Measuring Global Entrepreneurship Index of Indonesia among

ASEAN 6 Countries

Elistia

, Suryari Purnama

, Nina Nurhasanah

and Aliaras Wahid

Economic and Bussiness Faculty, Universitas Esa Unggul, Jakarta

Faculty of Communication, Universitas Esa Unggul, Jakarta

Keywords: Global Entrepreneurship Index, ASEAN Economic Community, Sustainable Entrepreneurship, Economic

Growth.

Abstract: GEI (Global Entrepreneurship Index) has a contextual feature of entrepreneurship by focusing on

Entrepreneurial Attitudes (ATT), Entrepreneurial Abilities (ABT), and Entrepreneurial Aspirations (ASP).

This paper purposes in measuring Global Entrepreneurship Index of Indonesia among ASEAN 6 (six)

Countries. The implementation of the ASEAN Economic Community (AEC) 2015 will create economic

activity with very high mobility and can open business opportunities and employment, but also at the same

time become a huge challenge for countries in the ASEAN region, including Indonesia. For this reason, we

need to know how that position of Indonesia is in the Global Entrepreneurship Index (GEI) among the 6 (six)

ASEAN member countries, namely: Indonesia, Philippine, Malaysia, Singapore, Thailand and Brunei

Darussalam. From the results of the literature review of the GEI report starting from 2015 - 2017, Indonesia's

position is at the lowest rank among the 6 (six) ASEAN countries. So, answering these conditions, it is

necessary to understand what the government's efforts are in the effort to improve Sustainable Global

Entrepreneurship.To spur the development of entrepreneurship, the Indonesian government launched the

National Entrepreneurship Movement (GKN), with the aim of increasing the number of Indonesian

entrepreneurs.According to Sarkar (2014), this interest has been fuelled by the desire to understand how

entrepreneurship influences the economy of a country. Both the economists and policymakersrecognize the

effect of entrepreneurship on the economy of a country. Moreover, the research conducted by Elistia (2017)

found results that stated that the Total Entrepreneurship Activity (TEA) and Economic Growth (GDP) in

Indonesia had a strong positive correlation between TEA and GDP of 0.853 (Pearson correlation). So it can

be concluded that entrepreneurship has an impact on increasing economic growth in Indonesia, this is

expected to increase Indonesia's GEI Index ranking.

1 INTRODUCTION

Global Entrepreneurship has brought new interests

and questions from thousands of new actors to the

dynamics of the world entrepreneurial ecosystem. As

they strive to harness the power of the formation of

new companies to create jobs and innovation ahead,

we have seen a series of new accelerations,

educational programs and policy experiments -

supported by sincere interest in creating the most

powerful local enabling environment.

The purpose of writing this article is to contribute

to our understanding of economic development by

building a Global Entrepreneurship Index (GEI. The

Global Entrepreneurship and Development Institute

(GEDI Institute) is a research organization that

advances knowledge about the relationship between

entrepreneurship, economic development and

prosperity The Institute was founded by leading

entrepreneurial scholars from George Mason

University, the University of Pécs, and Imperial

College London.

GEDI captures the contextual features of

entrepreneurship by focusing on entrepreneurial

attitudes, entrepreneurial activities, and

entrepreneurial aspirations. The data and its

contribution to the business formation process are

supported by three decades of research on

entrepreneurship in some countries. The index

construction integrates 31 variables, 16 from the

Global Entrepreneurship Monitor (GEM), and 14

from other data sources, into 14 pillars, three sub-

2794

Elistia, ., Purnama, S., Nurhasanah, N. and Wahid, A.

Measuring Global Entrepreneurship Index of Indonesia among ASEAN 6 Countries.

DOI: 10.5220/0009952827942801

In Proceedings of the 1st Inter national Conference on Recent Innovations (ICRI 2018), pages 2794-2801

ISBN: 978-989-758-458-9

indices, and a 'super-index'. GEI described in this

paper is only in 6 (six) ASEAN member countries,

namely: Indonesia, Malaysia, Singapore, Thailand,

Philippines and Brunei Darussalam.

