Indonesia's Competitiveness Rating Drops Sharply In WCR 2025

Rupiah (photo: dock. Antara)

JAKARTA The International Institute for Management Development (IMD) of the World Competitiveness Center (WCC) revealed that Indonesia's competitiveness ranking has decreased sharply in the 2025 World Competitiveness Ranking (WCR) report.

As for this year, Indonesia's competitiveness ranking has fallen by 13 places, from 27 to 40th position out of a total of 69 countries in the world. In fact, in the last three years, Indonesia has shown a positive trend which rose from 44 (2022) to 34 (2023), and reached the best position in 27th place in 2024.

Director of the World Competitive Center (WCC) IMD Arturo Bris explained that Indonesia had become one of the countries with the best competitiveness after the pandemic, mainly because it was driven by oil and gas exports and commodities.

"After the pandemic, Indonesia is one of the countries with the best competitiveness performance in the WCR ranking which has increased by 11 rankings. The increase in competitive power rankings has been boosted from the export value of oil and gas and commodities. However, currently Indonesia's competitiveness ranking and a number of Southeast Asian countries have fallen as a result of the tariff war aimed at this area," he explained in his statement, Thursday, June 19.

Ia menambahkan Turki juga mengalami penurunan signifikan, sama seperti Indonesia, yaitu turun 13 peringkat sehingga ini menjadikan penurunan terburuk dalam WCR 2025 bersama Indonesia.

According to him, Turkey's decline in competitiveness was caused by the economic crisis, especially the weakening of the country's currency.

In addition, three of the five Southeast Asian countries measured in the survey also fell in rank; Thailand fell 5 places and Singapore fell one rank.

But on the other hand, Malaysia's position managed to skyrocket 11 places and the Philippines rose one rank, where the increase in the rankings of the two countries was driven by strategic industrial policies and digital investment.

The following is the top five countries with the best competitiveness in Southeast Asia compared to last year:

Singapore's rank 2 down 1 rank

Malaysia's ranking is 23 up 11 places

Thailand's ranking is 30, down 5 places

Indonesia's ranking is 40, down 13 rankings

Philippines ranking 51, up 1 rating

Bris explained that in the 2025 WCR research, it measures the level of competitiveness of 69 countries in the world using hard data and survey results.

In addition, he added that WCC also calculated 262 information in the form of 170 external data and 92 survey responses to 6,162 executive respondents in each country.

Based on the survey results, it was shown that 66.1 percent of executives in Indonesia considered the lack of economic opportunities as the main cause of social polarization.

According to him, basic economic problems such as inadequate infrastructure, weak institutions, and limited human resources (human resources) must receive a large portion of attention.

"The development carried out by the state is considered inclusive in making structural inequality, high unemployment rates, and uneven development. At least the creation of this new job makes it frustrating for residents because it makes it difficult for them to advance to class," he explained.

In line with Indonesia, 74.6 percent of executives in South Africa and 68.1 percent in China perceive the same thing.

On the other hand, few executives in Nordic countries have complained about this because they have a strong labor market and a more equitable distribution of income where it is recorded, 11.1 percent of Danish executives, 14.5 percent and 11.5 percent in Iceland have complained about this.

To overcome this, he explained that in the Management Institute, the Faculty of Economics and Business, University of Indonesia, which is a partner of WCC in this study, suggested the need to develop productive workers who are able to improve economic competitiveness.

"Indonesia also needs to integrate their strategy from upstream to downstream. This is because government policies support long-term competitiveness," he said.

Meanwhile, based on the calculation of the 2025 WCR data, Indonesia is quite lagging behind education matters (62 out of 69 countries), health and the environment (63), and an effective government institutional framework (51).

"Therefore, government efficiency should not be the ideal goal, but must be practiced in order to build economic resilience and investment attraction in the years to come," he added.

Bris said that to determine the ranking of WCR 2025, there are four components that are calculated, namely economic performance, government efficiency, business efficiency, and infrastructure.

According to him, Indonesia has decreased in three of the four factors and the ranking of economic performance is stagnant, while government efficiency, business efficiency, and infrastructure have decreased.

Bris added that in terms of economic performance, international investment in Indonesia needs to be increased, because it is down from 36 to 42.

In addition, he explained that the export value of commercial services is still relatively low because it is ranked 63 out of 69 countries and Indonesia's economic performance strength is supported by GDP growth per capita and real.

"Regarding government efficiency, the institutional framework gets a red report card, down from rank 25 to 51. The government needs to improve the ineffective cost structure, ease of procedures for making new companies, foreign currency reserves per capita, to the level of Indonesian passport strength. Meanwhile, the government's efficiency strength lies in collecting income tax and private people," he explained.

In addition, Bris said that Indonesia's business efficiency fell from 14 to 26 and the things that need attention are the availability of foreign workers, access to financial services, as well as the level of overall productivity and labor.

Meanwhile, in the infrastructure sector, the most need for attention related to technology infrastructure has fallen from 32 to 46.

Bris said that this decline was mainly due to the low total health expenditure (68 out of 69 countries), total government spending for education (66), the number of applicable patents (66), to internet bandwidth speed (66) which was only 28.9 Mbps from an average of 138 Mbps.