INDONESIA, the largest archipelago in the world to form a single state consists of five main islands and some 30 smaller archipelagoes, totalling about 17,508 islands and islets of which about 6,000 are inhabited. These are scattered over both sides of the equator. At 1,919,440 square kilometers (741,050 sq mi), Indonesia is the world's 16th-largest country in terms of land area. Its national territory consists 84% of sea and 16% of land. The Indonesian sea area is four times larger than its land area, which is about 1.9 million sq.km and the sea area is about 7.9 million sq km. The five biggest islands are Kalimantan or two thirds of the island of Borneo (539,450 sq.km); Sumatera (473,606 sq.km); Papua, which forms part of the island of New Guinea (421,952 sq.km), Sulawesi (189,035 sq.km) and Java including Madura (132,035 sq.km). Indonesia shares land borders with Malaysia on the islands of Borneo and Sebatik, Papua New Guinea on the island of New Guinea, and East Timor on the island of Timor. Indonesia also shares borders with Singapore, Malaysia, and the Philippines to the north and Australia to the south across narrow straits of water. The capital, Jakarta, is on Java and is the nation's largest city, followed by Surabaya, Bandung, Medan, and Semarang.
Its average population density is 134 people per square kilometer (347 per sq mi), 79th in the world, although Java, the world's most populous island, has a population density of 940 people per square kilometer (2,435 per sq mi). At 4,884 meters (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.
The name "INDONESIA" is composed of the two Greek words: "Indos" meaning India, and "Nesos" meaning islands. The Indonesian archipelago forms a crossroad between two oceans, the Pacific and Indian oceans and a bridge between two continents, Asia and Australia. Because of its strategic position, therefore, Indonesia 's cultural, social, political and economic patterns have always been conditioned by its geographical position.
Indonesia's location on the edges of the Pacific, Eurasian, and Australian tectonic plates makes it the site of numerous volcanoes and frequent earthquakes. Indonesia has at least 150 active volcanoes, including Krakatoa and Tambora, both famous for their devastating eruptions in the 19th century. 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 the 2004 tsunami that killed an estimated 167,736 in northern Sumatra, and the Yogyakarta earthquake in 2006. However, volcanic ash is a major contributor to the high agricultural fertility that has historically sustained the high population densities of Java and Bali.
Lying along the equator, Indonesia has a tropical climate, with two distinct monsoonal wet and dry seasons. 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%. Temperatures vary little throughout the year; the average daily temperature range of Jakarta is 26–30 °C (79–86 °F).
The greater part of the country falls with in the boundaries of the equatorial rain belt. It has characteristically a tropical climate. Its geographical make up is an archipelago of mostly small island surrounded by sea. However, it allows an active air circulation. As a result, the climate is closely similar to that of prevailing in the equatorial zones above the world’s oceans. Abundant rainfall, high temperatures and humidity are characteristic to the average Indonesian lowland climate. The lowest average temperature is 18 degree Celsius. Moreover, the proximity of the Asian and Australian Continents brings the Indonesian archipelago well within the Asian characteristic that keeps alternating in accordance with the seasons. The trade and monsoon winds coming from the Indian and Pacific oceans temper the tropical character of the climate.
In Indonesia only two seasons prevail, a dry and wet, or rainy season. In most areas, the rainy season lasts from December up to March and driy season from May to October, with the transition periods characterized by shifting winds and capricious weather occuring in the months of March to May and September to November. The transitional period between these two seasons alternates between gorgeous sun-filled days and occasional thunderstorms. Even in the midst of the wet season temperature could range from 21 degrees (70 degrees Fahrenheit) to 33 degrees Celsius (90 degreed Fahrenheit), except at higher altitudes, which can be much cooler. The heaviest rainfall is usually recorded in December and January each year.
Flora & Fauna
Indonesia's size, tropical climate, and archipelagic geography, support the world's second highest level of biodiversity (after Brazil), and its flora and fauna is a mixture of Asian and Australasian species. Once linked to the Asian mainland, the islands of the Sunda Shelf (Sumatra, Java, Borneo, and Bali) 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. Forests cover approximately 60% of the country. 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, and Maluku—having been long separated from the continental landmasses—have developed their own unique flora and fauna. 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.
The Western island of the Archipelago display predominantly Asian characteristics of verdant jungles, rare orchids and the giant Rafflesia, (a plant which produces a bloom over 1 meter in diameter). A land where tigers, leopards, elephants, rhinos and thousands of varieties of birds and insects make it their home.
Further east, the central island present a gradual shift from Asian to Australasian flora and fauna. Sulawesi, for example, boasts both monkeys and marsupials, while Komodo is home to a pre-historic giant lizards commonly "dragon" found nowhere else in the world.
The eastern most islands, however, are more indicative of Australasia with bush-like shrubs and hardy plants; brilliantly coloured Lorries, Cukatoos and Australian marsupials become more common place. These wonderfully diverse illustrations of life are protected in numerous nature reserves and National Parks scattered throughout the archipelago.