Economic development in Indonesia cannot be

separated from the performance of entrepreneurs.

Besides that, the level of competition among

entrepreneurs in the Asian region is also getting

higher, we can take the example of GEDI rank

assessment in ASEAN member countries. The

ASEAN Economic Community (MEA) will formally

be implemented by the end of 2015 even though the

process has begun since the signing of the ASEAN

Framework Agreement on Economic Cooperation by

ASEAN leaders in 1992 (Kemenko, 2015). Thus, free

trade has actually begun to be implemented gradually

and progressively by ASEAN member countries

through the regional trade agreement (RTA) in the

form of the ASEAN Free Trade Area (AFTA). AEC

(ASEAN Economic Community) has a blueprint, this

is one of the most important milestones of ASEAN

economic integration. It is structured on four pillars: i)

a single market and production base; (ii) competitive

economic area; (iii) equitable economic development;

and (iv) integration into the global economy. The

work agenda starts in 2015 towards 2030, ASEAN

needs to continue to deepen regional integration by

creating a truly unlimited economic community.

2 LITERATURE REVIEW

The implementation of the ASEAN Economic

Community (AEC) 2015 will create economic

activity with very high mobility and can open

business opportunities and employment, but also at

the same time become a huge challenge for countries

in the ASEAN region, including Indonesia. The

creation of the ASEAN Community implies not only

institutional/institutional reform and innovation to

build a mature and developing society, but also close

coordination in developing the three pillars of

ASEAN, namely: political-security, economic, and

socio-cultural.

The relationship between entrepreneurship and

economic growth of a country has increasingly gained

much interest from economists and policymakers

over the years. However, while some view it as a

direct relationship, others see it as an indirect kind of

relationship. According to Sarkar (2014), this interest

has been fuelled by the desire to understand how

entrepreneurship influences the economy of a

country. Both the economists and policy makers

recognize the effect of entrepreneurship on the

economy of a country.

GEI consists of three components or sub-indices

3A, namely: Entrepreneurial Attitudes (ATT),

Entrepreneurial Abilities (ABT), and Entrepreneurial

Aspirations (ASP). These three sub-indices stand on

14 pillars, each of which contains an individual and

institutional variable that are compatible with the

micro and entrepreneurial aspects of the macro level.

The GEDI pillar includes individual and individual

institutional variables. This pillar is an effort to

capture the open nature of entrepreneurship;

analyzing they can provide an in-depth view of the

strengths and weaknesses listed in the index described

in the 14 entrepreneurship pillars in table 1.

Table 1: The Structure of the New Global Entrepreneurship

Index (GEI)*

Source: The GEDI 2017

*Individual variables are colored with a white

background while institutional ones with the light

blue background. Red letters show the changes in the

index structure as compared to the previous GEI

version.

According to table 1, Sub-Indexes consist of 3

aspects namely: Attitudes Sub-index, Abilities Sub-

Index, and Aspiration Sub-Index. The following is the

explanation:

Measuring Global Entrepreneurship Index of Indonesia among ASEAN 6 Countries

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 Attitudes Sub-index is for Entrepreneurial

Attitudes (ATT). Entrepreneurial attitudes

reflect people’s attitudes toward

entrepreneurship. It involves opportunity

recognition, startup skills, risk perception,

networking, and cultural supports of

entrepreneurs. Institutional embeddingis

expressed as the property rights and economic

freedom, the quality of the education, the

riskiness of the country, the connectivity

potential, and the prevalence of corruption.

 Abilities Sub-Index is for Entrepreneurial

Abilities include some important characteristics

of the entrepreneur that determine the extent to

which new startups will have potential for

growth, such as motivation based on

opportunity as opposed to necessity, the

potential technology-intensity of the startup, the

entrepreneur’s level of education, the level of

competition and digital startup capabilities.

These individual factors coincide with the

proper institutional factors of taxation and the

efficiency of government operation

(Governance), technology adsorption

capability, the freedom of the labor market and

the extent of staff training (Labor Market), and

the dominance of powerful business groups as

well as the effectiveness of antimonopoly

regulation (Regulation).

