Product market regulation in Indonesia: An international comparison

Christine Lewis, Cristiana Vitale, Rosamaria Bitetti, Auxentius Andry Yudhianto and Javier Terrero-Dávila
Authors registered in the RePEc Author Service: Javier Terrero Davila ()

No 1741, OECD Economics Department Working Papers from OECD Publishing

Abstract: 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.

Keywords: Competition; Governance of State-Owned Enterprises; Indonesia; Product Market Regulation; Productivity; Professional Services; Public Procurement; Regulation (search for similar items in EconPapers)
JEL-codes: D24 D4 H57 K23 K32 L1 L2 L3 L4 L5 L6 L7 L8 L9 O53 (search for similar items in EconPapers)
Date: 2022-12-16
New Economics Papers: this item is included in nep-com, nep-reg and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1741-en

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