Indonesia is second only to Australia in its degree of endemism, with 26% of its 1,531 species of bird and 39% of its 515 species of mammal being endemic. 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. 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. The British naturalist, Alfred Wallace, described a dividing line between the distribution and peace of Indonesia's Asian and Australasian species. 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. 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. The region of islands between his line and New Guinea is now termed Wallacea.
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. Issues include large-scale deforestation (much of it illegal) and related wildfires causing heavy smog over parts of western Indonesia, Malaysia and Singapore; 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. 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, including the Sumatran Orangutan.
According to a 2003 count, Indonesia is home to 234,893,453 people, making it the world's fourth most populous nation after China, India and United States. The work force (15-64 yrs of age) is 65.4 percent of the total population and consists of 76,743,613 males and 76,845,245 females.
The implementation of a comprehensive family planning program over the last three decades has resulted in controlled population growth. The growth rate has fallen from over 2.3 percent in 1972 to 1.5 percent in 2003. Despite a fairly effective family planning program that has been in place since the 1960s, the population is expected to grow to around 315 million by 2035, based on the current estimated annual growth rate of 1.25%
A Diverse Nation
In its ethnic groups, languages, culture, and religion, Indonesia is a very diverse nation. This great diversity is reflected in the country's national motto Bhinneka Tunggal Ika which means "Unity in Diversity."
- Ethnic Groups
Some 300 ethnic groups call Indonesia home, but most (45 percent) of Indonesians are Javanese. In addition, 14 percent are Sundanese, 7.5 percent Madurese, 7.5 percent coastal Malays, and 26 percent are of other ethnic groups.
There are more than 700 languages and dialects spoken in the archipelago. They normally belong to the different ethnic groups of the population. Some of the distinctly different local languages are: Acehnese, Batak, Sundanese, Javanese, Sasak, Tetum of Timor, Dayak, Minahasa, Toraja, Buginese, Halmahera, Ambonese, Ceramese, and several Irianese languages.
To make the picture even more colorful, these languages are also spoken in different dialects.
Bahasa Indonesia is the national language. It is similar to Malay and written in Roman script based on European orthography. English is the most prevalent foreign language. Also, some Dutch is still spoken and understood in the bigger cities and French increasing in its popularity at the better hotels and restaurants.
Indonesia's active history has encouraged the growth of many unique cultures. On Java, the Javanese of Central and East Java are known for having several layers of formality in their language. In Javanese, to speak to a boss and then to a child is like speaking two different languages. The Toraja of Sulawesi are famous for their elaborate funeral ceremonies. Often several days long, these ceremonies bring the whole village together in a feast, a procession, and a hillside burial. And the Minangkabau of Sumatra still maintain a matrilineal society. Everything from houses to animals is inherited from mother to daughter.
Today, the country maintains this cultural richness, even as it expands into new areas. The traditional music of the gamelan and angklung coexists with new dangdut and rock and roll. The ancient art of wayang kulit, or shadow puppetry, complements the modern Indonesian film industry. And, while the themes and story from historic epics like the Ramayana persist, newer literature like that of the author Pramoedya Ananta Toer has become an irrevocable part of Indonesian culture.
Six world religions are formally recognized in Indonesia: Islam, Catholicism, Protestantism, Confucianism, Hinduism and Buddhism. Nevertheless, other faiths can be found, especially in isolated societies. These religions, called traditional faiths, are also accepted. According to recent counts, approximately 85 percent of the population is Muslim, 11 percent is Christian (Protestants and Catholics), and 4 percent is Hindu, Buddhist, Confucian, or traditional.
Indonesia's legislative body, the Majelis Permusyawaratan Rakyat, or MPR, also welcomed new members in 2009. Over 171 million people voted to determine their national representations.
The People's Consultative Assembly (Indonesian: Majelis Permusyawaratan Rakyat/MPR) is the highest governing body in Indonesia, as set by the 1945 Constitution.
In accordance with Law No.16/1960, the assembly was formed after the first general election of 1971. It was decided at that time that the membership of the Assembly would be twice that of the House of Representative.
The 920 membership of MPR continued for the periods of 1977-1982 and 1982-1987. For the periods 1987-1992, 1992-1997, and 1997-1999 the MPR's membership became 1000. One hundred members were appointed representing delegations from groups as addition to the fraction delegates of Karya Pembangunan (FKP), Partai Demokrasi Indonesia (FPDI), and Partai Persatuan Pembangunan (FPPP). For the period of the 1999-2004 the membership of MPR was 700, and for 2004-2009 period the MPR membership is 678.
Furthermore, in accordance with law No.27/2009, it was decided that the membership of the Assembly consists of DPR and DPD, where as for 2009-2014 period the MPR membership is 692.
Following the election, Mr. Taufiq Kiemas became the Chairman of the MPR and Mr. Marzuki Alie became the Chairman of the Dewan Perwakilan Rakyat, or DPR.
The People's Representative Council (Indonesian: Dewan Perwakilan Rakyat/DPR) sometimes referred to as the House of Representatives, is one of two elected national legislative assemblies in Indonesia. It is the lower house of the legislature of Indonesia. Before the 2004 election, the DPR had 500 members, of whom 462 were elected by proportional representation from each of Indonesia's 27 provinces, and 38 were chosen to represent the Indonesian armed forces and police. From 2004 these seats have been abolished, and the new DPR will have 550 members elected by the people. Currently, following the 2009 election, 560 members were elected.
The Regional Representatives Council (Dewan Perwakilan Rakyat/DPD) is a second chamber that was created by the Third Amendment to the 1945 Constitution of Indonesia enacted November 9th 2001 in a move towards bicameralism. The DPD does not have the revising powers of an upper house like the United States Senate. Article 22D restricts the DPD to dealing with bills on 'regional autonomy, the relationship of central and local government, formation, expansion and merger of regions, management of natural resources and other economic resources, and Bills related to the financial balance between the centre and the regions.'
Accordingly, the DPD will also give considerations to the DPR concerning the bills on State Budget and the bills concerning tax, education, and religious affairs and perform surveillance on the implementation of the law and submit the results of surveillance to the DPR. The DPD shall hold session at least once in a year. The terms of office for the DPD is five years, and the DPD members shall be able to be dismissed from their position, the requirements, and procedures shall be regulated by law.
Pancasila, pronounced Panchaseela, is the philosophical basis of the Indonesian State. Pancasila consists of two Sanskrit words, “Panca” meaning five, and “Sila” meaning principle. It comprises five inseparable and interrelated principles. They are:
1. BELIEF IN THE ONE SUPREME GOD
2. JUST AND CIVILIZED HUMANITY
3. THE UNITY OF INDONESIA
4. DEMOCRACY GUIDED BY THE INNER WISDOM IN THE UNANIMITY ARISING OUT OF
DELIBERATIONS AMONGST REPRESENTATIVES
5. SOCIAL JUSTICE FOR WHOLE OF THE PEOPLE OF INDONESIA
Elaboration of the five principles is as follows:
1. Belief in the One Supreme God
This principle of Pancasila reaffirms the Indonesian people’s belief that God does exist. It also implies that the Indonesian people believe in life after death. It emphasizes the pursuit of sacred values will lead the people to a better life in the hereafter. The principle is embodied in article 29, Section 1of the 1945 Constitution and reads: The state shall be based on the belief in the One and Only God.
2. Just and Civilized Humanity
Just principle requires that human beings be treated with due regard to their dignity as God’s creatures. It emphasizes that the Indonesian people do not tolerate physical or spiritual oppression of human beings by their own people or by any other nation.
3. The Unity of Indonesia
This principle embodies the concept of nationalism, of love for one’s nation and motherland. It envisages the need to always foster national unity and integrity. Pancasila Nationalism demands that Indonesians avoid feelings of superiority on ethnical grounds, for reasons of ancestry and colour of the skin. In 1928 Indonesian youth pledged to have one country, one nation and one language, while the Indonesian coat of arms enshrines the symbols of “Bhineka Tunggal Ika” which means “Unity in diversity”.
4. Democracy Guided by the Inner Wisdom in the Unanimity Arising Out of Deliberations amongst Representatives
Pancasila democracy calls for decision-making through deliberations, or "musyawarah", to reach a consensus, or mufakat. It is democracy that lives up to the principles of Pancasila. This implies that democratic right must always be exercised with a deep sense of responsibility to God Almighty according to one’s own conviction and religious belief, with respect for humanitarian values of man’s dignity and integrity, and with a view to preserving and strengthening national unity and the pursuit of social justice.
Thus, Pancasila Democracy means democracy based on the people’s sovereignty which is inspired by and integrated with other principles of Pancasila. This means that the use of democratic rights should always be in line with responsibility towards God Almighty according to the respective faith; uphold human values in line with human dignity; guarantee and strengthen national unity; and be aimed at realizing social justice for the whole of the people of Indonesia.
5. Social Justice for the Whole of the People of Indonesia
This principle calls for the equitable spread of welfare to the entire population, not in a static but in a dynamic progressive way. This means that all the country’s natural resources and the national potentials should be utilized for the greater possible good and happiness of the people.
Social justice implies protection of the weak. But protection should not deny their work. On the contrary, they should work according to their abilities and fields of activity. Protection should prevent willful treatment by the strong and ensure the rule of justice.
These are the sacred values of Pancasila which, as a cultural principle, should always be respected by every Indonesian because it is now the ideology of the state and the life philosophy of the Indonesian people.
THE 1945 CONSTITUTION
The Constitution of the Republic of Indonesia is usually referred to as the 1945 Constitution. This partly because the constitution was drafted and adopted in 1945 when the Republic was being established, and another to distinguish it from other constitutions which were introduced in free Indonesia.
Furthermore, the articles of the 1945 Constitution spell out the ideals and the goals for which independence was proclaimed on August 17, 1945, and defended thereafter. It reflects the spirit and vigor of the time when the constitution was shaped. It was inspired by the urge for unity and for the common goals and democracy built upon the age-old Indonesian concepts of gotong royong (mutual assistance), deliberations of representatives (musyawarah) and consensus (mufakat).
Since the reformation era, the 1945 Constitution has experienced some amendments for four times in the annual sessions of the Assembly of 1999, 2000, 2001, and 2002. All the amendments were based on topics covering sovereignty, authority of the People's Consultative Assembly, direct election of the President and the Vice-President, term of office of President and Vice-President, discharge of President and Vice-President on posts, the replacement of President and Vice President amid the term by the Vice-President, executor of Presidential duties, the formation of the President Advisory Council and the elimination of the Supreme Advisory Council, the state ministries, the regional government, the establishment of the Regional Representative's Council and its financial matters, the Audit Board, the Supreme Court, the Constitutional Court, the Judicial Commission, Human Rights, the state defense and security, education and culture, national economies and social welfare, the state attributes, the amendment of the Constitution, transitional provision, and additional provision.
The most significant items being amended include sovereignty, direct election of President and Vice-President, term of office of President and Vice-President, and the formation of the Regional Representative's Council, the establishment of the Constitutional Court, and the Judicial Commission, and Human Rights.
On sovereignty, the sovereignty is vested with the people and executed according to the Constitution. Originally, the sovereignty was vested in the people and executed fully by the People's Consultative Assembly.
On direct election of president and vice-president, under the amended Constitution the people are being given the right to elect president and vice-president directly. Previously the president and vice-president were elected by members of the Assembly.
Regarding the term of office of the President and Vice-President, the amended Constitution regulates that the president and vice-president hold the fixed term of five years and eligible for another term was not concrete to arrange the frequency of the term.
The amended 1945 Constitution gives room for the formations of few state organs such as the Regional Representative's Council, the Constitutional Court, and the Judicial Commission.
The Constitution also sets the formulation of the human rights in a separated chapter. It asserts that the responsibility for implementing protection, promotion, upholding, and fulfilling of human rights rests on the state, mainly the Government.
On education, the amended Constitution rules out that at least some 20 percent of the state budget and regional budget should be earmarked for education, by taking into consideration most part of the human resources belong to lower standards of education.
Preceded by a preamble, the Constitution of the Republic of Indonesia consists of 37 articles, four transitional clauses and two additional provisions.
COAT OF ARMS
Indonesian coat of arms consists of a golden eagle, called “garuda” that is a figure from ancient Indonesian epics. It is also pictured on many temples from the 6th Century.
The eagle is a symbol of creative energy. It’s principal color, gold, suggests the greatness of the nation. The black color represents nature. There are 17 feathers on each wing, 8 on the tail and 45 on the neck. These figures stand for the date of Indonesia’s independence proclamation: 17 August 1945.
The motto, “Bhinneka Tunggal Ika” (Unity in Diversity), is enshrined on a banner held in the eagle’s talons. Empu Tantular, asaint of the Majapahit Kingdom introduced this old Javanese motto, in the 15th century. It signifies the unity of the Indonesian people despite their diverse ethnic and cultural backgrounds.
The shield symbolizes self-defense in struggle and protection of oneself. The red and white colors on the shield's background denote the colors of the Indonesian national flag. The five symbols on shield represent the state philosophy of Pancasila, the foundation of the Indonesian state.
The bar across the center indicates the equator, which passes through the islands of Sumatera, Kalimantan, Sulawesi, and Halmahera. This is a reminder of the fact that the Republic of Indonesia is the only tropical country in which the people have built a free and sovereign state by their own hands.
The golden star on the black background in the center of the shield represents the first priciple of Pancasila, belief in the One and Only God. The chain symbolizes successive human generations. The round links represent women and the square ones men. It is the symbol of the second principle, just and civilized humanity. The beringin, or banyan tree, symbolizes the third principle, the unity on Indonesia. The head of the banteng, or wild bull (Bos javanicus), which is black on a red background, represents the fourth principle, democracy guided by the inner wisdom in the unanimity arising out of deliberations amongst representatives. The fifth principle, social justice for the whole of the people of Indonesia, is symbolized by the gold and white paddy and cotton ears.
The Indonesian national flag is called “Sang Saka Merah Putih”. As provided for in Articles 35 of the 1945 Constitution, the flag is made up of two colors, red on top of white. Its width is two-third of its length, or two meters by three meters. It is hoisted in front of the presidential palace, of government buildings and Indonesian missions abroad. The first flag was courageously flown amidst Japanese occupation forces on the day Indonesia’s independence was proclaimed. Since then it has been hoisted at Independence Day commemoration in front of the presidential palace in the capital city of Jakarta. This historical flag, or “bendera pusaka”, was flown for the last time on August 17th 1968. Since then it has been preserved and replaced by a replica woven of pure Indonesian silk.
The national anthem is “Indonesia Raya”, which means "Great Indonesia". The song was composed in 1928. The colonial policy of the day was "divide and rule". It was a policy that deliberately aggravated language, ethnic, cultural, and religious differences amongst the people.
The birth of Indonesia Raya marked the beginning of Indonesian nationalist movements. The song first introduced by its composer, Wage Rudolf Supratman, at the second All Indonesian Youth Congress on October 28th 1928 in Batavia, now known as Jakarta. It was the moment when Indonesian youth of different ethnic, language, religious, and cultural backgrounds resolutely pledged allegiance to:
1. One native land, Indonesia;
2. One nation, the Indonesian nation;
3. One unifying language, the Indonesian language.
Soon the national song, which called for the unity of Indonesia, became popular. It was echoed at Indonesian political rallies, where people stood in solemn observance. The song seriously aroused national consciousness among the people throughout the archipelago Indonesia’s National Anthem.
Indonesia consists of 33 provinces, five of which have special status. Each province has its own political legislature and governor. The provinces are subdivided into regencies (kabupaten) and cities (kota), which are further subdivided into subdistricts (kecamatan), and again into village groupings (either desa or kelurahan). 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. 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, 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 an independent legal system; in 2003, it instituted a form of Sharia (Islamic law). Yogyakarta was granted the status of Special Region in recognition of its pivotal role in supporting Indonesian Republicans during the Indonesian Revolution. Papua, formerly known as Irian Jaya, was granted special autonomy status in 2001. Jakarta is the country's special capital region.
Indonesian provinces and their capitals:
Lesser Sunda Islands
- Bali - Denpasar
- West Nusa Tenggara (Nusa Tenggara Barat) - Mataram
- East Nusa Tenggara (Nusa Tenggara Timur) - Kupang
- West Kalimantan (Kalimantan Barat) - Pontianak
- Central Kalimantan (Kalimantan Tengah) - Palangkaraya
- South Kalimantan (Kalimantan Selatan) - Banjarmasin
- East Kalimantan (Kalimantan Timur) - Samarinda
- North Sulawesi (Sulawesi Utara) - Manado
- Gorontalo - Gorontalo (city)
- Central Sulawesi (Sulawesi Tengah) - Palu
- West Sulawesi (Sulawesi Barat) - Mamuju
- South Sulawesi (Sulawesi Selatan) - Makassar
- South East Sulawesi (Sulawesi Tenggara) - Kendari
- Maluku - Ambon
- North Maluku (Maluku Utara) - Ternate
- West Papua (Papua Barat) - Manokwari
- Papua - Jayapura
The Economy of Indonesia
Since the Asian Economic Crises, Indonesia has experienced major transition in political and economic sectors. Today, with an improved business environment and a stable political structure, Indonesia is witnessing a tremendous growth in both trade and industry output, and foreign investment. Strong commitment in easing bureaucratic procedures will enable the trend to continue forward.
In macro economy, Indonesia has enjoyed a high growth in recent years. Acceleration of economic growth is notable during the 2004 and 2008 period, and private consumption continues to play a key role in the economy. The Government has given special focus on such key areas as investment, macro economic stability, trade, energy, and agriculture which in turn allow Indonesia to enjoy its most rapid growth since the Crises.
In 2007 Indonesia was listed as the 20th largest economy with a nominal GDP of USD 432.8 billion (World Bank). In 2005-2008 Indonesia posted an average GDP growth of 6.0%. In 2009, amid the global crisis, the national economic growth in 2009 was estimated at above four percent, or the third rank among the G-20 member countries. The growth will continue to stabilise in 2010, predicted at 5.5% - 6.0%.
Such a promising picture has allowed Indonesia to be invited in 2008 - along with China, India, South Africa, and Brazil - to join the club of Enhanced Engagement Countries of OECD. As an initial step, Indonesia has become a full member of OECD Development Center.
Improved macro economic environment and continued pro-growth policy has increased the attractiveness of Indonesia, among other countries in the region, as a place for investment. In 2007, Indonesia attracted USD 10.34 billion in Foreign Direct Investment, while in 2008 the figure reached USD 14.87 billion.
It was predicted in 2004 that Indonesia needs a USD 426 billion new investment in 2004-2009. Investors are welcome to tap into the following sectors:
- agribusiness : soybean, corn, rubber, palm oil, cocoa, coffee, cashew nut, sugar cane;
- fisheries : marine and brackish water fisheries;
- manufactures : chemicals and pharmaceuticals, food, wood and furniture, pulp and paper, electronics, automotives, textiles and garment;
- infrastructures : power plants, toll roads, airports, harbours, water plants;
- services : trading, hotels, warehouses, technical and engineering services
Indonesia offers several competitive advantages for investors, including:
- Large domestic market and competitive work force arising from its economy and population;
- Market-based macro economic policy and free foreign currency exchange regime;
- Potential outsourcing partners stemming from the large pool of small and medium enterprises throughout the country;
- Abundance of diversified natural resources including agriculture, plantations, fisheries, mining, oil and gas;
- Strategic location spanning across several vital international sea transportation routes;
- A democratically elected government committed to reforming and promoting a conducive climate for investment.
Indonesia is a host to a large Canadian Foreign Direct Investment. Most Canadian companies operating in Indonesia are in the fields of mining, manufacture, consulting service, and finance.
The Government of Indonesia has identified 10 products which it believes the country enjoys a comparative advantage. Those are 'hot' items around the world, and are deemed potential for substantial growth. Recognised officially as 'Ten Priority Export Products', those items have been exported globally and have enjoyed distinction for their qualities. Those are shrimps, coffee, palm oil, cocoa, rubber and rubber products, textiles, footwear, electronic equipment, motorcycle component, and furniture.
In addition to those, Indonesia has designated 10 other products, recognised as 'Ten Potential Export Products', to further support the country's international trade, which are handicraft, fish and fish products, medicinal herbs, leather and leather products, processed foods, jewellery, essential oils, spices, non paper stationary, and medical instrument and appliances.
The Asian Crises has taught Indonesia to shift its dependence on oil and gas sector. In 2006, for example, oil and gas represented only 21% of all Indonesian exports. The main contributors for non oil and gas products are industrial products with a share of 64.5% of total exports. Top destinations for Indonesia's exports are Asia Pacific countries, EU countries, and the United States.
Indonesians are known for their hard-working but friendly attitude. This suits them to work in an environment where they have to interact with other peoples, such as in hospitality industry and health service. In 2008 Indonesia sent almost half a million workers overseas, of whom 40% were higher education graduates. Traditionally, Indonesian workers go to Asia Pacific countries, Middle East, and Europe, where they work in hospitality and health industries, and in informal sectors. However, there are also thousands of Indonesians working in cruise ships around the world, where they have gained reputation for efficiency and caring.
Vision, Mission and Strategy
The realization of an Indonesia that is prosperous, democratic, and just.
- To continue with the development towards a prosperous Indonesia.
- To strengthen the pillars of democracy.
- To strengthen the justice dimension in all fields.
The vision and mission of the 2009-2014 government are formulated and elaborated more operationally into a number of priority action programmes, in order to make them easier to implement and quantify the level of success achieved. The following Eleven Programme of Action is deemed capable of answering a number of challenges faced by the nation and state in the future.
1st Priority: Programme of Action in the Education Sector
- To continue and make effective the school building rehabilitation programmes that have been initiated in the period of 2004-2009, so that adequate and qualified facilities could be built by improving and augmenting the physical infrastructure of schools, as well as the use of informatics technology in the teaching process that will support learning and teaching processes to be more effective and qualified.
- The utilization of the budget allocation of at least 20 percent of the state budget to ensure the consolidation of free and affordable education for the nine-year basic education, and that will be gradually followed at a higher level of education at the high school level.
- The improvement, in a fundamental manner, of the curriculum quality and of the provision of good quality books to enhance the intelligence of the students and shape their character to become beings who are faithful, knowledgeable, creative, innovative, honest, dedicated, responsible, and hardworking.
- To continue enhancing the quality of teachers, lecturers and researchers in order to become pillars of education who are able to sharpen the intelligence of the nation, capable of creating an innovative environment, and able to transmit an intellectual mindset that is of high degree, qualified, and ever growing to their students.
- To revise the remuneration of teachers and continue efforts to improve the income of teachers, lecturers and researchers.
- To widen the areas of application of the progress in Information and Communication Technology (ICT) in order to support the performance in the conduct of development in the field of education.
- To encourage community participation (especially the parents of students) in making policies and in the implementation of quality education and in accordance with the aspirations and challenges of the current era and in the future.
- To reduce gaps in access to education and quality education, both for low income households and disadvantaged regions.
2nd Priority: Programme of Action in the Health Sector
- To refine and strengthen the administering of the public health insurance programme both in terms of the quality of service, access to services, accountability of budgets, and transparent and clean administrative arrangements.
- To encourage efforts to manufacture affordable drugs and other pharmaceutical products without sacrificing the quality and safety aspects of the drugs as carried out during the last three years.
- To facilitate the construction of clinics or hospitals of international quality either through the professionalisation of the management of public hospitals as well as by encouraging the growth of private hospitals.
- To improve the quality of services for mothers and children under the age of five years by strengthening existing programs such as the Integrated Service Posts (Posyandu) that enable the immunization and mass vaccination such as against Diphteria, Pertussis, and Tetanus to be administered effectively.
- To reduce maternal mortality rates, and prevent the spread of communicable diseases like HIV / AIDS, malaria, and tuberculosis.
- To reduce the malnutrition prevalence rate to below 15 percent in 2014 from the latest level of approximately 18 percent.
- The revitalization of the family planning program, which was restarted in the 2005 - 2009 period, will be continued and strengthened.
- The efforts to make progress in the health sector cannot be achieved if the welfare and incentive system for medical and paramedical personnel, especially those assigned to remote areas, are not adequate.
- To improve the mastery of science and technology in the health sector, particularly those aimed at reducing dependence on imported raw materials in the process of drug production.
- To improve the quality of services and practice of medicine in accordance with the ethics and to safeguard the interests, and protection, of the ordinary people from the malpractices of physicians and irresponsible hospitals.
- To develop early warning systems for disseminating information on the outbreak of diseases and how to avoid them in order to prevent panic and casualties.
- The evacuation, treatment, and medication of the population at the natural disaster affected areas.
3rd Priority: Programme of Action for Poverty Reduction
- To continue, improve and perfect the implementation of the National Programme for Community Empowerment (PNPM) Mandiri as the core of the poverty reduction programs, which have been initiated since 2007, by expanding the number of districts covered in the PNPM and by continuously increasing the fund allocation for each district in accordance with its performance.
- To continue the mainstreaming of all existing programs for poverty reduction in the ministries and agencies as PNPM supporting programs.
- The improvement of the Direct Cash Assistance Programme (BLT) by updating the target household data. The target household data will be integrated into all the affirmation and subsidy programs so that various duplications or leakages can be avoided.
- The provision of cheap rice for poor families to ensure food security.
- The development of multilayered programmes for the poor people that are conducted intensively, among others: the Public Health Insurance/Jamkesmas, School Operational Support/BOS, Aspiring Family Program/PKH, Direct Cash Assistance/BLT, National Program for Community Empowerment/PNPM, and Rice for the Poor People/Raskin programs.
- Advocation to Small and Medium Enterprises and Cooperatives, among others, by granting the People's Business Credit to provide capital access for low-income communities.
4th Priority: Programme of Action in Employment Creation
- The enhancement of the quality of workers either from the perspective of the received wages, or the productivity and standard of qualification in order to be able to heighten the increase of opportunities in the formal sector, and reduce the number of open youth unemployment.
- The increase of investment through improved investment climate both at the central and regional levels, so that new employment opportunities can be created.
- To conduct reforms at the micro-economic level, among others the improvement of the business climate and the advocation to the improvement of business opportunities for the small and medium business sector as a pillar of Indonesian labor absorber, conducted through sectoral policies and cooperation with local governments.
- Building the physical infrastructure that can facilitate the traffic flow of goods and information, and to encourage industrialization programmes that could attract spin-off industries (Domestic Investment, FDI, and global companies) to invest in Indonesia.
- To expand domestic demand outside the consumer goods, and also exploit the regional market.
- To expand and enhance the creative and tourism industries as very large potential sources of Indonesia's economy.
- The development of special economic zones such as in Batam, Bintan, Karimun, Suramadu, Sabang and various other special zones.
5th Priority: Programme of Action on Basic Infrastructure Development
- To continue the implementation of the dual track strategy in infrastructure development, which is expanding the opportunity for the public (both national and foreign private sectors) to participate in a transparent, fair, free from group interests, clean, and competitive manner in the construction and operation of infrastructure activities.
- To ensure public access to services in infrastructure activities, the government shall maintain a fair regulatory function for every actor and consumer.
- In order to support the participation of the private sector and state-owned enterprises in infrastructure development, the government can issue the risk guarantee policy on a selective manner based on objective, sound, measured, transparent, fair and accountable criteria.
- The provision of services and access to clean water at affordable prices to all the society, especially low-income people.
- To unbundle infrastructure development in which the government shall bear the construction of basic infrastructure, while business entities shall bear the construction of commercial ones for various critical infrastructures in the regions.
- To increase budget allocation for infrastructure development which usage will be prioritized for the development of basic infrastructure that are non-commercial in nature.
- To improve broadband telecommunications development in order to shorten the physical distance mindful of Indonesia's condition as an archipelagic state.
- In order to overcome the natural disasters of floods in various areas, the management of rivers and water catchment areas will continue to be carried out, inter alia through the development of the Bengawan Solo River Basin, and the Jakarta Flood Canal.
6th Priority: Programme of Action in Food Security
- To improve agricultural infrastructure by increasing the budget in the apportionment for the construction and rehabilitation of irrigation, drainage, highways, railways, and ports that connect food production areas to market destinations.
- To improve the quality of inputs either with the support of research and development of top-grade seeds, and counseling on the precise and accurate use of seeds with manageable risks.
- To improve the supply and fertilizer subsidy policies, in order to avoid shortages, smuggling, and use of subsidized fertilizers by unintended parties.
- Improvement of the distribution and logistics systems, including warehousing, in an integrated manner, taking into account the supply chain in order to reduce price volatility and seasonal supply of the main food commodities.
- To strengthen and empower farmers, fishermen, fish pond farmers, and maintain the purchasing power and exchange rates of farmers by maintaining the stability of commodity prices that could provide benefits to the farmers but not burden low-income consumers.
- To improve the mastery of science and technology to enhance the bargaining power and competitive advantage of the agricultural sector in regional and world markets, especially in predominant and largest commodities in Asia and the world such as CPO, cinnamon, and others.
- Implement policies on the development of downstream agricultural industries through the creation of a conducive investment climate and if necessary provide fiscal incentives for their development.
- Provision of transparent information about market prices of crops that accurate and up to date for farmers and fishermen, the price and availability of fertilizer, weather and the outbreak early warning so that farmers can be more intelligent in determining actions.
7th Priority: Resistance and Energy Independence
- Encourage diversification of domestic energy usage to natural gas and coal. This program will reduce the additional pressure on the demand for petroleum energy sources.
- Action programs increase energy independence will be conducted between the mastery of integrative energy technology, infrastructure development, pricing policies, and incentives in it.
- Increase the attractiveness and investment certainty for exploration and production in mining and energy to increase production and productivity of the energy sector.
- Improve transparency, governance, and eliminate corruption and inefficiency costs in the upstream energy sector.
- Enhance fair competition and transparency in the downstream energy sector, in order to achieve good service and prices are reasonable and affordable for the public.
- Implement development policies and the use of renewable energy (renewable energy) that is consistent and in accordance with the participation and responsibility of Indonesia in the global agenda to prevent deterioration of the world's climate (climate change) and strengthen the resilience of national energy.
- Increasing research activities of energy sector to generate new sources of non-conventional energy, improve energy efficiency and decrease carbon emissions.
- Increasing energy efficiency to boost the economy, peningakatan welfare and improve competitiveness.
- Increased diversification, distribution and access to energy so that each of the Indonesian people are able to obtain energy according to the needs and capabilities of purchasing power.
8th Priority: Improvement and Implementation of Good Governance
- Continuing reform of the bureaucracy in government institutions gradually, measured and maintained the quality of its performance and public accountability.
- Regulatory improvement program involving recruitment, career development in a transparent, accountable and based on merit (merit based), and the rules of discipline and dismissal of civil servants.
- Improving performance by improving work procedures (business process), the use of technology to increase speed and accuracy of services, and reorganize the organizational structure to more efficiently and effectively in fulfilling its public service, regulation, supervision and enforcement of rules.
- Fix the remuneration that reflects the growing risks, responsibilities, workloads are realistic and balanced.
- Improve the system and retirement benefits to reflect the benefits of human achievement but still can be met by the ability of the budget.
- Supervise the performance and impact of reforms, including combating corruption and implementing strict discipline and punishment for violation of oath of office, rules, discipline and work ethics bureaucracy.
- Increasing transparency and accountability of government services with the formulation of minimum service standards and monitoring their implementation known to the community by the community.
9th Priority: Enforcement Pillars of Democracy
- Reorganize the executive and legislative relations so that they can perform the function of legislation, oversight and budgetary functions of an effective and balanced and formed a system which can be launched in a dignified purpose of the state.
- Improving regulations and Up Election and Election, in order to achieve an honest election, fair, and can prevent citizens who lost the right to participate in elections.
- Improve the administration, budgeting, transparency and accountability in the implementation of elections in order to create certainty and efficiency of institutions administering the election without sacrificing the quality of elections.
- Developing the substance of democracy, namely the essential values such as freedom, law enforcement, justice and sense of responsibility.
10th Priority: Law Enforcement Corruption
- Improving law enforcement.
- Strengthen the performance and supervision of police and prosecutors through the police and judiciary reform, improved police performance and prosecutors in the region, both through the program a quick win or a thorough and comprehensive structural repairs to the police and judiciary.
- Review and improve regulations concerning law enforcement, including
- Setting the rights of the police, reporting regulations, and rules of law enforcement services.
- Support the improvement of administration and budget in the Supreme Court and courts below.
- Prevention and repression of corruption consistently and without selective logging.
11th Priority: Inclusive and Equitable Development
- Strengthening the micro, small and medium enterprises to expand credit access for SMEs, including and especially through the People's Business Credit (KUR), the creation and education for entrepreneurs (entrepreneurs) in the rate of new small and medium enterprises in rural areas, supporting innovation and creativity of the community and employers in creating a product, package, market and maintain continuity in healthy competition.
- Reduce regional disparities by conducting continuous improvement of the regions of the budget transfer policy through the General Allocation Fund (DAU), Profit Sharing Fund (DBH), the Special Allocation Fund (DAK), and the Special Autonomy Fund (autonomy).
- Accelerating the development of lagging regions and the outer border and remote areas with adequate budgetary provision for infrastructure development and the outermost checkpoint.
- Reducing the gender gap by improving the policy bias to women and gender mainstreaming in development strategies.
12th Priority: Field Environment Sector
- Fix the damaged environment and prevent natural disasters by conducting afforestation, reforestation, and watershed improvement.
- Develop environment-friendly development strategies and sustainable (sustainable) in accordance with the purpose to reduce the threat and impact of global climate change.
- Invites the entire community, households and businesses to actively protecting the environment to ensure sustainable economic growth.
13th Priority: Cultural Development
- Maintaining an atmosphere of creative freedom in the arts and sciences.
- Providing infrastructure to support cultural and scientific activities of non-commercial.
- Provide incentives to the arts and sciences to develop the quality of art and culture and preserving the local culture and national heritage, modern and traditional.