 Aspiration Sub-Index is for Entrepreneurial

Aspiration refers to the distinctive, qualitative,

strategy-related nature of the entrepreneurial

activity. The individual and institutional factors

of product and process innovation such as

technology transfer, the applied research

potential of science, high growth expectations,

venture capital availability and strategy

sophistication (Finance and Strategy),

internationalization and the availability of risk

financing constitute entrepreneurial aspirations.

Based on those sub-indexes table 2 shown the

description:

Table 2: The Description of the GEI Index Pillar

Source: The GEDI 2017

3 DATA AND METHODOLOGY

This paper is based on literature review and

conceptual analysis. Literature studies and conceptual

analysis are intended to identify the value of GEI in 6

(six) ASEAN member countries in 2015, 2017. GEI

provides a detailed description of the health of the

entrepreneurial ecosystem of a country. GEI is

designed to help the government utilize

entrepreneurial power for sustainable economic

development.

Sources of data and information for this paper are

derived from the report of The GEDI Institute in the

form of an assessment of the Global Entrepreneurship

Index (GEI) in 6 (six) ASEAN member countries,

namely: Indonesia, Malaysia, Singapore, Thailand,

Philippines and Brunei Darussalam. The data

displayed is as follows:Global Rank Global

Entrepreneurship Index (GEI)

1. Global Entrepreneurship Index (GEI) Score

2. Entrepreneurial Attitude (ATT) Score

3. Entrepreneurial Abilities (ABT) Score

4. Entrepreneurial Aspiration (ASP) Score

4 RESULT AND DISCUSSION

The results of data processing scoring and indexing

on 6 (six) ASEAN member countries in Indonesia,

Malaysia, Singapore, Thailand, Philippines and

Brunei Darussalam are as follows:

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4.1 Global Rank Global

Entrepreneurship Index (GEI)

Table 3. Global GEI Rank 6 Negara ASEAN 2015 -

2017

Figure 1. Global GEI Rank 6 Negara ASEAN 2015 -

2017

Data in Table 3 and Figure 1 shows that

Indonesia, despite the lowest GEI Global Rank, is

among the 6 (six) countries, but the increase from

2015 to 2017 has increased quite well, namely an

increase of an average of 14% from the previous year.

4.2 Global Entrepreneurship Index

(GEI) Score

The following are the results of the GEI Score of

6 ASEAN countries from 2015 - 2017, which shows

that Indonesia is still in the 6th position. Therefore

Indonesia must try to improve the aspects of ATT,

ABT and ASP.

Table 4. Global Entrepreneurship Index (GEI) Score 6

Negara ASEAN 2015 - 2017

Figure 2. Global Entrepreneurship Index (GEI) Score

6 Negara ASEAN 2015 - 2017

From the data in table 4 and figure 2, GEI Score

Indonesia is the lowest position of the 6 ASEAN

countries, therefore the need for Government,

Community and Business / Industry efforts to

collaborate to improve the Global Entrepreneurship

Index (GEI) Score. An increase in the

Entrepreneurship Index can also be seen from the

Ranking of Indonesia in the Ease of Doing Business

which increases every year. The increase can be seen

in reports from the Indonesia Investment

Coordinating Board as shown in figure 3 below:

Figure 3. Indonesia’s Doing Business from 2013 –

2017

If seen in figure 3, shows that Indonesia can

compete enough among ASEAN countries, because

each year the ranking is consistently increasing.

Therefore, it is expected to be able to boost

Indonesia's GEI score.

4.3 Entrepreneurial Attitude (ATT)

Entrepreneurial attitudes are societies’ attitudes

toward entrepreneurship, which we define as a

population’s general feelings about recognizing

opportunities, knowing entrepreneurs personally,

Measuring Global Entrepreneurship Index of Indonesia among ASEAN 6 Countries

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endowing entrepreneurs with high status,

acceptingthe risks associated with business startups,

and having the skills to launch a business

successfully. The benchmark individuals are those

who can recognize valuable business opportunities

and have the skills to exploit them; who attach high

status to entrepreneurs; who can bear and handle

startup risks; who know other entrepreneurs

personally (i.e., have a network or role models); and

who can generate future entrepreneurial activities.

