Competitiveness Ranking Drops, Government to Improve Business Efficiency and Accelerate Deregulation

The government still has a number of tasks in boosting investment activity, meaning technical regulations related to the business world need to be immediately improved and refined. Responding to this issue, the government stated it is accelerating deregulation measures and improving business efficiency, particularly after Indonesia’s ranking in the IMD World Competitiveness Ranking 2026 dropped eight places, from 40th in 2025 to 48th. The government recognises that business certainty and regulatory simplification are important factors in restoring investor confidence. Based on the International Institute for Management Development (IMD) ranking results, one of the main causes of the decline stems from the business efficiency component. In this component, the labour market is ranked 21st, finance is at 51st, attitudes and values are at 53rd, productivity and efficiency are at 53rd, and management practices are at 55th. Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, said the IMD assessment provides important input for the government to improve the business climate and increase business efficiency. “What has really dropped is business efficiency, which is indeed our concern, matters of deregulation, matters of business certainty, and we must continue to convince investors,” Susiwijono said at the Coordinating Ministry for Economic Affairs office. 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 overhaul various regulations, including simplifying the business licensing process. “This means we still need to convince the business world again about the various efforts being made by the government,” he added. To support these efforts, the government has tasked the Task Force for the Acceleration of Government Programmes to Support Increased Economic Growth (Satgas P3-MPPE) and the Task Force for the Acceleration of Strategic Government Programmes (Satgas P2SP) with creating a more conducive, transparent, and responsive business climate. The P2SP Task Force is tasked with resolving various investment barriers (debottlenecking) through weekly coordination meetings involving business actors and relevant ministries/agencies to accelerate the resolution of problems on the ground. “This is quite effective, meaning it has now become a mainstay for complaints if the business world has tried to submit them and there is no solution yet, they go there. And the variety of problems ranges from technical issues for just a few companies to policy matters discussed there,” said Susiwijono. Meanwhile, 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 the weakening of several domestic economic fundamentals, especially related to government efficiency, business efficiency, infrastructure quality, and regulatory certainty. According to him, this condition also shows that Indonesia’s economic growth has not been fully supported by increased productivity and innovation. High logistics costs, slowing private investment, uneven human resource quality, and increasing global uncertainty have also suppressed perceptions of Indonesia’s competitiveness compared to competing countries in the region. Rizal also mentioned that the decline in the competitiveness ranking could potentially affect investment flows and job creation because it may reduce long-term investment interest, slow business expansion, and restrain 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 of around 5% and can once again improve its competitiveness at the global level,” he said.