Competitiveness Ranking Drops, Government to Improve Business Efficiency and Accelerate Deregulation
The government still faces several tasks in boosting investment activity. Consequently, technical regulations related to the business world need urgent improvement and refinement.
Responding to this issue, the government stated that it is accelerating deregulation steps and business efficiency improvements, particularly after Indonesia’s competitiveness ranking in the IMD World Competitiveness Ranking 2026 fell eight places, from 40th in 2025 to 48th. The government recognises that business certainty and the simplification of regulations are vital factors in restoring investor confidence.
Based on the results from the International Institute for Management Development (IMD), one of the primary causes of this decline stems from the business efficiency component. Within this component, the labour market ranked 21st, the financial sector 51st, indicators of societal attitudes and values 53rd, productivity and efficiency 53rd, and management practices 55th.
The Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, stated that the IMD assessment results serve as important input for the government to improve the business climate and increase business efficiency.
“What has dropped significantly is business efficiency, which is indeed our concern—matters of deregulation, business certainty, and we must continue to reassure investors,” said Susiwijono at the Coordinating Ministry for Economic Affairs Office, as reported on Sunday (28/6/2026).
According to Susiwijono, improving business efficiency will strengthen investor confidence in Indonesia’s business climate. Therefore, the Coordinating Ministry for Economic Affairs continues to coordinate with the Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM) to fix various regulations, including the simplification of business licensing processes.
“This means we still need to further reassure the business community regarding the various efforts being undertaken by the government,” he added.
To support these efforts, the government has tasked the Task Force for the Acceleration of Government Programmes to Support Economic Growth (Satgas P3-MPKS) and the Task Force for the Acceleration of Strategic Government Programmes (Satgas P2SP) with creating a more conducive, transparent, and responsive business climate.
Satgas P2SP is responsible for resolving various investment hurdles (debottlenecking) through weekly coordination meetings involving business actors and relevant ministries/agencies to accelerate the resolution of field issues.
“This is quite effective; it has become the primary recourse for complaints when the business community has attempted to seek solutions but found none. The issues vary, ranging from technical problems affecting a few companies to broader policy matters discussed there,” said Susiwijono.
On the other hand, the Head of the Macroeconomics and Finance Centre at the Institute for Development of Economics and Finance (Indef), Rizal Taufikurahman, assessed that the decline in Indonesia’s competitiveness ranking from 27th in 2024 to 48th in 2026 reflects a weakening of several domestic economic fundamentals, particularly regarding government efficiency, business efficiency, infrastructure quality, and regulatory certainty.
According to him, this condition also indicates that Indonesia’s economic growth is not yet fully supported by increases in productivity and innovation. High logistics costs, slowing private investment, uneven human resource quality, and increasing global uncertainty are also weighing down Indonesia’s competitiveness perception compared to regional competitors.
Rizal also noted that the decline in the competitiveness ranking has the potential to affect investment flows and job creation, as it may reduce long-term investment interest, slow business expansion, and hinder national productivity growth.
“Therefore, improving the investment climate, deregulation, strengthening human resource quality, and increasing bureaucratic efficiency are key so that Indonesia does not get trapped in moderate growth around 5% and is able to regain its competitiveness on a global level,” he stated.