Indonesia improves in future-ready factor but lags in tech competitiveness

Indonesia has been ranked 56th out of 63 countries in terms of digital competitiveness, despite improving in the future readiness factor, particularly in e-participation (58th to 45th) and internet retailing (58th to 50th). According to the 2020 IMD World Digital Competitiveness Ranking, the improvement that Indonesia has witnessed is counterbalanced by a drop in the technology factor in which the efficiency of the banking and financial services, the level of investment in telecommunication and wireless broadband show a steep decline.

The ranking has three main factors - knowledge, technology and future readiness. Indonesia was ranked 63rd in terms of knowledge, 54th for technology and 48th for future readiness. The country's top strengths for future readiness are use of big data and analytics and entrepreneurial fear of failure. Meanwhile, the ranking identified the top strength under technology to be IT and media stock market capitalisation. When it came to knowledge, Indonesia did well in terms of having female researchers and R&D productivity by publication.

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Likewise, Malaysia also remained in 26th place, showing only small changes in each of the three factors. It dropped to 32nd in future readiness and to 20th in technology. Malaysia's weaknesses for future readiness were in software piracy and internet retailing, while its weaknesses in technology lay in starting a business and immigration laws. On the other hand, investment in telecommunications and high-tech exports were identified as top strengths in this area.

Meanwhile, it retained its 19th spot in the knowledge factor, showing small improvements in graduates in Science and high-tech exports, which offset declines in scientific employment. According to the study, the perceptions of business leaders shows relative declines in a number of areas across the three factors, notably their appreciation for talent and business agility.

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Singapore came in second in the rankings, with its achievements coming from its performance in the knowledge and technology factors where it ranked 2nd and 1st respectively. According to the ranking, Singapore's focus on high technology, internet infrastructure and business laws drive its success. It also showed improvement in employee training, jumping 12 places to 16th. In addition, in scientific concentration, the scientific and technical employment indicator showed improvement. However, the country trailed behind on future readiness (12th), largely due to lower adaptivity to technological change (adaptive attitudes sub factor) and a drop in business agility from last year.

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Arturo Bris, director of the IMD World Competitive Centre, said Singapore is an extremely important player in the digital apparatus and in the technology apparatus.

"It runs second again this year with very, very strong elements showing in the knowledge and technology factors. They top the ranking in the talent and the regulatory and technological frameworks. And in fact, we see an increase with respect to training of employees and scientific concentration from last year," he added.

He also explained that the post-COVID world will be characterised by a K-shaped recovery, with two types of economies - those that will recover quickly and those that will recover more slowly. "Recovery is driven by many factors, such as the health of public finances. But also, fundamentally, by the digital competitiveness of those economies," he said.

Knowledge measures the know-how necessary to discover, understand, and build new technologies, including the availability of talent, training and education, and scientific concentration of a country. Technology measures the overall context that enables the development of digital technologies. This context includes the regulatory framework, technological framework, and access to capital. Future Readiness measures the level of country preparedness to exploit digital transformation, broken down to adaptive attitudes to new technology, business agility, and IT integration.

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