Indonesia Achieves Improvement in Product Market Regulation Index: A Step Towards OECD Membership

Jakarta, INTI – The Organization for Economic Co-operation and Development (OECD) launched its latest Product Market Regulation (PMR) survey at the "Launch of OECD Product Market Regulation Indicators 2023-2024" event in Paris, France. This survey is an initiative to identify how a country creates a conducive business environment, increases transparency in the business world, and supports the creation of quality jobs. The PMR survey was conducted in 38 OECD member countries and several partner countries, including Indonesia.

In recognition of its successful policy reforms, Indonesia was invited by the OECD to speak at the PMR release event. Indonesia was invited alongside Greece and Peru, which also successfully implemented policy reforms. Deputy for Macroeconomic and Financial Coordination at the Coordinating Ministry for Economic Affairs, Ferry Irawan, who attended on behalf of Coordinating Minister for Economic Affairs Airlangga Hartarto, conveyed Indonesia's commitment and success in implementing structural reforms.

"The implementation of the Job Creation Law (UU CK) has proven effective, as evidenced by the improvement in Indonesia's PMR indicators," said Deputy Ferry.

Since 1998, Indonesia has undertaken a series of structural reforms to strengthen governance, decentralize fiscal management, combat corruption, improve financial services, and ensure economic resilience through various legislative and regulatory measures. In 2021, through the omnibus law approach, Indonesia revised 79 laws through the UU CK, comprising 186 articles and 15 chapters divided into 11 clusters. These clusters include improving the investment ecosystem and business activities, business licensing, labor, support for research and innovation, government administration, and ease of doing business.

"Success in improving the PMR indicators is a strategic step in line with Indonesia's aspirations to become a full member of the OECD, which will further strengthen international cooperation and national economic competitiveness. This success will not only solidify Indonesia's position globally but also strengthen the ongoing OECD membership accession efforts," said Deputy Ferry.

Indonesia will continue these reforms using OECD accession as a benchmark for further improvements. The event also reaffirmed Indonesia's commitment to continuing structural reforms to support healthy business competition and sustainable economic growth.

The 2024 Indonesia PMR survey shows very positive results, with an increase in the PMR index from 2.79 in 2021 to 2.2 in 2024 (on a scale of 0-6, where 0 indicates more competition-friendly regulation). Significant improvements were seen in several indicators, including more transparent public procurement, increased public participation in regulations, and more flexible regulatory evaluation methods.

Structural reforms have also successfully promoted open competition in the railway sector, reduced barriers to foreign investment and international trade, and simplified risk-based business licensing through the Online Single Submission Risk-Based Approach (OSS RBA) system.

"No country among the 47 surveyed currently has less competition-friendly regulations than in 2018, when the last Product Market Regulation indicators were collected. Several countries have made significant progress, including Indonesia, Brazil, Peru, and Greece. However, there is still room for further reform in these countries, as their regulations remain more stringent compared to the average OECD country," concluded OECD Secretary-General Mathias Cormann.

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