(GEDI, 2017)

Table 5. Entrepreneurial Attitude (ATT) Score 6

Negara ASEAN 2015 - 2017

Figure 4. Entrepreneurial Attitude (ATT) Score 6

Negara ASEAN 2015 - 2017

Table 5 and Figure 4 have shown that ATT of

Indonesia can compete against Malaysia, Brunei,

Thailand and Philippines. According to the data by

GEM (General Entrepreneurship Monitor), based on

Economies Participating in the 2014 GEM Survey,

grouped by Geographic Region and Economic

Development Level in Asia & Oceania data shown,

Indonesia is in Efficiency-driven Economies, which

are consistent to increase industrialization and

economies of scale (Table 6).

Table 6. GEM Economic Development Level in ASEAN 5

Countries

Table 7. Entrepreneurial Ability Score (ABT) Score

6 Negara ASEAN 2015 - 2017

Figure 5. Entrepreneurial Abilities (ABT) Score 6

Negara ASEAN 2015 – 2017

Entrepreneurial abilities refer to the

entrepreneurs’ characteristics and those of their

businesses. Different types of entrepreneurial abilities

can be distinguished within the realm of new business

efforts. Creating businesses may vary by industry

sector, the legal form of organization, and

demographics—age, education, etc. We define

entrepreneurial abilities as startups in the medium- or

high-technology sectors that are initiated by educated

entrepreneurs and launched because of a person being

motivated by an opportunity in an environment that is

not overly competitive. In order to calculate the

opportunity startup rate, we use the GEM TEA (Total

Early Entrepreneurship) Opportunity Index. TEA

captures new startups not only as the creation of new

ventures but also as startups within existing

businesses, such as a spinoff or other entrepreneurial

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effort. Differences in the quality of startups are

quantified by the entrepreneur’s education level—

that is, if they have a postsecondary education—and

the uniqueness of the product or service as measured

by the level of competition. Moreover, it is generally

maintained that opportunity motivation is a sign of

better planning, a more sophisticated strategy, and

higher growth expectations than “necessity”

motivation in startups. (GEDI, 2017).

According to Elistia (2017), Indonesia has a

strong positive correlation between TEA and GDP of

0.853. While the HDI and GDP has a negative

correlation-0.911. HDI and TEA a correlation has a

negative correlation -0.562. It means that only TEA

variables are positively correlated to GDP Indonesia.

Table 8. Correlation HDI, TEA, and GDP in Indonesia

from 2013 - 2015

Source: Elistia, (2017), The Correlation of HDI

and GEI towards Economic Growth in ASEAN 5

Countries, ICSSH PROCEEDINGS, 4th Kuala

Lumpur International Conference on Social Science

& Humanities (ICSSH), ISSN 2454-5899.

4.4 Entrepreneurial Aspiration

Entrepreneurial aspiration reflects the quality aspects

of startups and new businesses. Some people just

dislike their current employment situation and want

to be their own boss, while others want to create the

next Microsoft. Entrepreneurial aspiration is defined

as the early-stage entrepreneur’s effort to introduce

new products and/or services, develop new

production processes, penetrate foreign markets,

substantially increase their company’s staff, and

finance their business with formal and/or informal

venture capital. Product and process innovation,

internationalization, and high growth are considered

the key characteristics of entrepreneurship. Here we

added a finance variable to capture the informal and

formal venture capital potential that is vital for

innovative startups and high-growth firms. (GEDI,

2017)

Table 9. Entrepreneurial Aspiration (ASP) Score 6 Negara

ASEAN 2015 - 2017

Figure 6. Entrepreneurial Aspiration (ASP) Score 6

Negara ASEAN 2015 - 2017

In terms of Ease of Doing Business, The

economies showing the most notable improvement in

performance on the Doing Business indicators in

2015/16 of ten economies are highlighted this year for

making the biggest improvements in their business

regulations—Brunei Darussalam, Kazakhstan,

Kenya, Belarus, Indonesia, Serbia, Georgia, Pakistan,

the United Arab Emirates and Bahrain. Indonesia is

one of the biggest improvements in their business

regulations. In this report tells us the following

information of 7 (seven) improvements:

4.5 Starting a Business

Indonesia made starting a business easier by creating

a single form to apply for the company registration

certificate and trading license. This reform applies to

Jakarta. Indonesia also made starting a business easier

by abolishing the minimum capital requirement for

small and medium-sized enterprises and by

encouraging the use of an online system to reserve

company names. This reform applies to both Jakarta

and Surabaya.

