A year into the COVID-19 pandemic, Indonesia’s economy shows signs of recovery in 2021: The country has seen a 3.2 percent annual GDP growth this year, compared to a contraction of 2.1 percent a year earlier. The 2021 growth is mainly driven by the Information and Communication Technology (ICT) and wholesale and retail trade sectors. Indonesia’s strong recovery in 2021 is reverberated in its labour market, with unemployment rates dropping from 7.07 percent in August 2020 to 6.49 percent in August 2021.
As Indonesia navigates its economy out of the pandemic, this study on the competitiveness of 34 sub-national Indonesian economies by the Asia Competitiveness Institute serves to track the country’s socio-economic progress during the recovery phase. This is given the varied impacts and recovery trajectory experienced by its sub-national economics. The book outlines the country’s COVID-19 situation in 2021 and the government’s post-pandemic growth strategies. This iteration guides readers in understanding key development in the country and identifying the country’s high growth sectors and economic priorities.
The annual competitiveness rankings of 34 provinces reports that DKI Jakarta remained the top-ranked province in the competitiveness chart, in concordant with its status as the country’s economic hub. Even though the province excels in Macroeconomic Stability, Government and Institutional Setting, and Financial Businesses and Manpower Conditions environment, its progress in the Quality of Life and Infrastructure Development has been slipping, dropping from the 3rd rank in 2017 to 9th in 2021. The province has struggled with urban woes such as flooding, increased traffic congestion, and worsening income inequality.
Subsequently, the book also paints the competitiveness landscape at the regional level. ACI found persisting development gaps between Western and Eastern Indonesia. The Java region continues to outperform the rest. On the flip side, the Sulawesi and Maluku-Papua regions were amongst the least competitive across all the four environments. Even though the Java region continues to outperform its peers, the chapter shows that the gap has narrowed over time. The analysis identifies Sumatra as the emerging region, with improvements in Government and Institutional Setting (6th in 2020 to 4th in 2021), Financial, Businesses and Manpower Conditions (3rd in 2020 to 2nd in 2021) and Quality of Life and Infrastructure Development (5th in 2020 to 3rd in 2021).
This year’s iteration delves deeper into the development of the three central Indonesian provinces of Bali, DKI Jakarta and Riau Islands. The book provides a review the socio-economic progress of these three provinces through the lens of economic development, labour market dynamism, infrastructure and social development. ACI illustrates their unique provincial characteristics, how the pandemic impacted their socio-economic progress, and how they attempt to navigate out of the pandemic. These chapters also track the province’s development indicators against its associating medium-term development plan (RPJMD) targets.