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Indonesia
Area: 1,919,443 square kilometres (741,098 square miles)
Population: 221m (projection for 2003 based on 2000 census results, making it the fourth largest in the world)
Capital: Jakarta (population: estimates 13.23 million)
People: Javanese 45%, Sundanese 14%, Madurese 7.5%, coastal Malays 7.5%, others 26%
Languages: Official language Bahasa Indonesia. There are about 583 languages and dialects, but only 13 of these have more than 1m speakers.
Religions: Muslim 87% (the country with the world's largest Muslim population), Protestant 6%, Catholic 3%, Hindu 2%, Buddhist 1%, other 1%
Currency: Rupiah
Major Political Parties: Party of the Functional Groups (Golkar), Indonesian Democratic Party of Struggle (PDIP), Democrat Party (PD), United Development Party (PPP), Prosperous Justice Party (PKS), National Awakening Party (PKB), National Mandate Party (PAN), Crescent Star Party (PBB) – several other parties hold a small number of seats in parliament.
Government: Republic
Head of State: President Susilo Bambang Yudhoyono
Deputy Head of State: Vice President Yusuf Kalla
Foreign Minister: Hassan Wirajuda
Economic Information: See below
Membership of International groupings/organisations: UN, WTO, OPEC, IMF, IBRD, Asian Development Bank, Colombo Plan, APEC, ASEAN (founding member), Mekong Group, OIC, ASEM, IMO, G77 and the Non-Aligned Movement (NAM)
GEOGRAPHY
Indonesia is an equatorial archipelago of over 17,500 islands (6,000 inhabited) extending about 3,200 miles (5,150 kilometres) east to west and 1,250 miles (2,012 kilometres) north to south. It is divided into 32 provinces. The largest islands are Sumatra, Java, Kalimantan (Indonesian Borneo), Sulawesi (Celebes) and Papua (the Indonesian half of New Guinea, sometimes known as Irian Jaya). Most of the smaller islands except Madura and Bali belong to larger groups. The largest of these are the Moluccas (Spice Islands) and Nusa Tenggara (Lesser Sundas).
HISTORY
Recent History
After the fall of President Soeharto in May 1998 Indonesia changed dramatically. Soeharto's Vice-President, B J Habibie, took over the presidency until October 1999, when Abdurrahman Wahid (Gus Dur) was elected. After only 21 months in office Wahid was impeached for alleged involvement in financial scandals and replaced by his Vice-President, Megawati Soekarnoputri, (the daughter of Indonesia's first President, Soekarno) in July 2001. The transition was a peaceful one, which was a promising sign that Indonesia was coming to terms with its new democratic system. Susilo Bambang Yudhoyono, Megawati's former security minister, was elected President in September 2004 after defeating Megawati in a second-round election run-off. In his inauguration speech he pledged to stimulate the economy, fight corruption, promote peace in Aceh and Papua and prioritise education and health.
There is a continuing threat from terrorism across Indonesia as illustrated most recently by the second Bali bombing on 1 October 2005 which killed at least 23 and injured many more. Other recent attacks against western interests in Jakarta include the Marriot Hotel bombing on 5 August 2003 and the car bomb outside the Australian Embassy on 9 September 2004.
On 12 October 2002 the first Bali bomb led to the deaths of 202 people, including 28 British nationals. The then President Megawati said immediately after the bombings that she was determined to deal with the terrorist threat. The Indonesian police, with the help of Australian and British police, made significant progress in their investigation into the Bali attacks. Over 40 suspects have been convicted so far. A number of countries, including the UK, Australia and the US, are assisting Indonesia with Police capacity building and counter terrorism training.