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4.5.1 Getting Electricity

Indonesia made the process of getting an electricity

connection faster by reducing the time for contractors

to perform external work thanks to an increase in the

stock of electrical material supplied by the utility. In

Surabaya, getting electricity was also made easier

after the utility streamlined the process for new

connection requests.

4.5.2 Registering Property

Indonesia made it easier to register property by

digitizing its cadastral records and setting up a

geographic information system. This reform applies

to both Jakarta and Surabaya.

4.5.3 Getting Credit

Indonesia strengthened access to credit by

establishing a modern collateral registry. This reform

applies to both Jakarta and Surabaya.

4.5.4 Paying Taxes

Indonesia made paying taxes easier by introducing an

online system for filing and paying health

contributions. Indonesia also made paying taxes more

costly by levying a new pension contribution at a rate

of 2% paid by employers. These reforms apply to

both Jakarta and Surabaya.

4.5.5 Trading across Borders

Indonesia made exporting and importing easier by

improving the customs services and document

submission functions of the single national window.

This reform applies to both Jakarta and Surabaya.

4.5.6 Enforcing Contracts

Indonesia made enforcing contracts easier by

introducing a dedicated procedure for small claims

that allows for parties’ self-representation. This

reform applies to both Jakarta and Surabaya.

5 CONCLUSION

An effort to maintain and enhance the entrepreneurial

position that has been achieved at this time, the

entrepreneurial practitioners should build sustainable

entrepreneurship to create entrepreneurship that is

strong, sustainable and mutually supportive and

sustainable, by utilizing the synergy of various

elements of society. With the creation of sustainable

entrepreneurship, sustainable competitiveness at the

national and global levels can be realized. Sustainable

entrepreneurship focuses on the skills of

entrepreneurs to realize their success through social

and environmental change or social innovation.

Entrepreneurship no longer only produces

economic success, but sustainable entrepreneurs can

manage the "triple bottom line" (corporate

profitability, potential benefits for the environment,

as well as potential benefits for the community) by

balancing economic health, social justice and

environmental resilience through their

entrepreneurial behavior. Lately, there have been

many scientific discussions about entrepreneurial

theory and practices related to sustainable

entrepreneurship that is oriented towards the

community, ethical, economic and ecological goals.

In fact, entrepreneurship has been considered as

the engine of economic growth,and it has come to be

perceived as a catalytic agent for expansion and

promotion of productive activities in every sphere of

economic life all over the world. The role and

significance of entrepreneurship development in

numerous nations worldwide were quite significant.

Furthermore, the research of Jeanel Dominique et al.

(2017) showed there was a positive relationship

between entrepreneurship and economic

development. And, the research of Omoruyi et al.

(2017) found that innovation, entrepreneurship

curriculum training and education, individual

entrepreneurial characteristics, the participation of

micro, small and medium enterprises, youth

empowerment, the collaboration of government-

university-industry are the key tool for

entrepreneurship development which is stimulating

employment are eventually alleviating poverty.

The government effort through the National

Entrepreneurship Movement (GKN) is a movement

that grows from the bottom, so it has a strong

foundation to develop. This condition can increase

the ratio of Indonesian entrepreneurs who in

2013/2014 were still 1.67 percent, this year based on

BPS data it has risen to 3.1 percent (Ministry of

Cooperatives and SMEs, 2017).

So it can be concluded that to realize Indonesia

which is more competitive through the development

of entrepreneurship and the digital sector, it takes

cooperation from all parties. Not only the

government, but also the business world, academics,

and the wider community to create a conducive

entrepreneurial ecosystem.

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