2024 ranks countries based on long-term prosperity potential, using surveys and hard data to evaluate purchasing power, productivity, GDP, and social, cultural, and sustainability factors.
