COUNTRY PROFILE: INDONESIA

 Govt type- Republic (Executive branch- chief of state- is both the head of state and head of govt,
Legislative branch- Indonesia has a unicameral House of Representatives or Dewar Perwakilan Rakyat
(DPR) with 550 seats, Judicial branch- Supreme court)(legal system- based on Roman Dutch Law,
modified by indigenous concepts and by new criminal procedure codes)
 Head of state- Joko Widodo [first president- Sukarno, longest term president- Suharto (31 years)]
 Date of Independence- 17 August 1945 (from Netherlands and pro-Dutch civilians)
 National anthem- Indonesia Raya
 Capital- Jakarta
 Monetary unit- Indonesian Rupiah
 GDP- $861.9 billion (GDP growth- 4.8%, inflation- 6.4%, p.c.i- $49230)
 Population- 257.6 million
 Major religions- Islam, Protestantism, Catholicism, Hinduism, Buddhism and  Confucianism
 HDI- 75 (literacy rate- 92.8%, life expectancy- 67.86)
 Geography-
 Formerly the Dutch East Indies, the Republic of Indonesia, the biggest Islamic nation, is an
archipelago state consisting of about 13500 (6000 inhabited) islands extending some 5150km
along the equator in the Indian and Pacific Oceans. The largest islands are Sumatra, Java,
Kalimantan, Sulavesi and Irian Java.
 History-
 The islands were made an integral part of the Netherlands Kingdom in 1922.
 During World War 2, Indonesia was under Japanese military occupation.
 On August 17, 1945, Indonesia proclaimed Independence from Dutch. After a war of
independence, the Netherlands transferred sovereignty to Indonesia on December 27, 1949. A
republic was declared with Dr. Sukarno as President.
 Gen Suharto, head of the army was named president in 1968.The year 1998 was marked by
economic chaos. Gen. Suharto was forced to resign in May. Abdurrahman Wahid, leader of
Indonesia’s largest Muslim organisation, was elected president. After two scandals and debate on
his impeachment began in May.
 Indonesia annexed East Timor in 1976. A referendum was held in East Timor and ninety percent
turned out and the vote was for independence from Indonesia. East Timor slipped into violence
and a UN interim administration took command. In 2002 East Timor became independent.

 Important Events-

DATE EVENT
12 October 2002
The 2002 Bali bombings occurred in the tourist district of Kuta on the Indonesian island of Bali.

The attack killed 202 people (including 88 Australians, 38 Indonesians, and people from more than 20 other
nationalities). A further 209 people were injured.

Various members of Jemaah Islamiyah, a violent Islamist group, were convicted in relation to the bombings,
including three individuals who were sentenced to death.

An audio-cassette purportedly carrying a recorded voice message from Osama bin Laden stated that the Bali
bombings were in direct retaliation for support of the United States' war on terror and Australia's role in the
liberation of East Timor
5 August 2003 The 2003 Marriott Hotel bombing occurred in Mega Kuningan, South Jakarta, Indonesia. A suicide bomber
detonated a car bomb outside the lobby of the JW Marriott Hotel, killing twelve people and injuring 150.The
 hotel was viewed as a Western symbol, and had been used by the United States embassy for various events.
December 26, A magnitude of 9.0 earthquake whose epicentre was off the west coast of the Indonesian island of Sumatra,
2004, caused a tremendous powerful tsunami in the Indian Ocean that devastated 12 Asian countries.

2004, Indonesia's first direct presidential election elects Bambang Yudhoyono following popular disillusionment with
incumbent Megawati

May 27, 2006 The 2006 Yogyakarta earthquake (also known as the Bantul earthquake) occurred with a moment magnitude of
6.4 and a maximum intensity of IX (Destructive) on the Medvedev–Sponheuer–Karnik scale.

The shock occurred on the southern coast of Java near the Indonesian city of Yogyakarta, and caused a
disproportionate number of casualties, with more than 5,700 deaths and 37,000 injuries, and financial losses of
(Rp 29.1 Trillion ($3.1B)).

The eruption of Mount Merapi, a stratovolcano that was entering a period of unrest, was originally thought to
have a connection with the earthquake. With a lack of instruments in the area, the shock was initially attributed
with the Opak Fault that lies to the east of the affected areas, but later InSAR analysis revealed that another
previously unknown fracture was responsible for the sequence of shocks.

