THE COMPETITIVE

ADVANTAGE OF
INDONESIA
GROUP 4
Ivan Budiawan – 29113127
Halifah Hamzah – 29113069
Andry Moch Ramdan – 29113024
Anis Kemita – 29113475
What is Competitiveness?
Competitiveness depends on the productivity with which a
nation uses its human, capital, and natural resources.
– Productivity sets the sustainable standard of living (wages,
returns on capital, returns on natural resources) that a country
can sustain
– It is not what industries a nation competes in that matters for
prosperity, but how productively it competes in those industries
– Productivity in a national economy arises from a combination
of domestic and foreign firms
– The productivity of “local” or domestic industries is
fundamental to competitiveness, not just that of export
industries

Source: The Competitive Advantage of Nations, States and Regions; Prof. Michael E. Porter; 2009
Competitive Advantage
Porter’s theory of competitive advantage
(Porter Michael, 1990)
• The nature of the competition and the sources of
competitive advantage are very different among
industries and even among the segments of the
same industry.
• Certain country can influence the obtaining of the
competitive advantage within a certain sector of
industry;
• A country can offer different competitive
advantages for a company, depending if it is an
origin country or a host country;
• the competitivity has a dynamic character.
 Determinant of Competitiveness
Microeconomic Competitiveness

• Microeconomic
Quality of the Competitiveness
Sophistication of
National State of Cluster Company
Business Development Operation and
Environment Strategy

Macroeconomic Competitiveness
• MicroeconomicSocial
Competitiveness
Infrastructure Macroeconomic
and Political Policies
Institution

Natural Endownment
Source: The Competitive Advantage of Nations, States and Regions; Prof. Michael E. Porter; 2009
Microeconomic Competitiveness : Quality of the
Business Environment (Porter’s Diamond)

Context for
Firm
Strategy
and Rivalry

Factor ( Demand
input) Conditions
Conditions

Related
and
Supporting
Industries
THE COMPETITIVE ADVANTAGE
OF INDONESIA
INDONESIA ECONOMIC PROFILE
1. The Economic Growth of Indonesia
Economic Growth in 2013: 5,78%
GDP Per Capita in 2013: Rp. 36.506.486,32

7.00% 40,000,000.00
6.00% 35,000,000.00

5.00% 30,000,000.00
25,000,000.00
4.00%
20,000,000.00
3.00%
15,000,000.00
2.00% 10,000,000.00
1.00% 5,000,000.00
0.00% - GDP Per Capita
2009 2010 2011 2012 2013 Growth
2. Indonesia Export Growth from 2009-2013

Export of Indonesia 2009 – 2013

(Million $)
180,000.00
160,000.00
140,000.00
120,000.00
100,000.00
80,000.00
60,000.00
40,000.00
20,000.00
0.00
2009 2010 2011 2012 2013
Migas 19,692.30 26,712.60 34,652.00 31,329.90 31,159.50
Non-Migas 97,491.70 129,739.50 162,019.60 153,043.00 149,918.80
10 Indonesia Main Commodities

TPT Electronics Rubber Palm Oil Forest

Products

Footwear Automotive Prawn Cocoa Coffee

Indonesia Commodities Clustering
Kegiatan Ekonomi Utama Sumatera Jawa Kalimantan Sulawesi Bali & Papua & Maluku
Nusa Tenggara
Besi Baja x x
Makanan / Minuman x
Tekstil x
peralatan transportasi x
Perkapalan x x
Nikel x x
Tembaga x
Bauksit x
Kelapa Sawit x x
Karet x
Pertanian pangan x x
Pariwisata x
Telematika x
Batu Bara x x
Migas x x x
KSN Selat Sunda x
Jabodetabek Area x
Alutsista x
Peternakan x
Perkayuan x
Kakao x
Perikanan x x x
 BASIC REQUIREMENTS
Country/Economy Global Competitiveness 1st Pillar 2nd Pillar 3rd Pillaar 4th Pillar
Index Institutions Infrastructure Macroeconomic Health and
Environment Primary Education

