June 25, 2026
JAKARTA – Indonesia has gone down by 21 positions in the latest World Competitiveness Ranking from the peak it reached two years ago due to worsening government and business efficiency as well as infrastructure since President Prabowo Subianto took office.
The archipelago is now ranked below its Southeast Asian peers namely the Philippines, Thailand, Vietnam, Malaysia and Singapore, who were ranked 47th, 26th, 27th, 15th and 1st, respectively.
The Institute for Management Development (IMD) recorded that the archipelago reached its best performance in 2024 when it secured the 27th global rank, only to nosedive to the 40th the following year and 48th this year, according to IMD’s 2026 ranking released on June 18.
The report wrote that “economies boasting credible institutions are better positioned to tackle today’s volatile and fragmented world”, signalling a shift from the traditional emphasis on cost, scale and output.
Arturo Bris, director of Switzerland-based IMD’s World Competitiveness Center, said geopolitical conditions had been worsening and global fragmentation was increasing, making institutional strength ever more important.
“Nations with their own tried and tested, credible institutions gain an advantage in this context because, as the international systems cease to serve so many national needs, businesses can carry on as usual,” said Bris.
Indonesia’s economic performance, one of the four main gauges in the ranking, remained on the same spot in the past two years at the 24th position, a significant jump from 42nd in 2022.
The domestic economy, one component of the gauge, had slipped by 15 spots to 24th this year and employment likewise tumbled by 11 spots to rank 28th.
However, the other three main gauges had plunged, particularly in business efficiency. The country’s business efficiency was relatively well-placed in 2024, ranking 14th out of 70 economies listed in the rank.
The gauge then tumbled to rank 26th last year and nosedived even further to 50th this year, far worse than 31st five years ago.
All components under the business efficiency gauge from productivity and efficiency, labor market, finance, management practices to attitude and values, had freefallen by 9 spots at its best and 27 spots at its worst.
The government’s efficiency had also been freefalling from ranking 23rd in the last year of president Joko “Jokowi” Widodo administration in 2024, to 34th last year then 38th this year.
The country had shown better business legislation and institutional framework but came short in public finance, tax policy and societal framework, the report noted.
Infrastructure was Jokowi’s main economic agenda but the country remained at odds with other countries, placing only 52nd two years ago, exactly where it was in 2022.
However, Indonesia’s infrastructure ranking had become consistently worse in the past two years, plummeting to 57th in 2025 and went down yet again to 58th in the latest ranking, with the worst performance recorded in basic infrastructure.
The only notable improvement was recorded in the prices, business legislation and international investment components where Indonesia’s ranking went up by 5 to 6 spots.