Indonesia's Competitiveness Ranking Drops to 48th, Government to Form Task Force

Coordinating Minister for Economic Affairs Airlangga Hartarto has responded to the decline in Indonesia’s competitiveness ranking in the IMD World Competitiveness Ranking 2026, which fell to 48th position. According to Airlangga, Indonesia previously recorded its highest position at 27th in 2024. Airlangga stated that the government is aware of the reasons behind the drop in Indonesia’s competitiveness ranking. Consequently, President Prabowo Subianto has requested the formation of a Debottlenecking Task Force. “We actually managed to bring that figure down to 27, and the government more or less understands why it has risen again. So, the President has asked for a task force to be formed for debottlenecking,” Airlangga said after the UMKM Ease and Protection Festival event at the Smesco Building, South Jakarta, Monday (29/6/2026). Despite the pressured competitiveness ranking, Airlangga asserted that the investment climate in Indonesia continues to show high enthusiasm. He dismissed concerns that the decline in competitiveness would immediately kill investment interest or halt factory expansion. According to Airlangga, the government has a series of strategic agendas to enhance Indonesia’s attractiveness to global investors. “But with Indonesia entering the IEU-CEPA next year, along with the implementation of the agreement on reciprocal tariffs, and also the OECD accession process, I am confident that our regulations will continue to improve,” Airlangga explained. Airlangga noted that in terms of investment, inflows in the first quarter exceeded targets. He observed that various sectors continue to expand. “We see examples in the East Java special economic zone, where we are currently arranging for expansion. Then in Kendal, Batang, the location is almost 100% full. Likewise in Batang and Bintan, they are also nearly full. And I also see interest from the data centre sector, for instance, there is additional demand of 1.32 GW ready to enter Indonesia,” Airlangga detailed. Based on the latest report, IMD has downgraded Indonesia’s ranking in the IMD World Competitiveness 2026. In 2025, Indonesia was ranked 40th, and in 2026, it dropped to 48th. IMD outlined several challenges facing Indonesia, ranging from global economic turmoil threatening national energy security, relatively stagnant economic growth, adjustments in government budget allocation, inadequate infrastructure and human resource competencies, to limited availability of funding sources.