Singapore 2 3 2 18 2
Malaysia 24 29 29 38 33
Brunei Darussalam 26 25 58 1 23
Thailand 37 78 47 31 81
Indonesia 38 67 61 26 72
Phillippines 59 79 96 40 96
Vietnam 70 98 82 87 67
Lao PDR 81 63 84 93 80
Cambodia 88 91 101 83 99
Myanmar 139 141 141 125 111

EFFICIENCY ENHANCERS INNOVATION

Country/Economy Global Competitiveness 5th Pillar 6th Pillar 7th Pillar 8th Pillar 9th Pillar 10th Pillar 11th Pillar 12th Pillar
Index Higher Education Goods Market Labor Market Financial Market Technological Market Business Innovation
and Training Efficiency Efficiency Development Readiness Siza Sophistication

Singapore 2 2 1 1 2 7 34 17 9
Malaysia 24 46 10 25 6 51 26 20 25
Brunei Darussalam 26 55 42 10 56 71 131 56 59
Thailand 37 66 34 62 32 78 22 40 66
Indonesia 38 64 50 103 60 75 15 37 33
Phillippines 59 67 82 100 48 77 33 49 69
Vietnam 70 95 74 56 93 102 36 98 76
Lao PDR 81 111 54 44 91 113 122 78 68
Cambodia 88 116 55 27 65 97 92 86 91
Myanmar 139 139 135 98 144 148 79 146 143
Global Performance Index of
Indonesia
No Categories Rank Score
1 Market size 15 5.32
2 Macroeconomic Environment 26 5.75
3 Innovation 33 3.82
4 Business sophistication 37 4.44
5 Goods market efficiency 50 4.40
6 Financial market development 60 4.18
7 Infrastructure 61 4.17
8 Higher education and training 64 4.30
9 Institutions 67 3.97
10 Health and primary education 72 5.71
11 Technological readiness 75 3.66
12 Labor market efficiency 103 4.04
Indonesia Most Problematic Factor in
doing Business

Corruption

19% Inefficient government bureaucracy

Inadequate supply of infrastructure

44%
Access to financing
15%
Restrictive labor regulations

9% Others
6% 7%
Strategic Issue for Indonesia
Core Strengths Weaknesses
• Natural Endownment • Corruption
• Geographical Position • Inneficient Government
• Cheap Labor Bureaucracy
• Great Youth Population • Inadequate Supply of
• Big Market Size Infrastructure
• Creative Economy • Access to Financing
• Fast Economic Growth • Restrictive labor
Regulations
MP3EI
• The Masterplan for Acceleration and Expansion of
Indonesia's Economic Development (abbreviated MP3EI)
is an ambitious plan by the Indonesian government to
accelerate the realization of becoming a developed
country of which the prosperity will be enjoyed equally
among the people.
• By utilizing the MP3EI, Indonesia aims to earn its place as
one of the world’s developed countries by 2025 with
expected per capita income of USD $14,250-$15,500 and
total gross domestic product of USD $4.0-$4.5 trillion.
MP3EI
• Acceleration and expansion of Indonesia’s economic
development is supported by Indonesia's demographic
potentials, the abundance of its natural resources, and by its
geographical advantages.
• Important part of the MP3EI is the development of economic
corridors in Indonesia based on the potentials and advantages
inherent to each region throughout the country as has been
described previously in Indonesia Commodities Clustering.
• The improvement of human resource and national science and
technology capabilities is one of three pillars of the
implementation strategy for MP3EI.
MP3EI
Conclusion
• Indonesia Competitive Advantage in 2013-2014 increase
significantly from the previous period due to the MP3EI policy,
making Indonesia more attractive for investor.
• Indonesia’s infrastructure improvement and increased quality
of human resources will also make better investment climate.
• To survive in Asean Economic Community and AFTA in 2015,
Indonesia still have some ‘homework’ to be done.
Recommendation
• Indonesia must change from raw material exporter to finished
good exporter.
• To increase Indonesia competitive advantages, Indonesia
should improve and promote its creative economy (UKM) ,
Science and Technology, and tourism.
• Indonesia must improve its Human Resources & Technology
quality to face globalization economy.
Thank You