The last BTI category relevant to business is market organization and competition. Businesses operate in markets, and the degree to which governments regulate framework conditions to facilitate market transactions and competition is key to a conducive business environment.

Market Organization and Competition

This category evaluates the competitiveness and liberalization of Indonesia’s market.

The BTI identifies three Criteria for its assessment

• Market organization

• Competition policy

• Liberalization of foreign trade

Criteria Analysis: Score and Trend

• Market Organization: Score of 6, medium-level effectiveness with ongoing challenges in implementing economic reforms like the Omnibus Law.

• Competition Policy: Score of 5, reflecting limited anti-monopoly measures and ineffective enforcement by the competition authority (KPPU).

• Liberalization of Foreign Trade: Score of 7, indicating significant progress, particularly under the Omnibus Law, which improved the investment climate.

Evaluation: Market Organization and Competition

The market environment is mixed, with improvements in liberalization but setbacks in competition policy. The overall risk is moderate.

Key Takeaways: Assessing RoL, Property, and Market Conditions

• The BTI Index highlights Indonesia’s mixed performance in key areas of the LBE.

• Rule of Law exhibits moderate risks due to declining judicial independence and civil rights.

• Property rights remain stable but require attention to land-related disputes.

• The market organization benefits from liberalization but faces challenges related to competition and policy coherence.

These insights provided by BTI offer one framework for identifying risks and opportunities within Indonesia’s legal business environment, aiding stakeholders in making informed decisions.