Indonesia is facing a warning sign in its efforts to attract foreign investment. The 2025 World Competitiveness Ranking (WCR) by IMD shows that Indonesia’s competitiveness has sharply dropped to 40th out of 69 countries, falling 13 positions from the previous year. This decline is driven by structural issues such as high unemployment, weak infrastructure, an uncompetitive workforce, regional disparities, and institutional inefficiency.
Southeast Asia as a region is experiencing a similar trend, although Malaysia and the Philippines have seen improvements in their rankings. IMD highlights that Indonesia urgently needs comprehensive reforms, including:
- Integration of industrial strategies from upstream to downstream,
- Strengthening of the productive labor force,
- Expansion of the financial sector’s role,
- Compliance with global ESG standards,
- Enhancement of research and engagement of the diaspora.
Indonesia also continues to lag in education (ranked 62nd), health and environment (63rd), and government effectiveness (51st). Concrete steps are essential to ensure that Indonesia remains relevant and attractive in the global competition.
-Kontan, 20 June 2025
Ministry of Finance Strengthens Tax and Customs Task Force to Tap Potential from the Shadow Economy
The Ministry of Finance (MoF) is intensifying efforts to tap into state revenue potential from the shadow economy by collaborating with the National Police’s Special Task Force through synergy between the Directorate General of Taxes (DJP) and the Directorate General of Customs and Excise (DJBC). The focus is on illegal activities such as illegal mining, fishing, and logging, which have long caused losses to the state. In addition, DJBC has established an Illegal Cigarette Task Force, which seized 285.81 million illegal cigarettes in the first half of 2025.
Indonesia’s shadow economy is estimated to be worth IDR 2,213 trillion, with potential tax revenues of up to IDR 663 trillion. Experts believe that even if only a fraction of this hidden economy can be taxed, state revenue could increase significantly. The success of this strategy hinges on effective law enforcement and the use of intelligence data.
-Kontan, 19 June 2025
Bank Indonesia Maintains BI-Rate at 5.5% to Ensure Stability and Economic Growth
Bank Indonesia (BI) has decided to maintain the BI-Rate at 5.5% during the June 2025 Board of Governors Meeting, following a 25 basis points cut in May. BI Governor Perry Warjiyo stated that the decision aligns with efforts to keep inflation within the target of 2.5% ±1% and to safeguard exchange rate stability amid ongoing global uncertainty. In addition to the benchmark rate, the deposit facility rate remains at 4.75% and the lending facility rate at 6.25%.
BI also signaled the possibility of further rate cuts should stability be maintained. Meanwhile, macroprudential and payment system policies continue to support economic growth, particularly through the expansion of payment digitalization and the strengthening of the payment system industry.
-Kontan, 18 June 2025
Prabowo–Putin Bilateral Meeting: Strengthening Indonesia–Russia Strategic Partnership
President Prabowo Subianto and Russian President Vladimir Putin met in St. Petersburg on June 19, 2025, marking the 75th anniversary of Indonesia–Russia diplomatic relations. The meeting resulted in several strategic agreements across sectors including trade, halal infrastructure, energy, agriculture, high technology, and education. Key outcomes include:
- Agreement between Indonesia’s Ministry of Higher Education, Science, and Technology and Russia’s Ministry of Science and Higher Education on Cooperation in Higher Education.
- Memorandum of Understanding (MoU) between Indonesia’s Ministry of Transportation and Russia’s Ministry of Transport on Cooperation in the Transport Sector.
- MoU between Indonesia’s Ministry of Communication and Digital and Russia’s Ministry of Digital Development, Communications, and Mass Media on Cooperation in Digital Development and Mass Media.
- Memorandum of Understanding between the Indonesian sovereign wealth fund, Daya Anagata Nusantara Investment Authority (DANANTARA), and Joint Stock Company “Management Company of Russian Direct Investment Fund” to establish a €2 billion Indonesia–Russia investment platform.
These agreements reflect a deepening of strategic ties and a shared commitment to long-term bilateral cooperation.
-Kontan, 20 June 2025
Low Utilization of Cibitung–Cilincing Toll Road, ALFI Urges Tariff Review
The Indonesian Logistics and Forwarding Association (ALFI) Jakarta has raised concerns over the low utilization of the Cibitung–Cilincing Toll Road (JTCC) by logistics operators, despite its strategic role in connecting East Jakarta’s industrial zone with Tanjung Priok Port. ALFI Jakarta Chairman, Adil Karim, pointed out that high toll rates—over IDR 100,000 for the 34 km stretch—are the main reason logistics trucks are reluctant to use the JTCC. ALFI is urging a tariff review to make the toll road more affordable and enhance the efficiency of national logistics distribution.
-Antara, 22 Junie2025
Ministry of Public Works Reaffirms Commitment to Lower ICOR Through PU608 Strategy
Minister of Public Works, Dody Hanggodo, reaffirmed the government’s strong commitment to improving investment efficiency through the PU608 strategy. This strategy is more than a slogan—it is a concrete reform initiative aimed at reducing the national Incremental Capital Output Ratio (ICOR), which currently stands at 6.47.
PU608 targets three key objectives:
- Reducing ICOR to below 6,
- Eradicating poverty towards 0%, and
- Driving annual economic growth to reach 8%.
Through this strategy, the Ministry of Public Works seeks to ensure that every rupiah of infrastructure spending yields tangible impacts on national economic growth.
-Antara, 21 June 2025