17 July 2009
The JW Marriott and Ritz-Carlton Hotels in Jakarta, Indonesia, were hit by separate bombings five minutes
apart.  More than 50 people were injured in the blasts.  Both blasts were caused by suicide bombers.  

Mount Merapi volcanic mountain- the magma had risen to about 1 kilometre (3,300 ft) below the surface due to
25 October 2010 the seismic activity. On the afternoon of 25 October 2010 Mount Merapi erupted lava from its southern and
south-eastern slopes. The mountain was still erupting on 30 November 2010.  The volcano is now 2930 metres
high, 38 metres lower than before the 2010 eruptions.

After a large eruption in 2010 the characteristic of Mount Merapi was changed. On 18 November 2013 Mount
Merapi burst smoke up to 2,000 meters high, one of its first major phreatic eruptions after the 2010 eruption.

Researchers said that this eruption occurred due to combined effect of hot volcanic gases and abundant
rainfall.

2015 Dozens of Indonesians are killed by respiratory illness and accidents due to poor visibility caused by severe haze.
The haze occurs annually during dry season and is largely caused by illegal agricultural fires due to slash-and-
burn practices in Indonesia, especially from the provinces of South Sumatra and Riau in
Indonesia's Sumatra island, and Kalimantan on Indonesian Borneo. The haze also hit
neighbouring Singapore, Malaysia, and Brunei.

14 January 2016, Multiple explosions and gunfire were reported near the Sarinah shopping mall in central Jakarta, Indonesia, at
the intersection of Jalan Kyai Haji Wahid Hasyim and Jalan MH Thamrin.
The attack occurred near a United Nations (UN) information centre, as well as luxury hotels and foreign
embassies, including France's. The United Nations Environment Programme (UNEP) confirmed that a Dutch UN
official was seriously injured in the attacks.
The Islamic State of Iraq and the Levant (ISIL) claimed responsibility.

 Economy-
1. History-
 In the 1960s, the economy deteriorated drastically as a result of political instability. They had
a young and inexperienced government, which resulted in severe poverty and hunger.
  By the time of Sukarno's downfall in the mid-1960s, the economy was in chaos with
1,000% annual inflation, shrinking export revenues, crumbling infrastructure, factories
operating at minimal capacity, and negligible investment.
 Following President Sukarno's downfall the New Order administration brought a degree of
discipline to economic policy that quickly brought inflation down, stabilised the currency, and
rescheduled foreign debt, and attracted foreign aid and investment.
 Indonesia was until recently Southeast Asia's only member of OPEC, and the 1970s oil price
raises provided an export revenue windfall that contributed to sustained high economic
growth rates, averaging over 7% from 1968 to 1981
  In 2009, Indonesia outperformed its regional neighbours and joined China and India as the
only G20 members posting growth during the crisis.
 Indonesia has undergone resurgence since the 1997 Asian financial crisis, becoming one of
the world's major emerging economies.
2. New Order
 The new president enlisted a group of mostly American-educated Indonesian economists,
dubbed the "Berkeley Mafia", to formulate government economic policy. By cutting subsidies
and government debt, and reforming the exchange rate mechanism, inflation dropped from
660% in 1966 to 19% in 1969.
3. Recent
 Indonesia still struggles with poverty and unemployment, inadequate infrastructure,
corruption and unequal resource distribution among regions.
 Its economy also depends heavily on tourism, particularly on the island of Bali, although a
series of terrorist attacks there have damaged the industry. Visitor arrivals on Bali were hit
hard by the bomb attacks of 2002 and 2005.
 Investors are attracted by a large consumer base, rich natural resources and political stability,
but often equally deterred by poor infrastructure, rampant corruption and growing calls for
economic protectionism.
 Although Indonesia’s economic growth slowed further in 2014, there is optimism that
growth will accelerate in 2015 despite sluggish global economic conditions and Bank
Indonesia’s relatively high interest rate environment. Indonesia’s central bank has raised its
BI rate several times over the past one and a half years in an effort to combat high inflation,
curb capital outflows ahead of US monetary tightening, limit the current account deficit and
support the rupiah.
 President Joko Widodo seeks to develop Indonesia’s maritime resources and pursue other
infrastructure development, including significantly increasing its electrical power generation
capacity.
 Fuel subsidies were significantly reduced in early 2015, a move which has helped the
government redirect its spending to development priorities.
4. Components of economy

