House Warns of Plunging Competitiveness, Jobs Crisis, and Demographic Disaster

Member of Commission IX of the Indonesian House of Representatives (DPR RI), Pulung Agustanto, has issued a stern warning to the government following the release of the World Competitiveness Ranking 2026 report by the International Institute for Management Development (IMD). In the latest report, Indonesia’s competitiveness ranking plummeted sharply by eight places, from 40th to 48th out of 70 countries surveyed. At the Southeast Asian regional level, Indonesia’s position is increasingly worrying as it sits in the lower tier, lagging far behind Singapore, Malaysia, Thailand, and Vietnam. “This decline is not merely a fluctuation in statistical figures but reflects that our attractiveness as a country in the eyes of investors has plummeted,” Pulung stated in a written release on Friday, 26 June 2026. According to Pulung, the government can no longer use old, defensive formulas, as national competitiveness has collapsed just as Indonesia is at the peak of its demographic bonus. This phenomenon is a very dangerous paradox for domestic employment stability. “This index decline must be a momentum for a total evaluation of the economic policy approach that has been running so far,” he said. Referring to IMD indicators, aspects of institutional framework and legal certainty are Indonesia’s main weaknesses. Regulatory uncertainty and weak law enforcement ultimately undermine institutional credibility in the eyes of global investors. As a result, quality foreign direct investment flows will shift to neighbouring countries that offer more mature legal certainty, such as Vietnam and Malaysia. “The issue of large factory relocations out of Indonesia cannot be separated from this competitiveness problem,” he said. According to Pulung, the cycle of stalled investment has a direct impact that hits the employment sector. Without new investment in labour-intensive industries and high-value-added industries, the creation of quality jobs will stagnate. The adverse effect is that new workforce entrants from the productive age group will be threatened with unemployment or forced into the vulnerable informal sector without welfare guarantees. “The era where Indonesia relied solely on a large market and low wages as an investment attraction is over, because global investors today are looking more for regulatory stability and legal predictability. If the existing rules keep changing, this abundant natural wealth and demographic bonus will be in vain,” he stressed.