RI ranks very low in global competitiveness

Adianto P. Simamora and Tantri Yuliandini, The Jakarta Post, Jakarta

Indonesia's economy has become more uncompetitive, as suggested by the latest 2001 Global Competitiveness Report released by the World Economic Forum on Thursday.

This report, which ranks 75 countries, downgraded Indonesia to 64th place from 44th last year, overtaken by other countries that were previously well below Indonesia's ranking, like Peru, India, El Salvador, Bulgaria, Venezuela and Russia.

Produced by Harvard University professors Jeffrey Sachs and Michael Porter, the report measures the comparative strengths and weaknesses of national economies.

It combines existing economic data with the results of a survey of 4,600 business executives, who provide opinions about economic factors not contained within reliable data.

The survey examines competitiveness of countries in a timeframe of about five to eight years. Most of the analysis was completed prior to the Sept. 11 terrorist attacks in the United States.

According to the survey, Finland ranks first, replacing the United States which slipped into second place. Japan, which continues to experience economic stagnation, maintains a low position at 21st, down one slot from last year.

Commenting on the survey's results, Gadjah Mada University economist Sri Adiningsih said that the drop in rank was "pitiful" and it was apparent that even a weaker rupiah exchange rate against the U.S. dollar had not made Indonesia more competitive in the export market.

She said the drop was closely related to the "unsupportive" government policies for the business community and the high number of levies and duties.

"This drop (in the ranking) will greatly affect the government's efforts to attract (foreign) investors ... on top of that, the current political and security concerns will make our economic outlook more gloomy," she said.

Sri said that while the government was busy with meetings on the ASEAN Free Trade Area (AFTA), World Trade Organization (WTO) and Asia Pacific Economic Cooperation (APEC), it had forgotten to increase the competitiveness of Indonesian products.

"This is dangerous because how can a country with weak competitiveness compete within the global market?" she queried.

Institute for Development of Economics and Finance (Indef) economist Bustanul Arifin said that it was just further proof that Indonesia still has a lot of work to do and that key factors were the low quality of human resources and high rate of corruption.

Indonesia's ability to attract foreign investment was also still too low, proven by the number of sectors still confined to the negative investment list, he said.