AGRICULTURE INDUSTRY TERTIARY

Percentage of GDP- 15 Percentage of GDP- 47 Percentage of GDP- 37

Agriculture is a key sector. Hydrocarbons- Healthcare industry continues to grow

Currently there are around 30%
of Indonesian land areas that
are used for agriculture
purpose, and employed around
49 million Indonesians (41% of
total Indonesian work force).
Indonesia was the only Asian member of
the Organization of Petroleum Exporting
Countries (OPEC) outside of the Middle East
until 2008, and is currently a net oil
importer.
In 1999, Crude and condensate output
rapidly and remains a lucrative
investment opportunity for local and
global investors. Almost all aspects of
the healthcare industry, including
hospitals, medical insurance and
medical devices, showed significant

Currently Indonesia is the
world's largest producer of palm
oil clove sand cinnamon, the
2nd largest producer
of nutmeg natural
rubber cassava,
vanilla and coconut oil, the 3rd
largest producer
of rice and cocoa, the 4th
largest producer of coffee.
The 5th
largest tobacco producer and the
6th largest tea producer.
averaged 1.5 million barrels per day, and in
1998 the oil and gas sector, including
refining, contributed approximately 9% to
GDP.
A substantial decline from the 1990s, due
primarily to ageing oil fields and a lack of
investment in oil production equipment. This
decline in production has been accompanied
by a substantial increase in domestic
consumption.
Indonesia's manufacturing industry was
worth IDR 2,097.7 trillion in 2015. However,
this higher contribution of manufacturing to
the economy is mainly caused by the
declining roles of oil & gas, commodities,
agriculture and mining within the
Indonesian economy.
increases in sales over the course of
2015.
As Indonesia strives to avoid getting
stuck in the middle-income trap that
threatens emerging economies sooner
or later, its businesses need to tackle
high logistics costs and improve
operational efficiency. This makes ICT
solutions interesting for businesses
that need to find ways of boosting
productivity while having to contend
with a lack of infrastructure in many
parts of the country, especially
outside of Java and Bali.

Indonesia's important
agricultural commodities
are palm oil, natural
rubber, cocoa, coffee,
tea, cassava, rice and tropical
spices.
Within Indonesia's non-oil & gas
manufacturing industry the most important
sector is the food and beverage industry.
This industry accounts for 30.8 percent of
the total non-oil & gas manufacturing
industry of Indonesia. The food and
beverage industry is also one of the most
popular destinations for (foreign and
domestic) investment in Indonesia.
Despite the economic slowdown in
Indonesia and globally, Southeast
Asia's largest country continues to
attract growing numbers of travellers
from around the world. Demand for
hotel accommodation is set to rise
significantly over the coming years
and decades as more holidaymakers
and business people visit the country. 

5. Development-
 Indonesia’s economy has expanded strongly over recent decades, notwithstanding the sharp
economic contraction that occurred during the 1997–1998 Asian financial crises. This strong pace
of growth has seen Indonesia become an increasingly important part of the global economy.
 It is now the fourth largest economy in East Asia and the 15th largest economy in the world on
purchasing power parity (PPP) basis.
a) Policies
 The Indonesian government released the 12th economic policy package. This latest
edition focuses on enhancing the ease of doing business for the small and mid-sized
companies in Indonesia in a bid to attract more investment, hence giving a boost to
economic growth. In the 12th package the government announces it has cut a number
of procedures and permits, as well as costs, required for the development of a business.
 Bank Indonesia announced that the BI 7-Day (Reverse) Report rate will be held at 5.5%.
Bank Indonesia considers the macroeconomic stability to be well maintained, as
reflected by the inflation rate that remains within the target range of 4±1%, an
improving current account deficit, and a relatively stable exchange rate. 

