Analysts warn that Indonesia not yet efficient enough
Analysts warn that Indonesia not yet efficient enough
JAKARTA (JP): Indonesians should not be lulled into complacency following the country's leap from 30th to 15th place in a report on the world's most competitive economies, analysts say.
Director of Prasetia Mulya business institute Djisman Simanjuntak said improvements in economic efficiency were still needed despite the ranking on the Global Competitiveness Report 1997.
"The ranking upgrade is good news, but it doesn't show any improvement in our exports and services," Simanjuntak was quoted by Antara as saying over the weekend.
He said the report by the Geneva-based World Economic Forum was based on the country's "input", instead of "output" or exports.
"If the survey's criteria is based on our ability to attract foreign investment, instead of to reduce imports and increase exports and services, then (Indonesia's ranking) is correct," he said.
He acknowledged local and foreign investment in the country had increased in recent years.
Foreign investment rose to US$6.4 billion last year from US$4.2 billion in 1995. The amount is expected to increase again this year with improvements in infrastructure and human resources, he said.
The country has not shown a significant increase in growth of export and service sectors in the past three years, he said.
"This has caused a continued increase in the current account deficit during the past three years."
To support the ranking upgrade, Djisman said the government must encourage investors to focus on non-oil commodity exports and services, as well as reduce imports.
He also said the government should stop introducing inconsistent policies, including the controversial tax exemption on Indonesia's national car.
President of PT Aspecindo Kreasi Hartojo Wignjowijoto said the rating was not an accurate gauge of competitiveness in the country.
The rating upgrade did not reflect advancements in efforts to make the local economy more equitable, he said, adding that it was still controlled by a handful of people and business groups.
"The rating improvement should remind us that the equitable aspect of the country's economy has not been treated efficiently," he told the Bisnis Indonesia daily.
Indonesia's jump of 15 places was the largest of any of countries ranked in the top 20.
The rating is based on a country's ability to maintain its economic growth rate through its policies as well as established institutions.
The quality of infrastructure, technology and business management is also counted in the evaluation. (das)
Table: Most competitive economies
1997 1996 Singapore 1 (1) Hong Kong 2 (2) United States 3 (4) Canada 4 (8) New Zealand 5 (3) Switzerland 6 (6) United Kingdom 7 (15) Taiwan 8 (9) Malaysia 9 (10) Norway 10 (7) Luxembourg 11 (5) Holland 12 (17) Chile 13 (18) Japan 14 (13) Indonesia 15 (30) Ireland 16 (26) Australia 17 (12) Thailand 18 (14) Finland 19 (16) Denmark 20 (11)