Indonesia's Business Competition Intensifies, Nearing 2024 Target

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Adi Ahdiat 11/04/2022 15:40 WIB

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According to the Indonesian Business Competition Supervisory Commission (KPPU) study, Indonesia's business competition index in 2021 was 4.81. This is approaching the target set in the National Medium

Indonesia's Business Competition Index (2018-2021)

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Indonesia's Business Competition Index (2018-2021)

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Business competition in Indonesia increased in 2021. This is recorded in the 2021 annual report of the Indonesian Business Competition Supervisory Commission (KPPU), published on its official website in April 2022.

KPPU measures the Business Competition Index (IPU) using a 1-7 scale. A score of 1 indicates a low level of competition, while a score of 7 indicates a high level of competition.

Using this scoring system, Indonesia's business competition index in 2021 was rated at 4.81, the highest in the last four years, as shown in the graph.

"This shows that national business competition falls into the category of 'towards high' competition," KPPU explained in its report.

"This year's IPU value is also getting closer to the National Target outlined in the 2024 Medium-Term Development Plan, namely a Business Competition Perception Index of 5.0 points," it continued.

According to KPPU, high business competition will indirectly boost labor productivity and increase wage levels.

About the KPPU Business Competition Index

KPPU has conducted studies on the Business Competition Index (IPU) with the Center for Economics and Development Studies (CEDS), Padjadjaran University (UNPAD), since 2018.

The IPU study is conducted nationally across 34 provinces using an aggregation method, measuring business competition in each economic sector in the region.

"The entire assessment process of sectoral business competition conditions in each province is obtained based on a survey of respondent perceptions who are stakeholders in the region and are considered to understand the business competition conditions in their area," KPPU clarified in its report.

"The survey method was conducted offline and online using a structured questionnaire through in-depth interviews," it continued.

KPPU stated that the IPU is the only business competition indicator that covers all provinces in Indonesia and 15 Gross Regional Domestic Product (GRDP) sectors.

The concept or paradigm used as the basic framework for compiling this index is the Structure, Conduct, and Performance (SCP) paradigm, supplemented by market dimensions, regulatory dimensions, and institutional dimensions, or respondents' understanding of institutions and business competition policies.

The method used in calculating the weight for each dimension is the Principal Component Analysis (PCA) method and equal weighting.

(Also read: [Overview of Business Competition in 15 Indonesian Economic Sectors](https://databoks.katadata.co.id/datapublish/preview/2022/04/11/gambaran-persaingan-usaha-di-15-sektor-ekonomi-indonesia))

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Indonesia's Business Competition Intensifies, Nearing 2024 Target

Indonesia's Business Competition Intensifies, Nearing 2024 Target

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Indonesia's Business Competition Intensifies, Nearing 2024 Target

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