 Key findings of the June 2016 Indonesia Economic Quarterly:

 o The World Bank recently downgraded the global growth forecast by half a
percentage point but Indonesia’s economy remains resilient.
o Pro-active policies have helped Indonesia’s economic resilience, including
prudent monetary policy, higher public infrastructure spending, and
deregulation measures to improve trade and investment.
o The World Bank projects GDP growth of 5.1% in 2016 and 5.3% in 2017 –
unchanged from the March 2016 IEQ.  The outlook will depend more on private
investment growth as it responds to the recent economic reform packages.

o Exports and imports continued to decline, both in volume and value terms, in Q1
2016.
o Revenue collection has declined, while at the same time expenditure has
increased. Responding to weaker revenue outlook, the government has
submitted a draft 2016 Revised Budget which anticipates significant revenues
from the tax amnesty.
o Consumer price inflation as of May was 3.3 percent year on year. The relatively
modest headline inflation rate has masked high food price pressures. While
global food prices have declined, food prices in Indonesia remain high.
o This edition of the IEQ sheds some light on the issue of high bank interest rates
in Indonesia. The report also discusses how fiscal policy can help reduce
inequality in the country.

 Jakarta, October 26, 2016 – Indonesia carried out a record seven reforms in the past
year, to improve the business climate for local entrepreneurs, says the World Bank
Group’s latest annual ease of doing business report. As a result, the country is
amongst the top 10 improvers in doing Business 2017: Equal Opportunity for All,
released yesterday. In the global ranking stakes, Indonesia moved up 15 places and
is ranked 91 this year. The business reforms undertaken by Indonesia in the past
year covered multiple areas measured by Doing Business: Starting a Business,
Getting Electricity, Registering Property, Getting Credit, Paying Taxes, Trading across
Borders and Enforcing Contracts.

b) Trade
 Indonesia posted a trade surplus of 1.21 billion USD in October of 2016, compared
to a 1.01 billion USD surplus a year earlier and above market estimates of USD 1.03
billion, as exports grew more than imports. While imports rose 3.3 percent to USD
11.5 billion in October, below market estimate of a 4.9 percent increase.
 Export- petroleum and liquid natural gas, timber, rubber, coffee etc .{ Year to
date August 2014, Indonesia export 126,935 Completelety Build up (CBU) vehicle
units and 71,000 Completely Knock down (CKD) vehicle units, while the total
production is 878,000 vehicle units, so the export is 22.5 percent of total
production. Automotive export is more than double of its import.}
 Imports- rice, wheat, iron & steel, chemicals, textiles.
 Major trading partners- Japan, US, Singapore, EC, China .
 Social Issues-
1) Politics

 Indonesia is a republic and historically the political system has concentrated power in the
hands of the presidency.
  Since the fall of former President Suharto in 1998, however, Indonesia's political structures
have been undergoing major reform, giving more voice to Indonesia's two houses of
parliament.

 Suharto, who took power following a failed coup attempt in 1965 – the exact circumstances
of which have never been made clear – ruled Indonesia unchallenged for more than three
decades. He resigned in 1998 in the face of student-led protests triggered by the Asian
financial crisis.

