JakartaPost-Oct 14
The government has raised the alarm over labor productivity in Indonesia and launched an efficiency drive as economists warn that red tape, weak incentives and regional disparities undermine the competitiveness of local companies. New figures released by the government show that Indonesia’s productivity growth of just 2.6 percent a year is lower than that of peer economies like Vietnam and Malaysia, reflecting structural challenges, according to the Manpower Ministry. The National Productivity Masterplan 2025–2029 announced by the National Development Planning Agency (Bappenas) on Oct. 7 seeks to coordinate policy, industry intervention and workforce development and help turn Indonesia into one of the world’s top-five economies by 2045. But experts warn that the so-called Golden Indonesia Vision may be difficult to achieve without addressing long-standing structural bottlenecks. “The main challenge is bureaucracy, policy uncertainty and inefficiency, especially with the high number of ministers and officials” said CELIOS director Bhima Yudhistira. “Political appointees often lack substantive understanding, and meritocracy in the bureaucracy is weak,” he said. Bhima also noted that investment inefficiencies and infrastructure gaps held back productivity. “Our ICOR [Incremental Capital-Output Ratio] is above six, because licensing [procedures] remain lengthy, and different ministers pursue conflicting policies. Infrastructure is often disconnected from industrial hubs, for example, logistics routes from industrial areas to ports or airports are missing. This drives up logistics costs and lowers productivity,” he explained. Read more at:
