The Republic of Indonesia

Indonesia, officially the Republic of Indonesia(Indonesian: Republik Indonesia Indonesian pronunciation: [rɛpʊblɪk ɪndɔnɛsɪa]), is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 17,508 islands.^[5] It has 33 provinces with over 238 million people, and is the world's fourth most populous country. HP Pavilion DV9500 Battery

Indonesia is a republic, with an elected legislature and president. The nation's capital city is Jakarta. The country shares land borders with Papua New Guinea, East Timor, and Malaysia. Other neighboring countries include Singapore, Philippines, Australia, and theIndian territory of the Andaman and Nicobar Islands. HP Pavilion DV9500EA Battery

Indonesia is a founding member of ASEAN and a member of theG-20 major economies. The Indonesian economy is the world's seventeenth largest economy by nominal GDP andfifteenth largest by purchasing power parity. Indonesia is one of the fastest growing major economies in the world. HP Pavilion DV9500EF Battery

Despite overall economic growth, however, the country continues to face challenges related to infrastructure -- underdeveloped roads, ports and electric grids -- public corruption, inadequate spending on public health and the development of a robust middle class.^[6] HP Pavilion DV9500EM Battery

The Indonesian archipelago has been an important trade region since at least the 7th century, when Srivijaya and then later Majapahit traded with China and India. Local rulers gradually absorbed foreign cultural, religious and political models from the early centuries CE, and Hindu and Buddhist kingdoms flourished. HP Pavilion DV9500EW Battery

Indonesian history has been influenced by foreign powers drawn to its natural resources. Muslim traders brought Islam, and European powers brought Christianity and fought one another to monopolize trade in the Spice Islands of Maluku during theAge of Discovery. HP Pavilion DV9500T Battery

Following three and a half centuries of Dutch colonialism, Indonesia secured its independenceafter World War II. Indonesia's history has since been turbulent, with challenges posed by natural disasters, corruption, separatism, a democratization process, and periods of rapid economic change. HP Pavilion DV9500Z Battery

Across its many islands, Indonesia consists of distinct ethnic, linguistic, and religious groups. The Javaneseare the largest—and the politically dominant—ethnic group. Indonesia has developed a shared identity defined by a national language, ethnic diversity, religious pluralism within a majority Muslim population, HP Pavilion DV9501AU Battery

and a history of colonialism and rebellion against it. Indonesia's national motto, "Bhinneka Tunggal Ika" ("Unity in Diversity" literally, "many, yet one"), articulates the diversity that shapes the country. Despite its large population and densely populated regions, Indonesia has vast areas of wilderness that support the world's second highest level of biodiversity. HP Pavilion DV9501EA Battery

The country has abundant natural resources, yet poverty remains widespread.

Etymology

The name Indonesia derives from the Latin and Greek Indus, and the Greek nèsos, meaning "island".^[9] The name dates to the 18th century, far predating the formation of independent Indonesia.^[10] HP Pavilion DV9501TX Battery

In 1850, George Windsor Earl, an English ethnologist, proposed the terms Indunesians — and, his preference, Malayunesians — for the inhabitants of the "Indian Archipelago or Malayan Archipelago".^[11] In the same publication, a student of Earl's, James Richardson Logan, used Indonesia as a synonym for Indian Archipelago.^[12][13] HP Pavilion DV9501XX Battery

However, Dutch academics writing in East Indies publications were reluctant to use Indonesia. Instead, they used the termsMalay Archipelago (Maleische Archipel); the Netherlands East Indies (Nederlandsch Oost Indië), popularly Indië;the East (de Oost); and Insulinde.^[14] HP Pavilion DV9502AU Battery

After 1900, the name Indonesia became more common in academic circles outside the Netherlands, and Indonesian nationalist groups adopted it for political expression.^[14] Adolf Bastian, of the University of Berlin, popularized the name through his book Indonesien oder die Inseln des Malayischen Archipels, 1884–1894. HP Pavilion DV9502EA Battery

The first Indonesian scholar to use the name was Suwardi Suryaningrat (Ki Hajar Dewantara), when he established a press bureau in the Netherlands with the name Indonesisch Pers-bureau in 1913.^[10]

History

Ancient fossils and the remains of primitive tools show that the Indonesian archipelago was inhabited by Homo erectus, HP Pavilion DV9502TX Battery

popularly known as the "Java Man", between 1.5 million years^[16] ago and 550,000 to 143,000^[17] years ago.^[18][19][20]

In 2003, on the island of Flores, fossils of a new small hominid dated between 74,000 and 13,000 years old and named "Flores Man" (Homo floresiensis) were discovered much to the surprise of the scientific community.^[ HP Pavilion DV9502XX Battery

This 3 foot tall hominid is thought to be a species descended from Homo Erectus and reduced in size over thousands of years by a well known process called island dwarfism. Flores Man seems to have shared the island with modern Homo sapiens until only 12,000 years ago, when they became extinct. HP Pavilion DV9503AU Battery

Homo sapiens reached the region by around 45,000 years ago.^[23] In 2011 evidence was uncovered in neighbouring East Timor, showing that 42,000 years ago these early settlers had high-level maritime skills, and by implication the technology needed to make ocean crossings to reach Australia and other islands, as they were catching and consuming large numbers of big deep sea fish such as tuna.^[24] HP Pavilion DV9503ES Battery

Austronesian peoples, who form the majority of the modern population, migrated to South East Asia from Taiwan. They arrived in Indonesia around 2000 BCE, and as they spread through the archipelago, confined the native Melanesian peoples to the far eastern regions.^[25] IHP Pavilion DV9503TX Battery

deal agricultural conditions, and the mastering ofwet-field rice cultivation as early as the 8th century BCE,^[26] allowed villages, towns, and small kingdoms to flourish by the 1st century CE. Indonesia’s strategic sea-lane position fostered inter-island and international trade, including links with Indian kingdoms and China, which were established several centuries BCE.^[27] HP Pavilion DV9503XX Battery

 Trade has since fundamentally shaped Indonesian history.

From the 7th century, the powerful Srivijaya naval kingdom flourished as a result of trade and the influences of Hinduism andBuddhism that were imported with it.^[30][31]

Between the 8th and 10th centuries, the agricultural Buddhist Sailendra and HinduMataram dynasties thrived and declined in inland Java, leaving grand religious monuments such as Sailendra's Borobudur and Mataram'sPrambanan. The Hindu Majapahit kingdom was founded in eastern Java in the late 13th century, and under Gajah Mada, its influence stretched over much of Indonesia.^[32] HP Pavilion DV9504TX Battery

Although Muslim traders first traveled through South East Asia early in the Islamic era, the earliest evidence of Islamized populations in Indonesia dates to the 13th century in northern Sumatra.^[33] Other Indonesian areas gradually adopted Islam, and it was the dominant religion in Java and Sumatra by the end of the 16th century. HP Pavilion DV9504XX Battery

For the most part, Islam overlaid and mixed with existing cultural and religious influences, which shaped the predominant form of Islam in Indonesia, particularly in Java.^[34] The first regular contact between Europeans and the peoples of Indonesia began in 1512, when Portuguese traders, led by Francisco Serrão, HP Pavilion DV9505EF Battery

sought to monopolize the sources of nutmeg, cloves, and cubeb pepper in Maluku.^[35] Dutch and British traders followed. In 1602 the Dutch established the Dutch East India Company (VOC) and became the dominant European power. Following bankruptcy, the VOC was formally dissolved in 1800, and the government of the Netherlands established the Dutch East Indies as a nationalized colony.^[36] HP Pavilion DV9505EO Battery

For most of the colonial period, Dutch control over the archipelago was tenuous outside of coastal strongholds; only in the early 20th century did Dutch dominance extend to what was to become Indonesia's current boundaries.^[37] Despite major internal political, social and sectarian divisions during the National Revolution, HP Pavilion DV9505TX Battery

Indonesians, on the whole, found unity in their fight for independence. Japanese occupation during World War II ended Dutch rule,^[38][39] and encouraged the previously suppressed Indonesian independence movement.^[40] A later UN report stated that four million people died in Indonesia as a result of famine and forced laborduring the Japanese occupation.^[41] HP Pavilion DV9505XX Battery

Two days after the surrender of Japan in August 1945, Sukarno, an influential nationalist leader, declared independence and was appointed president.^{[42][43][44][45]} The Netherlands tried to reestablish their rule, and an armed and diplomatic struggle ended in December 1949, when in the face of international pressure, HP Pavilion DV9506TX Battery

the Dutch formally recognized Indonesian independence^[ (with the exception of the Dutch territory of West New Guinea, which was incorporated into Indonesia following the 1962 New York Agreement, and the UN-mandated Act of Free Choice of 1969).

Sukarno moved Indonesia from democracy towards authoritarianism, 
HP Pavilion DV9506XX Battery

and maintained his power base by balancing the opposing forces of the military and the Communist Party of Indonesia (PKI).^[48] An attempted coup on 30 September 1965 was countered by the army, who led a violent anti-communist purge, during which the PKI was blamed for the coup and effectively destroyed. HP Pavilion DV9507EF Battery

Around 500,000 people are estimated to have been killed.^[52][53] The head of the military, General Suharto, out-maneuvered the politically weakened Sukarno, and was formally appointed president in March 1968. His New Order administration^[54] was supported by the US government, and encouraged foreign direct investment in Indonesia, HP Pavilion DV9507ES Battery

which was a major factor in the subsequent three decades of substantial economic growth. However, the authoritarian "New Order" was widely accused of corruption and suppression of political opposition.

Indonesia was the country hardest hit by the late 1990s Asian financial crisis.^[ HP Pavilion DV9507TX Battery

This led to popular protest against the New Order which led to Suharto's resignation in May 1998.^[61] In 1999, East Timor voted to secede from Indonesia, after a twenty-five-year military occupation that was marked by international condemnation of repression of the East Timorese.^[62] HP Pavilion DV9507XX Battery

Since Suharto's resignation, a strengthening of democratic processes has included a regional autonomy program, and the first direct presidential election in 2004. Political and economic instability, social unrest, corruption, and terrorism slowed progress, however, in the last five years the economy has performed strongly. HP Pavilion DV9508TX Battery

Although relations among different religious and ethnic groups are largely harmonious, sectarian discontent and violence has occurred.^[63] A political settlement to an armed separatist conflict in Aceh was achieved in 2005.^[64]

 Government and politics

Indonesia is a republic with a presidential system. HP Pavilion DV9508XX Battery

As a unitary state, power is concentrated in the central government. Following the resignation of President Suharto in 1998, Indonesian political and governmental structures have undergone major reforms. Four amendments to the 1945 Constitution of Indonesia^[65] have revamped the executive, judicial, and legislativebranches.^[66] HP Pavilion DV9509TX Battery

The president of Indonesia is the head of state, commander-in-chief of the Indonesian National Armed Forces, and the director of domestic governance, policy-making, and foreign affairs. The president appoints a council of ministers, who are not required to be elected members of the legislature. HP Pavilion DV9509XX Battery

The 2004 presidential election was the first in which the people directly elected the president and vice president.^[67] The president may serve a maximum of two consecutive five-year terms.^[68]

The highest representative body at national level is the People's Consultative Assembly (MPR). HP Pavilion DV9510EA Battery

Its main functions are supporting and amending the constitution, inaugurating the president, and formalizing broad outlines of state policy. It has the power to impeach the president.^[69] The MPR comprises two houses; the People's Representative Council (DPR), with 560 members, and the Regional Representative Council (DPD), with 132 members.^[70] HP Pavilion DV9510EO Battery

The DPR passes legislation and monitors the executive branch; party-aligned members are elected for five-year terms by proportional representation.^[66] Reforms since 1998 have markedly increased the DPR's role in national governance.^[71] The DPD is a new chamber for matters of regional management.^[72] HP Pavilion DV9510TX Battery

Most civil disputes appear before a State Court (Pengadilan Negeri); appeals are heard before the High Court (Pengadilan Tinggi). The Supreme Court (Mahkamah Agung) is the country's highest court, and hears final cessation appeals and conducts case reviews. Other courts include the Commercial Court, which handles bankruptcy and insolvency; HP Pavilion DV9510XX Battery

a State Administrative Court (Pengadilan Tata Negara) to hear administrative law cases against the government; a Constitutional Court (Mahkamah Konstitusi) to hear disputes concerning legality of law, general elections, dissolution of political parties, and the scope of authority of state institutions; HP Pavilion DV9511TX Battery

and a Religious Court (Pengadilan Agama) to deal with codified Sharia Law cases.^[73]

Foreign relations and military

In contrast to Sukarno's anti-imperialistic antipathy to western powers and tensions with Malaysia, Indonesia's foreign relationssince the Suharto "New Order" have been based on economic and political cooperation with Western nations.^[75] HP Pavilion DV9511XX Battery

Indonesia maintains close relationships with its neighbors in Asia, and is a founding member of ASEAN and the East Asia Summit.^[70] The nation restored relations with the People's Republic of China in 1990 following a freeze in place since anti-communist purges early in the Suharto era.^[73] HP Pavilion DV9512TX Battery

Indonesia has been a member of the United Nations since 1950,^[76] and was a founder of the Non-Aligned Movement (NAM) and the Organisation of the Islamic Conference (OIC, now the Organisation of Islamic Cooperation).^[70] Indonesia is signatory to theASEAN Free Trade Area agreement, the Cairns Group, and the WTO, HP Pavilion DV9512XX Battery

and has historically been a member of OPEC, although it withdrew in 2008 as it was no longer a net exporter of oil. Indonesia has received humanitarian and development aid since 1966, in particular from the United States, western Europe, Australia, and Japan.^[70] HP Pavilion DV9513TX Battery

The Indonesian Government has worked with other countries to apprehend and prosecute perpetrators of major bombings linked to militant Islamism and Al-Qaeda.^[77] The deadliest bombing killed 202 people (including 164 international tourists) in the Bali resort town of Kuta in 2002.^[78] HP Pavilion DV9513XX Battery

The attacks, and subsequent travel warnings issued by other countries, severely damaged Indonesia's tourism industry and foreign investment prospects.^[79]

Indonesia's 300,000-member armed forces (TNI) include the Army (TNI–AD), Navy (TNI–AL, which includes marines), and Air Force(TNI–AU).^[80] HP Pavilion DV9514TX Battery

The army has about 400,000 active-duty personnel. Defense spending in the national budget was 4% of GDP in 2006, and is controversially supplemented by revenue from military commercial interests and foundations.^[81] One of the reforms following the 1998 resignation of Suharto was the removal of formal TNI representation in parliament; HP Pavilion DV9514XX Battery

nevertheless, its political influence remains extensive.^[82]

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.^[83][84] HP Pavilion DV9515CA Battery

Following a sporadic thirty-year guerrilla war between the Free Aceh Movement (GAM) and the Indonesian military, a ceasefire agreement was reached in 2005.^[85] In Papua, there has been a significant, albeit imperfect, implementation of regional autonomy laws, and a reported decline in the levels of violence and human rights abuses, since the presidency of Susilo Bambang Yudhoyono.^[86] HP Pavilion DV9515EA Battery

Administrative divisions

Administratively, Indonesia consists of 33 provinces, five of which have special status. Each province has its own legislature and governor. The provinces are subdivided into regencies (kabupaten) and cities (kota), which are further subdivided into districts (kecamatan), and again into village groupings (either desaor kelurahan). HP Pavilion DV9515EF Battery

Furthermore, a village is divided into several citizen-groups (Rukun-Warga (RW)) which are further divided into several neighbourhood-groups (Rukun-Tetangga (RT)). Following the implementation of regional autonomy measures in 2001, the regencies and cities have become the key administrative units, responsible for providing most government services. HP Pavilion DV9515EO Battery

The village administration level is the most influential on a citizen's daily life, and handles matters of a village or neighborhood through an elected lurah or kepala desa (village chief).

The provinces of Aceh, Jakarta, Yogyakarta, Papua, HP Pavilion DV9515TX Battery

and West Papua have greater legislative privileges and a higher degree of autonomy from the central government than the other provinces. The Acehnese government, for example, has the right to create certain elements of an independent legal system; in 2003, it instituted a form of Sharia (Islamic law).^[87] HP Pavilion DV9515XX Battery

Yogyakarta was granted the status of Special Region in recognition of its pivotal role in supporting Indonesian Republicans during the Indonesian Revolution.^[88] Papua, formerly known as Irian Jaya, was granted special autonomy status in 2001 and was separated into Papuaand West Papua in February 2003.^[89][90] HP Pavilion DV9516TX Battery

Jakarta is the country's special capital region.

Geography

Indonesia lies between latitudes 11°S and 6°N, and longitudes 95°E and 141°E. It consists of 17,508 islands, about 6,000 of which are inhabited.^[91] These are scattered over both sides of the equator. HP Pavilion DV9516XX Battery

The largest are Java, Sumatra, Borneo (shared with Brunei and Malaysia), New Guinea (shared with Papua New Guinea), and Sulawesi. Indonesia shares land borders with Malaysia on Borneo, Papua New Guinea on the island of New Guinea, and East Timor on the island of Timor. HP Pavilion DV9517TX Battery

Indonesia shares maritime borders across narrow straits with Singapore, Malaysia, and the Philippines to the north, and with Australia to the south. The capital, Jakarta, is on Java and is the nation's largest city, followed by Surabaya, Bandung, Medan, and Semarang.^[92] HP Pavilion DV9517XX Battery

At 1,919,440 square kilometers (741,050 sq mi), Indonesia is the world's 16th-largest country in terms of land area.^[93] Its average population density is 134 people per square kilometer (347 per sq mi), 79th in the world,^[94] although Java, the world's most populous island,^[95] has a population density of 940 people per square kilometer (2,435 per sq mi). HP Pavilion DV9518EM Battery

At 4,884 metres (16,024 ft), Puncak Jaya in Papua is Indonesia's highest peak, and Lake Toba in Sumatra its largest lake, with an area of 1,145 square kilometers (442 sq mi). The country's largest rivers are in Kalimantan, and include the Mahakam and Barito; such rivers are communication and transport links between the island's river settlements. HP Pavilion DV9518TX Battery

Indonesia's location on the edges of the Pacific, Eurasian, and Australian tectonic plates makes it the site of numerousvolcanoes and frequent earthquakes. Indonesia has at least 150 active volcanoes,^[97] including Krakatoa and Tambora, both famous for their devastating eruptions in the 19th century. HP Pavilion DV9519TX Battery

The eruption of the Toba supervolcano, approximately 70,000 years ago, was one of the largest eruptions ever, and a global catastrophe. Recent disasters due to seismic activity include the2004 tsunami that killed an estimated 167,736 in northern Sumatra,^[98] and the Yogyakarta earthquake in 2006. HP Pavilion DV9519XX Battery

However,volcanic ash is a major contributor to the high agricultural fertility that has historically sustained the high population densities of Java and Bali.^[99]

Lying along the equator, Indonesia has a tropical climate, with two distinct monsoonal wet and dry seasons. HP Pavilion DV9520EB Battery

Average annual rainfall in the lowlands varies from 1,780–3,175 millimeters (70–125 in), and up to 6,100 millimeters (240 in) in mountainous regions. Mountainous areas—particularly in the west coast of Sumatra, West Java, Kalimantan, Sulawesi, and Papua—receive the highest rainfall. Humidity is generally high, averaging about 80%. HP Pavilion DV9520EG Battery

Temperatures vary little throughout the year; the average daily temperature range of Jakarta is 26–30 °C (79–86 °F).^[100]

 Biota and environment

Indonesia's size, tropical climate, and archipelagic geography, support the world's second highest level of biodiversity (after Brazil),^[101] and its flora and fauna is a mixture of Asian and Australasian species.^[102] HP Pavilion DV9521EA Battery

The islands of the Sunda Shelf (Sumatra, Java, Borneo, and Bali) were once linked to the Asian mainland, and have a wealth of Asian fauna. Large species such as the tiger, rhinoceros, orangutan, elephant, and leopard, were once abundant as far east as Bali, but numbers and distribution have dwindled drastically. HP Pavilion DV9521EI Battery

Forests cover approximately 60% of the country.^[103] In Sumatra and Kalimantan, these are predominantly of Asian species. However, the forests of the smaller, and more densely populated Java, have largely been removed for human habitation and agriculture. Sulawesi, Nusa Tenggara, HP Pavilion DV9521TX Battery

and Maluku—having been long separated from the continental landmasses—have developed their own unique flora and fauna.^[104] Papua was part of the Australian landmass, and is home to a unique fauna and flora closely related to that of Australia, including over 600 bird species.^[105] HP Pavilion DV9521XX Battery

Indonesia is second only to Australia in terms of total endemic species, with 36% of its 1,531 species of bird and 39% of its 515 species of mammal being endemic.^[106] Indonesia's 80,000 kilometers (50,000 mi) of coastline are surrounded by tropical seas that contribute to the country's high level of biodiversity. HP Pavilion DV9522TX Battery

Indonesia has a range of sea and coastal ecosystems, including beaches, sand dunes, estuaries, mangroves, coral reefs, sea grass beds, coastal mudflats, tidal flats, algal beds, and small island ecosystems.^[9] Indonesia is one of Coral Triangle countries with the world's greatest diversity of coral reef fish with more than 1,650 species in eastern Indonesia only. HP Pavilion DV9522XX Battery

The British naturalist, Alfred Wallace, described a dividing line between the distribution and peace of Indonesia's Asian and Australasian species.^[108] Known as the Wallace Line, it runs roughly north-south along the edge of the Sunda Shelf, between Kalimantan and Sulawesi, and along the deep Lombok Strait, between Lombok and Bali. HP Pavilion DV9523TX Battery

West of the line the flora and fauna are more Asian; moving east from Lombok, they are increasingly Australian. In his 1869 book, The Malay Archipelago, Wallace described numerous species unique to the area.^[109] The region of islands between his line and New Guinea is now termed Wallacea.^[108] HP Pavilion DV9523XX Battery

Indonesia's high population and rapid industrialization present serious environmental issues, which are often given a lower priority due to high poverty levels and weak, under-resourced governance.^[110] Issues include large-scale deforestation (much of it illegal) and related wildfires causing heavy smog over parts of western Indonesia, Malaysia and Singapore; HP Pavilion DV9525EN Battery

over-exploitation of marine resources; and environmental problems associated with rapid urbanization and economic development, including air pollution, traffic congestion, garbage management, and reliable water and waste water services.^[110] Deforestation and the destruction of peatlands make Indonesia the world's third largest emitter of greenhouse gases.^[111] HP Pavilion DV9525EO Battery

Habitat destruction threatens the survival of indigenous and endemic species, including 140 species of mammals identified by the World Conservation Union (IUCN) as threatened, and 15 identified as critically endangered, includingBali Starling,^[112] Sumatran Orangutan,^[113] and Javan Rhinoceros.^[112] HP Pavilion DV9525US Battery

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. Palm oil expansion requires land reallocation as well as changes to the local and natural ecosystems. Palm oil expansion can generate wealth for local communities if done right. HP Pavilion DV9525XX Battery

If down wrong it can degrade ecosystems and cause social conflicts.^[114]

Melati (Jasminum sambac) is the national flower of Indonesia,^[115] together with Anggrek Bulan (Phalaenopsis amabilis) and Padma Raksasa Rafflesia (Rafflesia arnoldii). All three were chosen on World Environment Day in 1990.^[116][117] HP Pavilion DV9530EB Battery

On the other occasion Bunga Bangkai (Titan arum) was also added as puspa langkatogether with Rafflesia. Each of Indonesian provinces also have their own floral emblems.

Economy

Indonesia has a mixed economy in which both the private sector and government play significant roles.^[118] HP Pavilion DV9530EF Battery

The country is the largest economy in Southeast Asia and a member of the G-20 major economies.^[119] Indonesia's estimated gross domestic product (nominal), as of 2010 was US$706.73 billion with estimated nominal per capita GDP was US$3,015, and per capita GDP PPP was US$4,394 (international dollars).^[120] HP Pavilion DV9530EG Battery

June 2011: At World Economic Forum on East Asia, Indonesian president said Indonesia will be in the top ten countries with the strongest economy within the next decade. The Gross domestic product (GDP) is about $1 trillion^[3] and the debt ratio to the GDP is 26%.^[121] HP Pavilion DV9530EM Battery

The industry sector is the economy's largest and accounts for 46.4% of GDP (2010), this is followed by services (37.1%) and agriculture (16.5%). However, since 2010, service sector has employed more people than other sectors, accounting 48.9% of the total labor force, this has been followed by agriculture (38.3%) and industry (12.8%).^[122] HP Pavilion DV9532EF Battery

Agriculture, however, had been the country's largest employer for centuries.^[123][124]

According to World Trade Organization data, Indonesia was the 27th biggest exporting country in the world in 2010, moving up three places from a year before.^[125] Indonesia's main export markets (2009) are Japan (17.28%), Singapore (11.29%), the United States (10.81%), and China (7.62%).HP Pavilion DV9532XX Battery

The major suppliers of imports to Indonesia are Singapore (24.96%), China (12.52%), and Japan (8.92%). In 2005, Indonesia ran a trade surplus with export revenues of US$83.64 billion and import expenditure of US$62.02 billion. The country has extensive natural resources, including crude oil, natural gas, tin, copper, and gold. HP Pavilion DV9533EF Battery

Indonesia's major imports include machinery and equipment, chemicals, fuels, and foodstuffs. And the country's major export commodities include oil and gas, electrical appliances, plywood, rubber, and textiles.

In the 1960s, the economy deteriorated drastically as a result of political instability, HP Pavilion DV9533EG Battery

a young and inexperienced government, and economic nationalism, 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. 
HP Pavilion DV9534EF Battery

Following President Sukarno's downfall in the mid-1960s, the New Order administration brought a degree of discipline to economic policy that quickly brought inflation down, stabilized the currency, rescheduled foreign debt, and attracted foreign aid and investment. (See Berkeley Mafia). HP Pavilion DV9534XX Battery

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.^[127] Following further reforms in the late 1980s,^[128] foreign investment flowed into Indonesia, HP Pavilion DV9535EA Battery

particularly into the rapidly developing export-orientedmanufacturing sector, and from 1989 to 1997, the Indonesian economy grew by an average of over 7%.^[129][130]

Indonesia was the country hardest hit by the Asian financial crisis of 1997–98. Against the US dollar, the rupiah dropped from about Rp. HP Pavilion DV9535EF Battery

2,600 to a low point of 14,000, and the economy shrank by 13.7%.^[131] The Rupiah stabilised in the Rp. 8,000 to 10,000 range,^[132] and a slow but significant economic recovery has ensued. However, political instability, slow economic reform, and corruption slowed the recovery.^[7][8] HP Pavilion DV9535EG Battery

Transparency International, for example, has since ranked Indonesia below 100 in its Corruption Perceptions Index.^[133][134] Since 2007, however, with the improvement in banking sector and domestic consumption, the national economic growth has been 6% annuallyand this helped the country weather the 2008–2009 global recession. HP Pavilion DV9535EO Battery

In 2011, Indonesia's inflation rate was only 3.79 percent, well below the government-set target of 5.65 percent.^[139] It was the lowest inflation rate since 1998. Ran by large domestic market helping to shield it from the global economic turmoil battering its more export-oriented neighbors and Foreign Direct Investment which grew 20 percent to a record $20 billion in 2011, HP Pavilion DV9535NR Battery

Indonesia GDP expanded 6.5 percent as its fastest pace since Asian financial crisis, affirming Indonesia as one of Asia's fastest-growing economies.^[140]

As of 2010, an estimated 13.3% of the population was living below poverty line, and the unemployment rate was 7.1%.^[126] HP Pavilion DV9535US Battery

Indonesia regains its investment grade rating by end of 2011 by Fitch Rating and by early 2012 by Moody's Rating, after losing its investment grade rating in December 1997 at the onset of the Asian financial crisis which Indonesia spent more than Rp450 trillion ($50 billion) to bail out lenders from banks. HP Pavilion DV9536EF Battery

Fitch raised Indonesia's long-term and local currency debt rating to BBB- from BB+ with both ratings is stable. Fitch also predicted that economy will grow at least 6.0% on average per year through 2013, despite a less conducive global economic climate.^[141] Moody’s raised Indonesia's foreign and local currency bond ratings to Baa3 from Ba1 with a stable outlook.^[142] HP Pavilion DV9536EM Battery

Demographics

The population of Indonesia according to the 2010 national census is 237.6 million,^[143] with population growth still high at 1.9%.^[144] 58% of the population lives on Java,^[143] the world's most populous island.^[95] HP Pavilion DV9540EB Battery

 Despite a fairly effective family planning program that has been in place since the 1960s, the population is expected to grow to around 265 million by 2020 and 306 million by 2050.^[145]

There are around 300 distinct native ethnicities in Indonesia, and 742 different languages and dialects.^[ HP Pavilion DV9540EO Battery

Most Indonesians are descended from Austronesian-speaking peoples whose languages can be traced to Proto-Austronesian (PAn), which possibly originated in Taiwan. Another major grouping are Melanesians, who inhabit eastern Indonesia.^[92][148] The largest ethnic group is the Javanese, who comprise 42% of the population, and are politically and culturally dominant.^[149] HP Pavilion DV9540US Battery

TheSundanese, ethnic Malays, and Madurese are the largest non-Javanese groups.^[150] A sense of Indonesian nationhood exists alongside strong regional identities.^[151] Society is largely harmonious, although social, religious and ethnic tensions have triggered horrendous violence. HP Pavilion DV9540XX Battery

Chinese Indonesians are an influential ethnic minority comprising 3–4% of the population.^[155] Much of the country's privately owned commerce and wealth is Chinese-Indonesian-controlled,^[156][157] which has contributed to considerable resentment, and even anti-Chinese violence. HP Pavilion DV9541EV Battery

The official national language, Indonesian, a form of Malay, is universally taught in schools, and consequently is spoken by nearly every Indonesian. It is the language of business, politics, national media, education, and academia. It is based on the prestige dialect of Malay, that of the Johor-Riau Sultanate, HP Pavilion DV9541XX Battery

which for centuries had been the lingua franca of the archipelago, standards of which are the official languages in Singapore, Malaysia and Brunei. It was promoted by Indonesian nationalists in the 1920s, and declared the official language under the name Bahasa Indonesia on the proclamation of independence in 1945. HP Pavilion DV9542EV Battery

Most Indonesians speak at least one of the several hundred local languages and dialects, often as theirfirst language. Of these, Javanese is the most widely spoken as the language of the largest ethnic group.^[126] On the other hand, Papua has over 270 indigenous Papuan and Austronesian languages,^[161] in a region of about 2.7 million people. HP Pavilion DV9542XX Battery

While religious freedom is stipulated in the Indonesian constitution,^[162] the government officially recognizes only six religions: Islam, Protestantism, Roman Catholicism, Hinduism, Buddhism, and Confucianism.^[163] Although it is not an Islamic state, Indonesia is the world's most populous Muslim-majority nation, with 86.1% of Indonesians being Muslim according to the 2000 census.^[126] HP Pavilion DV9543CL Battery

On 21 May 2011 the Indonesian Sunni-Shia Council (MUHSIN) was established. The council aims to hold gatherings, dialogues and social activities. It was an answer to violence committed in the name of religion.^[164] The majority of Muslims in Indonesia are Sunni. 9% of the population was Christian, 3% Hindu, and 2% Buddhist or other. Most Indonesian Hindus are Balinese,^[165] HP Pavilion DV9543EA Battery

and most Buddhists in modern-day Indonesia are ethnic Chinese.^[166] Though now minority religions, Hinduism and Buddhism remain defining influences in Indonesian culture. Islam was first adopted by Indonesians in northern Sumatra in the 13th century, through the influence of traders, and became the country's dominant religion by the 16th century.^[167] HP Pavilion DV9543EV Battery

Roman Catholicism was brought to Indonesia by early Portuguese colonialists and missionaries,^[168][169] and the Protestant denominations are largely a result of Dutch Calvinist and Lutheran missionary efforts during the country's colonial period. HP Pavilion DV9543XX Battery

 A large proportion of Indonesians—such as the Javanese abangan, Balinese Hindus, and Dayak Christians—practice a less orthodox, syncretic form of their religion, which draws on local customs and beliefs.^[173]

Culture

Indonesia has about 300 ethnic groups, each with cultural identities developed over centuries, HP Pavilion DV9545EO Battery

and influenced by Indian, Arabic, Chinese, and European sources. Traditional Javanese and Balinese dances, for example, contain aspects of Hindu culture and mythology, as do wayang kulit (shadow puppet) performances. Textiles such as batik,ikat, ulos and songket are created across Indonesia in styles that vary by region. HP Pavilion DV9545XX Battery

The most dominant influences onIndonesian architecture have traditionally been Indian; however, Chinese, Arab, and European architectural influences have been significant.

Sports in Indonesia are generally male-orientated and spectator sports are often associated with illegal gambling.^[174] HP Pavilion DV9547CL Battery

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. HP Pavilion DV9547XX Battery

Its women have won the Uber Cup, the female equivalent of the Thomas Cup, twice, in 1994 and 1996. Liga Indonesia is the country's premier football club league. Traditional sports include sepak takraw, and bull racing in Madura. In areas with a history of tribal warfare, mock fighting contests are held, such as, caci in Flores, and pasola in Sumba. HP Pavilion DV9548CA Battery

 Pencak Silat is an Indonesian martial art.

Indonesian cuisine varies by region and is based on Chinese, European, Middle Eastern, and Indian precedents.^[175] Rice is the main staple food and is served with side dishes of meat and vegetables. HP Pavilion DV9548US Battery

Spices (notably chili), coconut milk, fish and chicken are fundamental ingredients.^[176] Indonesian traditional music includes gamelan and keroncong. The Indonesian film industry's popularity peaked in the 1980s and dominated cinemas in Indonesia,^[177] although it declined significantly in the early 1990s.^[178] HP Pavilion DV9550EO Battery

Between 2000 and 2005, the number of Indonesian films released each year has steadily increased.^[177]

The oldest evidence of writing in Indonesia is a series of Sanskrit inscriptions dated to the 5th century. HP Pavilion DV9550EP Battery

Important figures in modern Indonesian literature include: Dutch author Multatuli, who criticized treatment of the Indonesians under Dutch colonial rule; Sumatrans Muhammad Yamin and Hamka, who were influential pre-independence nationalist writers and politicians;^[179] HP Pavilion DV9552ES Battery

and proletarian writer Pramoedya Ananta Toer, Indonesia's most famous novelist.^[180][181] Many of Indonesia's peoples have strongly rooted oral traditions, which help to define and preserve their cultural identities.^[182]

Media freedom in Indonesia increased considerably after the end of President Suharto's rule, HP Pavilion DV9552XX Battery

during which the now-defunct Ministry of Information monitored and controlled domestic media, and restricted foreign media.^[183] The TV market includes ten national commercial networks, and provincial networks that compete with public TVRI. Private radio stations carry their own news bulletins and foreign broadcasters supply programs. HP Pavilion DV9555EG Battery

At a reported 25 million users in 2008,^[184] Internet usage was estimated at 12.5% in September 2009.^[185]

More than 30 million cell phones are sold in Indonesia each year, and 27 percent of them are local brands. HP Pavilion DV9555EO Battery

Indonesia is the largest economy in Southeast Asia and is one of the emerging market economies of the world. The country is also a member of G-20 major economies.^[7] It has a market economy in which the government plays a significant role by owning more than 164 enterprises and administers prices on several basic goods, HP Pavilion DV9560EA Battery

includingfuel, rice, and electricity. In the aftermath of the financial and economic crisis that began in mid-1997, the government took custody of a significant portion of private sector assets through acquisition of nonperforming bank loans and corporate assets through the debt restructuring process. HP Pavilion DV9560EG Battery

Since 2004, the national economy has recovered and undergone another period of rapid economic growth.

In the 1960s, the economy deteriorated drastically as a result of political instability, a young and inexperienced government, HP Pavilion DV9560ER Battery

and economic nationalism, which resulted in severe poverty and hunger. By the time of Soekarno'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. HP Pavilion DV9560XX Battery

Following President Soekarno's downfall in the mid-1960s, the New Order administration brought a degree of discipline to economic policy that quickly brought inflation down, stabilized the currency, rescheduled foreign debt, and attracted foreign aid and investment. (See Berkeley Mafia). HP Pavilion DV9562EA Battery

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.^[9] High levels of regulation and a dependence on declining oil prices, HP Pavilion DV9562EZ Battery

growth slowed to an average of 4.3% per annum between 1981 and 1988. A range of economic reforms were introduced in the late 1980s including a managed devaluation of the rupiah to improve export competitiveness, and de-regulation of the financial sector,^[10] Foreign investment flowed into Indonesia, HP Pavilion DV9565EA Battery

particularly into the rapidly developing export-oriented manufacturing sector, and from 1989 to 1997, the Indonesian economy grew by an average of over 7%.^[11][12]

GDP per capita grew 545% from 1970 to 1980 as a result of the sudden increase in oil export revenues from 1973 to 1979. HP Pavilion DV9565EG Battery

High levels of economic growth from 1987–1997 masked a number of structural weaknesses in Indonesia's economy. Growth came at a high cost in terms of weak and corrupt institutions, severe public indebtedness through mismanagement of the financial sector, the rapid depletion of Indonesia’s natural resources, and a culture of favors and corruption in the business elite.^[14] HP Pavilion DV9570EF Battery

Corruption particularly gained momentum in the 1990s, reaching to the highest levels of the political hierarchy as Suharto became the most corrupt leader according toTransparency International's corrupt leaders list.^[15][16] As a result, the legal system was very weak, and there was no effective way to enforce contracts, collect debts, or sue for bankruptcy. HP Pavilion DV9570EL Battery

Banking practices were very unsophisticated, with collateral-based lending the norm and widespread violation of prudential regulations, including limits on connected lending. Non-tariff barriers, rent-seeking by state-owned enterprises, domestic subsidies, barriers to domestic trade and export restrictions all created economic distortions. HP Pavilion DV9570EO Battery

Asian Financial Crisis

The Asian Financial Crisis that began to affect Indonesia in mid-1997 became an economic and political crisis. Indonesia's initial response was to float the rupiah, raise key domestic interest rates, and tighten fiscal policy. HP Pavilion DV9570XX Battery

In October 1997, Indonesia and the International Monetary Fund (IMF) reached agreement on an economic reform program aimed at macroeconomic stabilization and elimination of some of the country's most damaging economic policies, such as the National Car Program and the clove monopoly, both involving family members of President Soeharto. HP Pavilion DV9571EO Battery

The rupiah remained weak, however, and President Soeharto was forced to resign in May 1998. In August 1998, Indonesia and the IMF agreed on an Extended Fund Facility (EFF) under President B.J Habibie that included significant structural reform targets. HP Pavilion DV9571XX Battery

President Abdurrahman Wahid took office in October 1999, and Indonesia and the IMF signed another EFF in January 2000. The new program also has a range of economic, structural reform and governance targets.

The effects of the financial and economic crisis were severe. HP Pavilion DV9572EA Battery

By November 1997, rapid currency depreciation had seen public debt reach US$60 bn, imposing severe strains on the government's budget.^[17] In 1998, real GDP contracted by 13.7%. The economy reached its low point in mid-1999 and real GDP growth for the year was 0.3%. Inflation reached 77% in 1998 but slowed to 2% in 1999. HP Pavilion DV9572EL Battery

The rupiah, which had been in the Rp 2,600/USD1 range at the start of August 1997 fell to 11,000/USD1 by January 1998, with spot rates around 15,000 for brief periods during the first half of 1998.^[18] It returned to 8,000/USD1 range at the end of 1998 and has generally traded in the Rp 8,000–10,000/USD1 range ever since, with fluctuations that are relatively predictable and gradual. HP Pavilion DV9572EO Battery

Post Suharto

In late 2005 Indonesia faced a 'mini-crisis' due to international oil prices rises and imports. The currency reached Rp 12,000/USD1 before stabilizing. The government was forced to cut its massive fuel subsidies, which were planned to cost $14 billion for 2005, in October.^[19] HP Pavilion DV9572XX Battery

This led to a more than doubling in the price of consumer fuels, resulting in double-digit inflation. The situation had stabilized, but the economy continued to struggle with inflation at 17% in 2005.

For 2006, Indonesia's economic outlook was more positive. HP Pavilion DV9574EA Battery

Economic growth accelerated to 5.1% in 2004 and reached 5.6% in 2005. Real per capita income has reached fiscal year 1996/1997 levels. Growth was driven primarily by domestic consumption, which accounts for roughly three-fourths of Indonesia's gross domestic product. HP Pavilion DV9574LA Battery

The Jakarta Stock Exchange was the best performing market in Asia in 2004 up by 42%. Problems that continue to put a drag on growth include low foreign investment levels, bureaucratic red tape, and very widespread corruption which causes 51.43 trillion Rupiah or 5.6573 billion US Dollar or approximately 1.4% of GDP to be lost on a yearly basis.^[20] HP Pavilion DV9575EM Battery

However, there is very strong optimism with the conclusion of peaceful elections during the year 2004 and the election of the reformist president Susilo Bambang Yudhoyono.

The unemployment rate in February 2007 was 9.75%.^[21] Despite a slowing global economy, Indonesia’s economic growth accelerated to a ten-year high of 6.3% in 2007. HP Pavilion DV9575EN Battery

This growth rate was sufficient to reduce poverty from 17.8% to 16.6% based on the Government’s poverty line and reversed the recent trend towards jobless growth, with unemployment falling to 8.46% in February 2008.^[22][23] Unlike many of its more export-dependent neighbors, it has managed to skirt the recession, HP Pavilion DV9575EO Battery

helped by strong domestic demand (which makes up about two-thirds of the economy) and a government fiscal stimulus package of about 1.4% of GDP, announced earlier this year. After India and China, Indonesia is currently the third fastest growing economy in the Group of Twenty (G20) industrialized and developing economies. HP Pavilion DV9575EP Battery

The $512 billion economy expanded 4.4% in the first quarter from a year earlier and last month, the IMF revised its 2009 forecast for the country to 3-4% from 2.5%. Indonesia enjoyed stronger fundamentals with the authorities implemented wide-ranging economic and financial reforms, including a rapid reduction in public and external debt, HP Pavilion DV9575ES Battery

strengthening of corporate and banking sector balance sheets and reducing bank vulnerabilities through higher capitalization and better supervision.^[24]

Investment

Since the late 1980s, Indonesia has made significant changes to its regulatory framework to encourage economic growth. HP Pavilion DV9575LA Battery

This growth was financed largely from private investment, both foreign and domestic. U.S. investors dominated the oil and gas sector and undertook some of Indonesia's largest mining projects. In addition, the presence of US banks, manufacturers, and service providers expanded, especially after the industrial and financial sector reforms of the 1980s. HP Pavilion DV9575NR Battery

Other major foreign investors included India, Japan, the United Kingdom, Singapore, the Netherlands, Qatar, Hong Kong, Taiwan and South Korea.

The economic crisis made continued private financing imperative but problematic. New foreign investment approvals fell by almost two-thirds between 1997 and 1999. HP Pavilion DV9575XX Battery

The crisis further highlighted areas where additional reform was needed. Frequently cited areas for improving the investment climate were establishment of a functioning legal and judicial system, adherence to competitive processes, and adoption of internationally acceptable accounting and disclosure standards. HP Pavilion DV9576EA Battery

Despite improvements in the laws in recent years, Indonesia's intellectual property rights regime remains weak; lack of effective enforcement is a major concern. Under Suharto, Indonesia had moved toward private provision of public infrastructure, including electric power, toll roads, and telecommunications. HP Pavilion DV9576XX Battery

The financial crisis brought to light serious weaknesses in the process of dispute resolution, however, particularly in the area of private infrastructure projects. Although Indonesia continued to have the advantages of a large labor force, abundant natural resources and modern infrastructure, private investment in new projects largely ceased during the crisis. HP Pavilion DV9580ED Battery

As of 28 June 2010, the Indonesia Stock Exchange had 341 listed companies with a combined market capitalization of $269.9 billion.^[25] As at November 2010, two thirds of the market capitalization was in the form of foreign funds and only around 1% of the Indonesian population have stock investments.^[26] HP Pavilion DV9580EE Battery

Efforts are further being made to improve the business and investment environment. Within the World Bank's Doing Business Survey,^[27] Indonesia rose to 122 out of 178 countries in 2010, from 129 in the previous year. Despite these efforts, the rank is still below regional peers and an unfavourable investment climate persists. HP Pavilion DV9580EG Battery

For example, potential foreign investors and their executive staff cannot maintain own bank accounts in Indonesia, unless they are tax-paying local residents (paying tax in Indonesia for their worldwide income).

From 1990 to 2010, Indonesian companies have been involved in 3,757 mergers and acquisitions as either acquiror or target with a total known value of $137bn.^[ HP Pavilion DV9580EL Battery

In 2010, 609 transactions have been announced which is a new record. Numbers had increased by 19% compared to 2009. The value of deals in 2010 was 17 bil. USD which is the second highest number ever.

Economic relations with the United States

U.S. exports to Indonesia in 1999 totaled $2.0 billion, down significantly from $4.5 billion in 1997. HP Pavilion DV9580EN Battery

The main exports were construction equipment, machinery, aviation parts, chemicals, and agricultural products. U.S. imports from Indonesia in 1999 totaled $9.5 billion and consisted primarily of clothing, machinery and transportation equipment, petroleum, natural rubber, and footwear. HP Pavilion DV9580EO Battery

Economic assistance to Indonesia is coordinated through the Consultative Group on Indonesia (CGI), formed in 1989. It includes 19 donor countries and 13 international organizations that meet annually to coordinate donor assistance.

The U.S. Agency for International Development (USAID) has provided development assistance to Indonesia since 1950. HP Pavilion DV9580ET Battery

Initial assistance focused on the most urgent needs of the new republic, including food aid, infrastructure rehabilitation, health care, and training. Through the 1970s, a time of great economic growth in Indonesia, USAID played a major role in helping the country achieve self-sufficiency in rice production and in reducing the birth rate. HP Pavilion DV9580EZ Battery

USAID's current program aims to support Indonesia as it recovers from the financial crisis by providing food aid, employment generating activities, and maintaining critical public health services. USAID is also providing technical advisers to help the Indonesian Government HP Pavilion DV9580US Battery

implement economic reforms and fiscal decentralization and is supporting democratization and civil society development activities through non-governmental organizations.

Agriculture, livestock, forestry and fishery

Statistics Indonesia provisionally valued food crop yields at 213,529,700 million rupiahs in 2006 thus registering over 35% growth since 2003.^[30] HP Pavilion DV9580XX Battery

Badan Pusat Statistik provisionally valued estate crop yields at 62,690,900 million rupiahs in 2006 thus registering over 34% growth since 2003.^[30] Badan Pusat Statistik provisionally valued livestock and its derivative products at 51,276,400 million rupiahs in 2006 thus registering over 37% growth since 2003.^[30] HP Pavilion DV9581EE Battery

Badan Pusat Statistik provisionally valued forestry at 30,017,000 million rupiahs in 2006 thus registering over 63% growth since 2003.^[30] Badan Pusat Statistik provisionally valued fishery at 72,979,900 million rupiahs in 2006 thus registering over 60% growth since 2003.^[31] HP Pavilion DV9581XX Battery

Hydrocarbons

Badan Pusat Statistik provisionally valued the oil and gas mining industry at 187,893,200 million rupiahs in 2006 thus registering over 97% growth since 2003.^[31]

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. HP Pavilion DV9585EG Battery

In 1999, Crude and condensate output averaged 1.5 million barrels (240,000 m³) per day, and in the 1998 calendar year the oil and gas sector, including refining, contributed approximately 9% to GDP. As of 2005, Indonesian crude oil and condensate output was 1.07 million barrels (170,000 m³) per day. HP Pavilion DV9585EL Battery

This is a substantial decline from the 1990s, due primarily to aging 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, about 5.4% per year, leading to an estimated US$1.2 billion cost for importing oil in 2005. HP Pavilion DV9589EF Battery

The state owns all petroleum and mineral rights. Foreign firms participate through production-sharing and work contracts. Oil and gas contractors are required to finance all exploration, production, and development costs in their contract areas; they are entitled to recover operating, exploration, and development costs out of the oil and gas produced. HP Pavilion DV9589XX Battery

Indonesia's fuel production has declined significantly over the years, owing to aging oil fields and lack of investment in new equipment. As a result, despite being an exporter of crude oil, Indonesia is now a net importer of oil products. It had previously subsidized fuel prices to keep prices low, costing US$ 7 billion in 2004 .^[32] HP Pavilion DV9590EA Battery

The current president has mandated a significant reduction of government subsidy of fuel prices in several stages .^[33] The government has stated the cuts in subsidies are aimed at reducing the budget deficit to 1% of gross domestic product (GDP) this year, down from around 1.6% last year. HP Pavilion DV9590ED Battery

At the same time, in order to alleviate economic hardships, the government has offered one-time subsidies to qualified citizens.

Non-oil and gas mining

Badan Pusat Statistik provisionally valued the non-oil and gas mining industry at 130,861,000 million rupiahs in 2006 thus registering over 145% growth since 2003.^[31] HP Pavilion DV9590EG Battery

Indonesia is the world's largest tin market. Although mineral production traditionally centered on bauxite, silver, and tin, Indonesia is expanding its copper, nickel, gold, and coal output for export markets.

In mid-1993, the Department of Mines and Energy reopened the coal sector to foreign investment, HP Pavilion DV9590ER Battery

with the result that the leading Indonesian coal producer now is a joint venture between UK firms - BP and Rio Tinto. Total coal production reached 74 million metric tons in 1999, including exports of 55 million tons. From January to August 2011, the coal production was 235 million tons and targeted 2011 coal production between 340 to 370 million tons. HP Pavilion DV9590ET Battery

Not all of the productions can be exported due to there are Domestic Market Obligation (DMO) regulation which should fullfil the domestic market. In 2012, the DMO is 24.72%. And starting 2014, there are no low-grade coal exports allowed, so the upgraded brown coal process which crank up the calorie value of coal from HP Pavilion DV9590EZ Battery

4,500 kcal/kg to 6,100 kcal/kg will be built in South Kalimantan and South Sumatra.^[34]

Two US firms operate three copper/gold mines in Indonesia, with a Canadian and British firm holding significant other investments in nickel and gold, respectively. In 1998, the value of Indonesian gold production was $1 billion and copper, $843 million. HP Pavilion DV9592EF Battery

Receipts from gold, copper, and coal comprised 84% of the $3 billion. Earned in 1998 by the mineral mining sector. India fortune groups like Vedanta Resources and Tata Group have significant mining operations in Indonesia.

April 2011: With additional of Tayan, HP Pavilion DV9592XX Battery

West Kalimantan Alumina project which produce 5% of the world's alumina production, Indonesia will be the world's second largest Alumina producer. The project will not make the ores to become Aluminium due to there are 100 types of Alumina derivatives which can be developed further by other companies in Indonesia.^[35] HP Pavilion DV9595AU Battery

Quarrying

Badan Pusat Statistik provisionally valued the quarrying industry at 35,872,700 million rupiahs in 2006 thus registering over 87% growth since 2003.^[31]

Manufacturing

Badan Pusat Statistik provisionally valued the petroleum refinery industry at 119,833,900 million rupiahs in 2006 thus registering over 139% growth since 2003^[31] HP Pavilion DV9595EA Battery

while the liquefied natural gas industry was valued at 53,791,300 million rupiahs in 2006 thus registering over 94% growth since 2003.

Non-oil and gas manufacturing

Badan Pusat Statistik provisionally valued the food, beverage and tobacco industry at 213,173,300 million rupiahs in 2006 thus registering over 38% growth since 2003.^[31] HP Pavilion DV9595XX Battery

Textile, leather products and footwear industry was valued at 90,871,700 million rupiahs in 2006 thus registering over 34% growth since 2003.

Wood and wood products industry was valued at 44,410,400 million rupiahs in 2006 thus registering over 48% growth since 2003. HP Pavilion DV9596XX Battery

Paper and printing products industry was valued at 39,968,900 million rupiahs in 2006 thus registering over 43% growth since 2003.

Fertilizers, chemicals and rubber products industry was valued at 95,765,000 million rupiahs in 2006 thus registering over 68% growth since 2003. HP Pavilion DV9597XX Battery

Cement and non-metallic quarry products industry was valued at 29,015,100 million rupiahs in 2006 thus registering over 50% growth since 2003.

Iron, steel and other basic metals industry was valued at 20,492,200 million rupiahs in 2006 thus registering over 52% growth since 2003. HP Pavilion DV9598XX Battery

Transport equipment, machinery and apparatus industry was valued at 221,891,800 million rupiahs in 2006 thus registering over 87% growth since 2003.

Other manufacturing industries were valued at 7,148,300 million rupiahs in 2006 thus registering over 67% growth since 2003.HP Pavilion DV9599ED Battery

In 2010, Indonesia sales 7.6 million motorcycles, which mainly produce in Indonesia with almost 100% local components. Honda led the market with a 50.95% market share, followed by Yamaha with 41.37% market share.^[36]

In 2011, the retail car sales total was 888,335 units, a 19.26% increase from last year. HP Pavilion DV9599XX Battery

Toyota dominated the domestic car market by 35.34%, followed by Daihatsu and Mitsubishi with 15.44% and 14.56%, respectively.^[37] Since 2011, some origin local car makers have introduced some Indonesian national cars which can be categorized as Low Cost Green Car (LCGC). HP Pavilion DV9600 Battery

Electricity, gas and water supply

See also: Geothermal power in Indonesia and Nuclear power in Indonesia

Badan Pusat Statistik provisionally valued the electricity industry at 21,247,200 million rupiahs in 2006 thus registering over 51% growth since 2003.^[31] HP Pavilion DV9601AU Battery

The vast majority of production is with conventional fossil units, but hydroelectric and other renewables make a contribution. Total electric production in 2005 was 100 TWh.

Indonesia has expressed interest recently in possible use of nuclear plants. 
HP Pavilion DV9601TX Battery

Badan Pusat Statistik provisionally valued the city gas industry at 5,036,100 million rupiahs in 2006 thus registering over 119% growth since 2003.^[31]

Badan Pusat Statistik provisionally valued the water supply industry at 4,115,200 million rupiahs in 2006 thus registering over 43% growth since 2003.^[31] HP Pavilion DV9602AU Battery

Construction

Badan Pusat Statistik provisionally valued the construction industry at 249,127,800 million rupiahs in 2006 thus registering over 98% growth since 2003.^[31]

Badan Pusat Statistik provisionally valued the wholesale and retail trades at 386,872,500 million rupiahs in 2006 thus registering over 48% growth since 2003.^[31] HP Pavilion DV9602TX Battery

Badan Pusat Statistik provisionally valued the hotel industry at 17,248,800 million rupiahs in 2006 thus registering over 52% growth since 2003.^[31]

Badan Pusat Statistik provisionally valued the restaurant industry at 92,214,900 million rupiahs in 2006 thus registering over 45% growth since 2003.^[31] HP Pavilion DV9603AU Battery

Transportation and communication

Badan Pusat Statistik provisionally valued railway transport at 1,345,000 million rupiahs in 2006 thus registering over 16% growth since 2003.^[31]

Road transport was valued at 81,449,500 million rupiahs in 2006 thus registering over 106% growth since 2003. HP Pavilion DV9603TX Battery

Sea transport was valued at 16,120,700 million rupiahs in 2006 thus registering over 34% growth since 2003.

River, lake and ferry transport was valued at 4,510,700 million rupiahs in 2006 thus registering over 53% growth since 2003. HP Pavilion DV9604AU Battery

Air transport was valued at 14,685,200 million rupiahs in 2006 thus registering over 96% growth since 2003.

Other services allied to transport industry were valued at 24,868,900 million rupiahs in 2006 thus registering over 49% growth since 2003. HP Pavilion DV9604TX Battery

Communication

Badan Pusat Statistik provisionally valued the communication industry at 87,941,600 million rupiahs in 2006 thus registering over 123% growth since 2003.^[31]

According to Deloitte, in 2011 Internet-related activities in Indonesia have generated 1.6% of the nation's gross domestic product (GDP). HP Pavilion DV9605TX Battery

This is bigger than electronic and electrical equipment exports and liquified natural gas at 1.51% and 1.45% respectively.^[38]

Finance, real estate and business services

At end of June 2011, Indonesia's debt service ratio was 21.6%, well below the dangerous threshold of 30%.^[39] HP Pavilion DV9605XX Battery

Badan Pusat Statistik provisionally valued the banking industry at 97,708,300 million rupiahs in 2006 thus registering over 31% growth since 2003.^[31]

Badan Pusat Statistik provisionally valued the non-bank finance industry at 26,682,500 million rupiahs in 2006 thus registering over 87% growth since 2003.^[31] HP Pavilion DV9606CA Battery

Badan Pusat Statistik provisionally valued other services allied to finance industry at 2,006,300 million rupiahs in 2006thus registering over 82% growth since 2003.^[31]

Badan Pusat Statistik provisionally valued the real estate industry at 97,764,400 million rupiahs in 2006 thus registering over 72% growth since 2003.^[31] HP Pavilion DV9606TX Battery

Badan Pusat Statistik provisionally valued other business support services at 47,381,600 million rupiahs in 2006 thus registering over 71% growth since 2003.^[31]

There are 50 million small businesses in Indonesia with online usage growth of 48% in 2010, so Google will open a local office in Indonesia before 2012.^[40] HP Pavilion DV9607TX Battery

General government

Badan Pusat Statistik provisionally valued government administration and defence services at 103,508,800 million rupiahs in 2006 thus registering over 63% growth since 2003.^[31]

Up to end of June 2011, the fixed state assets was Rp1,265.09 trillion ($127.75 billion), HP Pavilion DV9607XX Battery

while worth of state stocks was Rp49.56 trillion ($5.0 billion) and other state assets was Rp24.05 trillion ($2.4 billion) or totally of the state assets was Rp1,338.70 ($135.1 billion).^[41]

Private

Badan Pusat Statistik provisionally valued the social and community services at 60,319,400 million rupiahs in 2006 thus registering over 92% growth since 2003.^[31] HP Pavilion DV9608CA Battery

Amusement and recreational services were valued at 10,018,800 million rupiahs in 2006 thus registering over 46% growth since 2003.

Personal and household services were valued at 100,247,900 million rupiahs in 2006 thus registering over 69% growth since 2003. HP Pavilion DV9608EA Battery

Indonesian migrant workers

The most common destination of Indonesian migrant workers is Malaysia (including the illegal workers). In 2010, according to World Bank report, Indonesia is among the world's top ten remittance receiving countries with value of totalling $7 billion.^[42]HP Pavilion DV9608NR Battery

May 2011: There are 6 million Indonesian citizens working overseas, 2.2 million of whom reside in Malaysia and another 1.5 million in Saudi Arabia.^[43]

Expatriate workers

In 2011, Indonesia released 55,010 foreigners working visas, increased by 10% compared to 2010, HP Pavilion DV9608TX Battery

while the number of foreign residents in Indonesia, excluding tourists and foreign emissaries was 111,752 persons, rose by 6% to last year. Who got visas for 6 months to one year were mostly Chinese, Japanese, South Korean, Indian, American and Australian.HP Pavilion DV9609TX Battery

A few of them were entrepreneur who made a new businesses in Indonesia and all of the foreigners caused restaurants, bars, clubs, hotels, and apartments catering to expatriates developing well.^[44]

Public expenditure

Since the Asian financial crisis in the late 1990s, which brought down the Suharto regime in its wake in May 1998, HP Pavilion DV9609XX Battery

Indonesia’s public finances have undergone a major transformation. The financial crisis itself caused a huge economic contraction and a commensurate decline in public spending. Not surprisingly, debt and subsidies increased dramatically, while development spending was sharply curtailed. HP Pavilion DV9610CA Battery

Now, one decade later, Indonesia has moved out of crisis and into a situation in which the country once again has sufficient financial resources to address its development needs. This change has come about as a result of prudent macroeconomic policies, the most important of which has been very low budget deficits. HP Pavilion DV9610TX Battery

Also, the way in which the government spends money has been transformed by the 2001 "big bang" decentralization, which has resulted in over one-third of all government spending being transferred to sub-national governments by 2006. Equally important, in 2005, spiraling international oil prices caused Indonesia’s domestic fuel subsidies to run out of control, threatening the country’s hard won macroeconomic stability. HP Pavilion DV9610US Battery

Despite the political risks of major price hikes in fuel driving more general inflation, the government took the brave decision to slash fuel subsidies.

This decision freed up an extra US$10 billion for government spending on development programs.^[45] HP Pavilion DV9610XX Battery

Meanwhile, by 2006 an additional US$5 billion had become available thanks to a combination of increased revenues boosted by steady growth of the overall economy, and declining debt service payments, a hangover from the economic crisis.^[45] This meant that in 2006 the government had an extra US$15 billion to spend on development programs.^[45] HP Pavilion DV9611TX Battery

The country has not seen “fiscal space” of such magnitude since the revenue windfall experienced during the oil boom of the mid-1970s. However, an important difference is that the 1970s oil revenue windfall was just that: a lucky and unforeseen financial boon. HP Pavilion DV9611XX Battery

In contrast, the current fiscal space has been achieved as a direct result of sound and carefully thought through government policy decisions.

However, while Indonesia has made tremendous progress in freeing up financial resources for its development needs, and this situation is set to continue in the newt few years, HP Pavilion DV9612TX Battery

subsidies continue to place a heavy burden on the government’s budget. The 2005 reductions on subsidies notwithstanding, total subsidies still accounted for some US$10 billion in government spending in 2006, or a significant 15% of the total budget.^[45] HP Pavilion DV9612XX Battery

Thanks to the decision of the Habibie government (May 1998 to August 2001) to decentralize power across the country in 2001, increasingly high shares of government spending are being channeled through sub-national governments. As a result, provincial and district governments in Indonesia now spend 37% of total public funds, HP Pavilion DV9613TX Battery

which represents a level of fiscal decentralization that is even higher than the OECD average.

Given the level of decentralization that has occurred in Indonesia and the fiscal space now available, the Indonesian government has a unique opportunity to revamp the country’s neglected public services. HP Pavilion DV9613XX Battery

If carefully managed, this could allow the lagging regions of eastern Indonesian to catch up with other more affluent areas of the country in terms of social indicators. It could also enable Indonesian to focus on the next generation of reforms, namely improving quality of public services and targeted infrastructure provision. HP Pavilion DV9614TX Battery

In effect, the correct allocation of public funds and the careful management of those funds once they have been allocated have become the main issues for public spending in Indonesia going forward.

For example, while education spending has now reached 17.2% of total public spending ─HP Pavilion DV9614XX Battery

the highest share of any sector and a share of 3.9% of GDP in 2006, compared with only 2.0% of GDP in 2001 ─ in contrast total public health spending remains below 1.0% of GDP.^[45] Meanwhile, public infrastructure investment has still not fully recovered from its post-crisis lows and remains at only 3.4% of GDP.^[45] HP Pavilion DV9615CA Battery

One other area of concern is that the current level of expenditure on administration is excessively high. Standing at 15% in 2006, this suggests a significant waste of public resources.^[45][46]

Economic challenges

Between 1945 and 1960s, Indonesia had been an excessively poor country. HP Pavilion DV9615TX Battery

It was only until changes in government in 1965 that triggered off essential progress in lowering the country’s poverty rate. From a steep recession in 1965 with an 8% decline in GDP, the country began to develop economically in the 1970s, earning much benefit from the oil shock. HP Pavilion DV9618CA Battery

This development continued throughout the 1980s and into the 1990s despite the oil counter-shocks. During these periods, GDP level rose at an average rate of 7.1%. Indonesia saw consistent growth, with the official poverty rate falling from 60% to 15%.^[47] Despite this development, an estimated 13.33% of the population (2010 estimate) remains below the poverty line.^[48]HP Pavilion DV9618XX Battery

Labor unrest

As of 2011 labor militancy was increasing in Indonesia with a major strike at the Grasberg mine and numerous strikes elsewhere. A common issue was attempts by foreign-owned enterprises to evade Indonesia's strict labor laws by calling their employees contract workers. HP Pavilion DV9620US Battery

The New York Times expressed concern that Indonesia's cheap labor advantage might be lost. However, a large pool of unemployed who will accept substandard wages and conditions remains available. One factor in the increase of militancy is increased awareness via the internet of prevailing wages in other countries and the generous profits foreign companies are making in Indonesia.^[49] HP Pavilion DV9620XX Battery

Inequality

Poverty rate has since been higher in the outer islands. Java, Bali, and Sumatra have benefited more due to the rise of manufacturing and better infrastructure of the inner islands. Economic disparity and the flow of natural resource profits to Jakarta has led to discontent and even contributed to separatist movements in areas such as Aceh and Irian Jaya. HP Pavilion DV9623CA Battery

Geographically, the poorest fifth regions account for just 8% of consumption, while the richest fifth account for 45%. While there are new laws on decentralization that may address the problem of uneven growth and satisfaction partially, there are many hindrances in putting this new policy into practice.^[47] HP Pavilion DV9623CL Battery

At the Indonesian Chamber of Commerce and Industry (Kadin) meeting at Makassar on April 2011, Disadvantaged Regions Minister said there are 184 regencies classified as disadvantaged areas in Indonesia with around 120 regencies were located in the eastern part of Indonesia.^[50] HP Pavilion DV9625CA Battery

Inflation

Inflation has long been another problem in Indonesia. Because of political turmoil, the country had once suffered hyperinflation, with 1,000% annual inflation between 1964 and 1967,^[51] and this had been enough to create severe poverty and hunger.^[52] HP Pavilion DV9625XX Battery

Even though the economy recovered very quickly during the first decade of New Order administration (1970–1981), never once was the inflation less than 10% annually. The inflation slowed during mid-1980s, however, the economy was also languid due to the decrease of oil price that reduced its export revenue dramatically. HP Pavilion DV9627CL Battery

The economy was again experiencing rapid growth between 1989-1997 due to the improving export-oriented manufacturing sector, still the inflation rate was higher than economic growth, and this caused widening gap among several Indonesians. The inflation peaked in 1998 during the Asian financial crisis, with over 58%,HP Pavilion DV9627XX Battery

causing the raise in poverty level as bad as the 1960s crisis.^[53] During the economic recovery and growth in recent years, the government has been trying to decline the inflation rate. However, it seems that Indonesian inflation has been affected by the global fluctuation and domestic market competition.^[54] HP Pavilion DV9628NR Battery

As of 2010, the inflation rate was approximately 7%, when its economic growth was 6% (Note that economic growth rates already take inflation into account, so this comparison by no means implies economic reduction^[55]). To date, inflation is affecting Indonesian lower middle class, especially those who can't afford food after price hikes. HP Pavilion DV9628XX Battery,HP Pavilion DV9630EF Battery,HP Pavilion DV9630XX Battery