 Since 1999 Indonesia has had a multi-party system. In the two legislative elections since the
fall of the New Order regime, no political party has managed to win an overall majority of
seats, resulting in coalition governments.
 Indonesia held its first direct presidential election in 2004, won by the current president,
Susilo Bambang Yudhoyono.
 The Indonesian Democratic Party of Struggle (Partai Demokrasi Indonesia Perjuangan) is the
party of Joko Widodo, the Indonesian President. The Great Indonesia Movement
Party (Partai Gerakan Indonesia Raya) is the third largest political party.
2) Smoking
 Smoking in Indonesia is common, as there are approximately 57 million smokers
in Indonesia. Of Indonesian people, 63% of men and 5% of women reported being smokers, a
total of 34% of the population. 88% of Indonesia smokers use clove-flavoured kreteks.
 Kretek manufacturers directly employ over 180,000 people in Indonesia and an additional 10
million indirectly. Indonesia is the fifth largest tobacco market in the world. The WHO has
ranked Indonesia third in the world for total number of smokers.
 More than 30% of Indonesian children reportedly smoke a cigarette before the age of 10.
 In 2003, cigarette advertising and promotion in Indonesia was valued at $250 million. It is thus
one of the most distinctive tobacco manufacturing hubs in the world. Smoking Kretek is said
to be "an ingrained part of Indonesian culture". An all pervading scent of kretek smoke is
distinctly discerned in Indonesia.
3) Women Status
 The roles of Indonesian women today are being affected by many factors, including increased
modernisation, globalisation, improved education and advances in technology. Many women
in Indonesia choose to reside in cities instead of staying in townships to perform agricultural
work because of personal, professional, and family-related necessities, and economic
requirements.
 These women are moving away from the traditional dictates of Indonesian culture, wherein
women act simply and solely as wives and mothers. At present, the women of Indonesia are
also venturing actively into the realm of national development, and working as active
members of organisations that focus and act on women's issues and concerns.
 Many pregnant women in Indonesia do not have the financial capability to pay for hospital
deliveries and birthing by Caesarean section, because of disproportionate salaries and
medical expenses.
 An Indonesian railway company, PT Kereta Api, introduced women-only carriages on
some KRL Jabotabek commuter trains in the Jakarta metropolitan area from August 2010 in
response to many reports of sexual harassment in public places, including commuter trains
and buses. 
4) Military
 Indonesia's Armed Forces  include the Army, Navy, which includes Marine Corps), and Air
Force . The army has about 400,000 active-duty personnel. Defence spending in the national
 budget was 4% of GDP in 2006, and is controversially supplemented by revenue from
military commercial interests and foundations.
 One of the reforms following the 1998 resignation of Suharto was the removal of formal TNI
representation in parliament; nevertheless, its political influence remains extensive.
 Separatist movements in the provinces of Aceh and Papua have led to armed conflict and
subsequent allegations of human rights abuses and brutality from all sides. Following a
sporadic thirty-year guerrilla war between the Gerakan Aceh Merdeka (GAM) and the
Indonesian military, a ceasefire agreement was reached in 2005.
5) Sports
 Sports in Indonesia are generally male-oriented and spectator sports are often associated
with illegal gambling. The most popular sports are badminton and football. 
 Indonesian players have won the Thomas Cup (the world team championship of men's
badminton) thirteen of the twenty-six times that it has been held since 1949, as well as
numerous Olympic medals since the sport gained full Olympic status in 1992.
 Indonesian women have won the Uber Cup, the female equivalent of the Thomas Cup, 3
times, in 1975, 1994 and 1996. Liga Super Indonesia is the country's premier football club
league.
 On the international stage, Indonesia experienced limited success despite being the first
Asian team to qualify for the FIFA World Cup in 1938 as Dutch East Indies.
 Basketball has a long history in Indonesia and was part of the first Indonesian National
Games in 1948. Boxing is a popular combative sport spectacle in Indonesia.
 Pencak Silat is an Indonesian martial art and in 1987, became one of the sporting events
in Southeast Asian Games, with Indonesia appearing as one of the leading forces in this
sport. In Southeast Asia, Indonesia is one of the major sport powerhouses by winning the
Southeast Asian Games 10 times since 1977.
6) Crime
 crime against foreigners
 Petty crime, which includes snatch theft and pick-pocketing, is present in Indonesia,
usually taking place in locations with many people. 
  Taxi scams are common in Indonesia, in which fake taxis are passed off as real ones.
Foreign travellers often get fooled by this trickery, and end up getting robbed by the
conmen operating the fake taxi. 
 Violent crime is another growing issue in the
country. Pirated and counterfeit merchandise can be easily found in most parts of
Indonesia.
 crime against women
 Prostitution is most visibly manifested in Indonesia’s brothel complexes, or lokalisasi,
which are found throughout the country.[2] These brothels are managed under local
government regulations.
 UNICEF estimates that 30 percent of the female prostitutes in Indonesia are below 18
years of age.
 corruption and police misconduct
 Corruption is a known and increasing issue in Indonesia. There are two key areas in the
public sector in which corruption in Indonesia can be found. These are the justice and
civil service sectors.
 punishment
Crime is segmented into two broad classifications: "Crimes" and "Offenses". There are a few
methods to punish one for crime; this includes imprisonment and fine. The death
 penalty executed by a firing squad is available and very frequently used, as a deterrent
against crime.
 Culture-

 According to official statistics, Indonesia is the world's most populous Muslim nation, with about
86 per cent of its 240 million people professing to follow Islam.

 Ethnically and linguistically, however, it is very diverse, with more than 20 ethnic groups and
more than 300 recorded languages spoken across the archipelago.

