Indonesia's Competitiveness Ranking Drops to 48th Position, Government Evaluates

JAKARTA - The government has spoken out about the decline in Indonesia's competitiveness in the IMD World Competitiveness Ranking (WCR) 2026 which recorded a decline in position from 40th in 2025 to 48th in 2026 out of a total of 70 countries surveyed.

Coordinating Minister for the Economy, Airlangga Hartarto, said that he would first examine the causes of the decline in the ranking before determining the necessary improvement steps.

According to Airlangga, the government together with the Government Strategic Program Acceleration Task Force (Satgas P2SP) or debottlenecking team will identify factors that cause the decline in national competitiveness.

"Yes, later we will examine the problem again. We have preparations for the team at the bottleneck. So we will see from there," he told the media, quoted on Thursday, July 25.

He assessed that the energy sector, especially the availability and reliability of electricity supply, was one of the important aspects in improving national competitiveness.

According to him, a good business climate must be supported by a strong energy infrastructure to support manufacturing, transportation, and service activities.

"Well, of course the country is considered to have a good climate if energy is the main infrastructure for anything. Whether it's for manufacturing, whether it's for the transportation sector, services. Well, it's stable, that's why there are criteria from level 1 to level 4. Well, coincidentally, Indonesia is in demand because we have renewable energy," he said.

Airlangga also revealed that the government had received various inputs from the joint review process of a number of international institutions, including the OECD, and various issues that emerged in the evaluation were considered in line with the findings in the IMD survey.

"Well, of course we will pick and choose if this is the problem. Well, this was also yesterday in the review, including with the OECD sector and with various other countries. Well, we get some issues that arise, the issue is not too different," he explained.

Based on the IMD World Competitiveness Report 2026, Indonesia faces five main challenges, namely the increasing global economic confrontation which has the potential to disrupt national energy resilience, economic growth which tends to stagnate, adjustment of government budget allocation, infrastructure limitations and human resource quality, and limited access to financing.

This year's decline in ranking also ended the positive trend that previously brought Indonesia to 27th place in the world in 2024.

At the regional level, Indonesia's position in the Asia Pacific region also weakened from 11th to 14th out of 15 countries assessed. Meanwhile, in the group of countries with a population of over 20 million, Indonesia fell from 16th to 21st.

Of the four main pillars of the assessment, economic performance is still Indonesia's main strength by ranking 24th in the world. The price indicator is in the 10th position in the world, while employment is in the 28th position. However, international trade and international investment are only in the 50th and 37th positions, respectively.

In terms of government efficiency, the tax policy is the best indicator with a rank of 12. However, the public finances are in position 25, the institutional framework in position 50, business regulations in position 43, and the social framework in position 54.

Meanwhile, business efficiency still faces various challenges, namely the labor market is ranked 21st, but productivity and efficiency only occupy 53rd place, the financial sector is ranked 51st, management practices are in position 55, and community attitude and value indicators are ranked 53rd.

Infrastructure is the aspect that needs the most attention, namely basic infrastructure is ranked 42nd, technology infrastructure is in position 47, and scientific infrastructure is ranked 48th.

The health and environmental sectors and education are in 65th and 63rd positions, respectively, making them the indicators with the lowest performance in the IMD World Competitiveness 2026 report.