Product market regulation in Indonesia
An international comparison
Appropriately designed Product Market Regulation (PMR) is essential to enhance productivity,
boost economic growth and increase welfare. Regulation is needed to address market
failures and guarantee the health and safety of consumers. However, by limiting the
entry and expansion of firms, a too stringent regulatory environment can hinder an
efficient allocation of resources both within and across industries. This paper provides
a detailed review of PMR in Indonesia and analyses the country’s performance in this
area relative to OECD countries, other G-20 members and regional peers. To do so,
it relies on the OECD’s PMR Indicators, which have been recently compiled for Indonesia.
These indicators assess the extent to which the regulatory framework of a country
is competition-friendly across a range of sectors and regulatory areas. The analysis
reveals that PMR in Indonesia is less conducive to competition than in most OECD countries.
The scope for improvement is particularly great in areas such as barriers in network
sectors, command-and-control regulation, public procurement, the governance of State-owned
Enterprises (SOEs) and the extent to which the impact on competition is assessed when
designing new regulation. The paper proposes concrete policy measures to align the
regulatory environment of Indonesia with that of best performing countries.
Published on December 16, 2022
In series:OECD Economics Department Working Papersview more titles