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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
Porters 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
Competitiveness
Quality of the
Sophistication of
National
Business
Environment

Company
Operation and
Strategy

State of Cluster
Development

Macroeconomic Competitiveness

MicroeconomicSocial
Competitiveness
Infrastructure
and Political
Institution

Macroeconomic
Policies

Natural Endownment
Source: The Competitive Advantage of Nations, States and Regions; Prof. Michael E. Porter; 2009

Microeconomic Competitiveness : Quality of the


Business Environment (Porters Diamond)
Context for
Firm
Strategy
and Rivalry

Factor (
input)
Conditions

Demand
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
GDP Per Capita
-

0.00%

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
Migas
19,692.30
Non-Migas 97,491.70

2010
2011
2012
2013
26,712.60 34,652.00 31,329.90 31,159.50
129,739.50 162,019.60 153,043.00 149,918.80

10 Indonesia Main Commodities

TPT

Electronics

Footwear Automotive

Rubber

Palm Oil Forest


Products

Prawn

Cocoa

Coffee

Indonesia Commodities Clustering


Kegiatan Ekonomi Utama

Sumatera

Besi Baja
Makanan / Minuman
Tekstil
peralatan transportasi
Perkapalan
Nikel
Tembaga
Bauksit
Kelapa Sawit
Karet
Pertanian pangan
Pariwisata
Telematika
Batu Bara
Migas
KSN Selat Sunda
Jabodetabek Area
Alutsista
Peternakan
Perkayuan
Kakao
Perikanan

Jawa

Kalimantan

Sulawesi

Bali &
Papua & Maluku
Nusa Tenggara

x
x
x
x
x
x

x
x

x
x

x
x

x
x
x

x
x

x
x
x
x
x
x
x

BASIC REQUIREMENTS
Country/Economy Global Competitiveness
Index

Singapore
Malaysia
Brunei Darussalam
Thailand
Indonesia
Phillippines
Vietnam
Lao PDR
Cambodia
Myanmar

1st Pillar
2nd Pillar
Institutions Infrastructure

2
24
26
37
38
59
70
81
88
139

3
29
25
78
67
79
98
63
91
141

3rd Pillaar
Macroeconomic
Environment

4th Pillar
Health and
Primary Education

18
38
1
31
26
40
87
93
83
125

2
33
23
81
72
96
67
80
99
111

2
29
58
47
61
96
82
84
101
141

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
Malaysia
Brunei Darussalam
Thailand
Indonesia
Phillippines
Vietnam
Lao PDR
Cambodia
Myanmar

2
24
26
37
38
59
70
81
88
139

2
46
55
66
64
67
95
111
116
139

1
10
42
34
50
82
74
54
55
135

1
25
10
62
103
100
56
44
27
98

2
6
56
32
60
48
93
91
65
144

7
51
71
78
75
77
102
113
97
148

34
26
131
22
15
33
36
122
92
79

17
20
56
40
37
49
98
78
86
146

9
25
59
66
33
69
76
68
91
143

Global Performance Index of


Indonesia
No
1
2
3
4
5
6
7
8
9
10
11
12

Categories
Market size
Macroeconomic Environment
Innovation
Business sophistication
Goods market efficiency
Financial market development
Infrastructure
Higher education and training
Institutions
Health and primary education
Technological readiness
Labor market efficiency

Rank
15
26
33
37
50
60
61
64
67
72
75
103

Score
5.32
5.75
3.82
4.44
4.40
4.18
4.17
4.30
3.97
5.71
3.66
4.04

Indonesia Most Problematic Factor in


doing Business
Corruption

19%

Inefficient government bureaucracy


Inadequate supply of infrastructure

44%
15%

Access to financing
Restrictive labor regulations

9%

6%

7%

Others

Strategic Issue for Indonesia


Core Strengths

Natural Endownment
Geographical Position
Cheap Labor
Great Youth Population
Big Market Size
Creative Economy
Fast Economic Growth

Weaknesses

Corruption
Inneficient Government
Bureaucracy
Inadequate Supply of
Infrastructure
Access to Financing
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 worlds 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 Indonesias 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.
Indonesias 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