Indonesia's competitiveness has fluctuated over the past decade, lagging behind regional peers despite its large market and macroeconomic stability. The key challenge is weak innovation capability, which hampers productivity and economic growth. Corporate innovation, driven by large companies, is identified as the fastest path to enhance national competitiveness and sustainable development.
Over the last decade, Indonesia's competitiveness has experienced significant fluctuations. According to the Global Competitiveness Index, Indonesia ranked 41st in 2016, improved to 36th in 2017, then declined to 45th in 2018 and further to 50th in 2019. Similarly, in the AMD competitiveness ranking, Indonesia was 40th in 2020, rose to 37th in 2021, dropped sharply to 44th in 2022, jumped to 34th in 2023, peaked at 27th in 2024, and then fell back to 40th in 2025.
In the Southeast Asian region, Singapore consistently leads as the most competitive country, with Malaysia and Thailand alternating between second and third places, and the Philippines in fifth. Indonesia generally holds the fourth position, occasionally surpassing Malaysia in 2024.
Despite Indonesia's enormous potential, including a large domestic market and macroeconomic stability, this potential has not fully translated into solid and sustainable competitiveness. This lag in competitiveness significantly impacts the national economy.
The World Economic Forum's analysis reveals a strong correlation between a country's competitiveness level and its gross national income per capita. Higher competitiveness correlates with higher national income. Indonesia's relatively low competitiveness in the region directly affects its income levels. While Singapore, Malaysia, and Thailand enjoy higher incomes, Indonesia's progress remains slow and is increasingly being approached by Vietnam, whose competitiveness is rising.
Without significant improvements in competitiveness, Indonesia risks falling into the middle-income trap, a situation where the country cannot increase productivity to reach high-income status. This stagnation in competitiveness hinders Indonesia's ambition to advance in the global economy.
One critical issue is Indonesia's low innovation capability. The Global Competitiveness Index highlights a stark contrast in Indonesia's profile: strong structural factors such as a large market size and relatively stable macroeconomics, but very weak innovation capability, the lowest among all assessed pillars.
This imbalance indicates that Indonesia's foundational strengths are not matched by its ability to generate, adopt, and commercialize innovation. Other pillars with better rankings are insufficient to compensate for this crucial weakness, which is a key determinant of long-term competitiveness.
Countries excelling in competitiveness, such as Singapore, South Korea, and Japan, consistently perform strongly in innovation. This underscores that innovation is not merely an additional element but a strategic foundation for sustainable economic growth.
Indonesia's innovation capability has improved slowly. The Global Innovation Index shows Indonesia's ranking stagnated between 85th and 87th globally from 2018 to 2021, making it the weakest innovator among Southeast Asian nations including Singapore, Malaysia, Thailand, Vietnam, and the Philippines.
From 2022 to 2024, Indonesia's ranking improved to 75th in 2022, 61st in 2023, and reached its best position at 54th in 2024. This improvement pace was faster than most ASEAN countries, which remained relatively stable. However, Indonesia slipped slightly to 55th in 2025.
Despite these gains, Indonesia remains near the bottom among ASEAN countries. Singapore remains in the global top five, Malaysia consistently ranks between 34th and 36th, Thailand and Vietnam hover around 44th to 45th, and the Philippines continues to outperform Indonesia.
Maintaining and accelerating this momentum is crucial. Without a leap in innovation, Indonesia will continue to lag in a global competition increasingly reliant on creativity, technology, and value creation.
While infrastructure policies and government reforms are important, their progress is slow and often insufficient to keep pace with global competition dynamics. Indonesia cannot rely solely on these factors.
The key to a breakthrough lies in harnessing the energy of change from large Indonesian corporations. These companies possess unique capacities unavailable to other economic actors, including research and development funding, access to technology, skilled talent, and international networks.
Large corporations can establish innovation laboratories, test new technologies, and allocate long-term investments. They are naturally driven to enhance competitiveness by creating breakthroughs.
Studies show that large companies are vital engines for boosting productivity, investment flows, technological innovation, workforce skill enhancement, and research and development activities. Their progress creates ripple effects throughout the national economy.
Indonesia benefits from a large domestic market, relative economic stability, and increasingly digitally savvy consumers. These factors make the country an ideal innovation laboratory without waiting for perfect external conditions.
Examples of corporate innovation include:
Corporate innovation also drives broader ecosystem transformation. Goto's innovations open income opportunities for millions of drivers and small traders and provide digital learning access for micro-businesses. Collaboration between large companies and MSMEs in supply chains can enhance quality standards and production capacity.
Internal innovation projects within companies accelerate knowledge flow and enrich workforce competencies.
Accelerating innovation in large corporations must become a national strategic agenda. This is essential for Indonesia to move faster toward stronger competitiveness.
In the short term, this approach offers the most tangible impact. In the long term, it benefits the entire economy by enhancing industrial competitiveness, creating jobs, and improving human resource quality.
To support this mission, Corporate Innovation Asia (CIAS) was established as a consulting institution fully dedicated to corporate innovation. CIAS was founded with the noble and strategic mission of enhancing Indonesia's global competitiveness through sustainable corporate innovation.
CIAS believes corporate innovation is the fastest and most effective path to improve Indonesia's competitiveness. Through targeted innovation, large companies can drive national productivity surges, increase state revenue, and ultimately bring more equitable prosperity across society.
After a decade of pursuing this mission, CIAS's conviction has strengthened. Every step taken, transformation supported, and solution designed with corporate partners demonstrates that Indonesia's future can be shaped by innovation emerging from its large companies.
In January 2026, CIAS celebrates its 10th anniversary. To mark this special occasion, CIAS presents a book dedicated to Indonesian cooperatives titled "Decoding Corporate Innovation." This guide aims to help large cooperatives build innovation capabilities to create sustainable competitive growth.
CIAS hopes this book will empower more large Indonesian cooperatives to innovate with impactful and sustainable results, thereby boosting Indonesia's global competitiveness.
The aspiration is to continue contributing to the nation's journey in the coming decades until Indonesia truly occupies its position as a developed country.
Amen.