 In October 2009, Indonesian batik has been recognised by UNESCO as a Masterpiece of Oral and

Intangible Heritage of Humanity, and has become the national costume. Currently, Indonesia
holds 7 items of UNESCO's Intangible Cultural Heritage , which include wayang puppet theatre,
Indonesian kris, batik and angklung.

 Wood carvings traditions exist in many parts of the country, with exceptional examples are
in Jepara in Central Java, Bali, and Asmat. Traditional carpentry, masonry, stone and woodwork
techniques and decorations are also thrived in Indonesian vernacular architecture, with numbers
of traditional houses' styles has been developed.

 The Indonesian film industry's  popularity peaked in the 1980s and dominated cinemas in
Indonesia, although it declined significantly in the early 1990s. 

 The Indonesia traditional houses are at the centre of a web of customs, social relations, traditional
laws, taboos, myths and religions that bind the villagers together. The house provides the main
focus for the family and its community, and is the point of departure for many activities of its
residents. Traditional houses hold a prominent position in the society, relates to its social
significance.

 The music of Indonesia predates historical records. Various native Indonesian tribes incorporate
chants and songs accompanied with musical instruments in their rituals.

 Traditional dance of Indonesia reflect the rich diversity of Indonesian people. The dance traditions
in Indonesia; such as Javanese, Sundanese, Minangkabau, Balinese, Malays, Acehnese and many
other dances traditions are age old traditions, yet also a living and dynamic traditions.

 The oldest evidence of writing in Indonesia is a series of Sanskrit inscriptions dated to the 5th
century. Many of Indonesia's peoples have strongly rooted  oral traditions, which help to define
and preserve their cultural identities.

 Tourism

 Indonesia has a well-preserved natural ecosystem with rainforests that stretch over about 57% of
Indonesia's land. Forests on Sumatra and Kalimantan are examples of popular tourist
destinations, such as Orang Utan wildlife reserve. Moreover, Indonesia has one of longest
coastlines in the world, measuring 54,716 kilometres.

 With 20% of the world's coral reefs, over 3,000 different species of fish and 600 coral species,
deep water trenches, volcanic sea mounts, World War II wrecks, and an endless variety of macro
life, scuba diving in Indonesia is both excellent and inexpensive.

 Bunaken National Marine Park, at the northern tip of Sulawesi has more than 70% of all the
known fish species of the Indo-Western Pacific Ocean. According to Conservation International,
 marine surveys suggest that the marine life diversity in the Raja Ampat Islands is the highest
recorded on Earth.

 The heritage tourism is focussed on specific interest on Indonesian history, such as colonial
architectural heritage of Dutch East Indies era. The activities among others are visiting museums,
churches, forts and historical colonial buildings, as well as spend some nights in colonial heritage
hotels.

 Migration

  There is an increasing level of migration to more developed nations, particularly those belonging
to the Organization for Economic Cooperation and Development (OECD); here the flow is
predominantly permanent and consists mainly of skilled migrants.

 There is a temporary movement of largely unskilled workers to the Middle East and elsewhere in
Asia. Many of these migrants are women who work as domestics and are vulnerable to
exploitation.

 Unlike several other large Asian countries, Indonesia has not been a major source of permanent
settlers to OECD nations.

 There is an increasing pattern of Indonesians on temporary residence visas (especially students)

applying for permanent residence.

 Rioters ransacked Chinese shops and neighbourhoods. It was part of a hectic month of racially
charged protests that wracked Java and Sumatra shortly before the collapse of Suharto’s New
Order government.

 Environment

 Indonesia's high population and rapid industrialisation present serious environmental issues,

which are often given a lower priority due to high poverty levels and weak, under-resourced
governance.
 Issues include large-scale deforestation (much of it illegal) and related wildfires causing heavy
smog over parts of western Indonesia; over-exploitation of marine resources; and environmental
problems associated with rapid urbanisation and economic development.
 Deforestation and the destruction of peat lands make Indonesia the world's third largest emitter
of greenhouse gases.
  Habitat destruction threatens the survival of indigenous and endemic species, including 140
species of mammals identified by the International Union for Conservation of Nature (IUCN)
as threatened, and 15 identified as critically endangered,.
 Much of Indonesia's deforestation is caused by forest clearing for the palm oil industry, which has
cleared 18 million hectares of forest for palm oil expansion.