Indonesian Competitiveness

KOMPAS/PRIYOMBODO

Irons are assembled at PT Selaras Citra Nusantara Perkasa in Cileungsi, Bogor regency, West Java, Thursday (10/10/2019). In the midst of the American-Chinese trade war, Selaras Citra Nusantara Perkasa seized the opportunity to export its first batch of electric air purifiers to the United States. The factory with a production capacity of 4 million devices per year is an Original Equipment Manufacturer (OEM) for a variety of household appliance brands and has its own brand, Turbo.

The decline of Indonesia‘s competitiveness ranking in 2019 reminds us of the importance of consistently implementing plans to improve human quality.

In the World Economic Forum’s Global Competitiveness Index 2019 report, which was launched on Wednesday (9/10/2019), Indonesia\'s competitiveness dropped by five ranks among 140 countries. Indonesia is now ranked 50^th, while the previous year it ranked 45th.

The drop in the country’s competitiveness rank occurs amid the government\'s efforts to continuously improve competitiveness to attract investors. We need direct investment to provide quality job vacancies for young workers who are now dominating the Indonesian labor market.

Of the 12 pillars assessed in the GCI, Indonesia got the highest score for macroeconomic stability, while its lowest score came in innovation capability.

Many factors determine innovation capability. Besides the environment that supports the birth of innovation, such as academic freedom, freedom of thought and protection of patents and intellectual property rights, what is crucial is human capacity.

In his second term in office, in addition to continuing infrastructure development, President Joko “Jokowi” Widodo emphasized human development.

KOMPAS/MEGANDIKA WICAKSONO

Ear, nose and throat specialist Wahyu Dwi from Jenderal Soedirman University in Purwokerto examines an elementary school student in Mandirancan, Kebasen, Banyumas, Central Java, to detect a possible acute otitis media infection on Thursday (10/10/2019).

GCI shows that, although economic stability is important, there are other things that a country must have in order to be attractive as an investment destination. Indonesia must compete with neighboring countries in ASEAN as an investment destination. Vietnam, for example, despite its GCI rank being below Indonesia’s at 67, nonetheless improved from its ranking of 77^th in 2018. What we have been worrying about has materialized. All countries have worked hard to improve their competitiveness and other countries successfully jumped to the top.

The World Bank recommends that in the global economic situation next year, which will increasingly slow down due to the shadow of recession in a number of developed countries, the government needs to seriously invest in increasing human resource capacity. The short-term focus is on reducing the number of stunted children under five years old, increasing basic education and training workers.

Stunted children and poverty are closely related to the lack of access to basic education and balanced nutrition. Both of these are interrelated with the availability (or unavailability) of quality labor. Therefore, it is important to immediately provide retraining and skills upgrading for our workforce, 45 percent of which has education below elementary school.

The experience of rich countries shows that low capital investment and inefficient allocation of resources prevents workers from moving from low to high productivity sectors. Low labor productivity will in turn reduce economic growth and can lead to a rise in the number of poor and unemployed.

KOMPAS/PRIYOMBODO

Workers are in action on the Jabodebek light rail (LRT) project on the Cawang-Dukuh Atas route on Jl. Gatot Subroto in South Jakarta on Tuesday (8/10/2019).