The world’s economy in 2024 has been a bit of a rollercoaster. A strong dollar is making things tough for many countries. But Indonesia is surprising everyone by doing really well. They jumped way up in the World Competitiveness Rankings, going from 34th to a cool 27th place in just a year. This positive development paints a promising future for the Indonesian business environment.
Indonesia’s Impressive Leap
According to a recent report, Indonesia’s WCR has jumped an impressive 7 positions, climbing from 34th in 2023 to 27th out of 64 countries in 2024. This remarkable improvement places Indonesia ahead of regional peers like Malaysia and Japan, solidifying its position as a top competitor in Asia.
“Indonesia’s competitiveness is driven by improving economic performance, the ability to attract capital and growth in Gross Domestic Product (GDP). This year Southeast Asia’s economic performance is very good, except for Malaysia which has dropped in ranking,” said Arturo Bris, Director of the World Competitiveness Center.
The increase in Indonesia’s competitiveness ranking was supported by an increase in a number of supporting factors. Among other things, business efficiency rose from 20th place in 2023 to 14th this year.
Then government efficiency from 31st to 23rd and economic performance from 29th to 24th. However, Indonesia must continue to improve the ranking of its infrastructure which is still relatively low. Even so, the government believes that the increase of competitiveness ranking will attract more foreign investors.
“This will improve a country’s reputation because global investors often consider high competitiveness in their investment decisions,” said Airlangga Hartarto, Indonesia’s Coordinating Minister for Economic Affairs.
Standing Out in Asia
Indonesia’s strong economic performance, its ability to attract foreign capital, and healthy GDP growth have all been recognized by the WCR assessors. While Indonesia is doing great, some other Asian countries aren’t so lucky. Indonesia and Malaysia actually swap positions this year. In 2023, Malaysia was in 27th and now dropped to 34th because their currency is weak, their government isn’t very stable, and nobody’s quite sure what their plans are.
Japan is also falling behind in 38th position because they’re slow on adopting new technology for businesses (like online stuff). This shows that Indonesia is doing a good job fixing these problems, which is helping them move ahead of other countries in Asia when it comes to how well businesses can operate.
India, another big player in Asia, is also improving its ranking, but not as quickly as Indonesia. Last year India was in 40th place and now improved slightly to 39th below Japan. This means Indonesia is making bigger and faster changes to make it easier to run businesses there compared to its neighbors.
Overcoming the Challenge of a Strong Dollar
The global economic slowdown and the strengthening dollar pose challenges for many emerging economies, including Indonesia. A strong dollar can make exports more expensive and reduce foreign investment. However, Indonesia is taking steps to mitigate these risks.
One key factor is Indonesia’s robust domestic market, fueled by a growing middle class. This strong domestic demand helps to insulate the economy from external shocks like a stronger dollar. Businesses can continue to thrive by catering to the needs of the domestic market, even if global economic conditions are less favorable.
Foreign direct investment (FDI) also plays a crucial role in Indonesia’s economic resilience. Despite global uncertainties, Indonesia continues to attract significant FDI. This influx of capital helps to support economic growth, create jobs, and foster innovation. These positive indicators demonstrate Indonesia’s growing economic potential and its attractiveness as an investment destination.
A Rising Star in the Global Economy
Indonesia’s jump in the World Competitiveness Ranking shows they’re making big improvements for businesses. The economy is doing well, it’s attracting more investors, and training the manpower for better jobs. All this puts Indonesia on track for strong economic growth in the future and certainly it also means many opportunities for foreign investors.
If you have any questions about how to open a business or how to start investing in Indonesia, contact Seven Stones Indonesia now. We are experienced in assisting foreign businesses looking to operate in the country. Send us an email, text us on Whatsapp or simply fill in the inquiry form below, and let’s discuss how we can help your business.