The Indonesian Government brokered an agreement (the Malino I Accord) to end fighting between Christian and Muslim factions in Central Sulawesi, which was signed on 20 December 2001. This has brought an end to the large scale inter-communal violence. The bombing of Tentena, a largely Christian town near Poso in Central Sulawesi on 28 May 2005 , killed 21 people. Low level violence has continued in the region and the area remains volatile with the possibility of violent clashes. The central government is working with local communities to bring about stability/
In the Moluccas serious sectarian violence in 2000 and 2001 violence left thousands dead. On 12 February 2002 the Indonesian Government brokered an agreement (the Malino II Accord) between Christian and Muslim factions in Maluku. Despite attempts to incite unrest, there has been some progress on the ground in Ambon and on 15th September 2003 the Indonesian Government lifted the state of civil emergency in the Province. However, sporadic clashes still occur.
The peace process in Aceh has been a major achievement of the current Indonesian government. Both parties fulfilled their security obligations under the peace agreement signed in August 2005. The Free Aceh Movement (GAM) handed in 840 weapons for decommissioning, and the Government of Indonesia withdrew all non-local military and police forces. The UK supported the peace process through its participation in the EU-led Aceh Monitoring Mission. Elections were successfully held on 11 December 2006 with a large turnout. Irwandi Yusuf, former GAM member, was elected as Governor of Aceh.
Following the departure of the Dutch in 1962 and a brief period of UN administration, Indonesia took over the administration of Papua (formerly Irian Jaya) in 1963. Irian Jaya became a province of Indonesia following a UN-supervised Act of Free Choice in 1969, the legitimacy of which is much debated. The Special Autonomy law was passed after consultations with the Papuan people by Gus Dur's government on 1 January 2002. However, this was not properly implemented, and on 27 January 2003, President Megawati issued a Presidential Instruction to split Papua into three provinces. But there was concern that this contradicted the Special Autonomy Law, making its implementation difficult. However, on 14 November 2003 the Indonesian Government announced the formation of a new province of West Irian Jaya in Papua marking the official split of West Irian Jaya from the rest of Papua.
In November 2004 the Constitutional Court ruled that the creation of West Irian Jaya was not legal. However the court also stated that the province was a de facto reality and should be recognised. President Yudhoyono reiterated this position in a speech made to the DPD (Regional Government Assembly).
POLITICS
Institutions and Government
The highest authority of the State is the People's Consultative Assembly (MPR - Majelis Permusyawaratan Rakyat) with 700 members who serve for five years. The MPR includes 500 members of the House of Representatives (DPR - Dewan Perwakilan Rakyat), the country's legislature. The remaining 200 seats in the MPR are allocated to regional representatives and delegates of respected organisations, such as NGOs, religious and professional bodies. Executive power rests with the President, governing with the assistance of the Vice President and an appointed cabinet responsible to him/her. The President can serve a maximum of two presidential terms.
On 20 September 2004 Susilo Bambang Yudhoyono was elected President in the first ever direct Presidential election in Indonesia. The first round of this election was held on 5 July 2004, in which the public voted directly for their President and Vice President on double tickets put forward by the major parties. As none of the Presidential candidates won over 51% of the vote, the two candidates with the highest number of votes, Megawati and Yudhoyono, went forward to the run-off second round election. Yudhoyono was officially declared the victor on 4 October.
The Supreme Court is the judicial organ of the state along with the courts of law; these are independent of the Executive in exercising their judicial powers. Local government is through a three-tier system of provincial, district and village assemblies.
ECONOMY
GDP:IDR 3,500 trillion (US$376 billion) (2006 est, Finance Department)
GDP per head: US$1,503 (2006 est, Central Statistical Office)
Annual Growth: 5.8% (2006 est, Government Official Estimate)
Inflation: 7% (2006 est, Central Bank)
Major Industries: Oil, gas, mining (coal, minerals, metals), forestry, fishery, rubber, agriculture (especially coffee and rice) (2006, Central Statistical Office))
Major Trading Partners: Japan, US, Singapore, EU, South Korea, China (2006, Central Statistical Office)
Exchange rate: £1 = approximately 17,850 Rupiah (as at January 2007) US$1=9,074 (2006, Central Bank)
President Yudhoyono has highlighted the need to lift economic growth and investment in order to create jobs as key priorities. The administration's other priority is to stamp out corruption, which significantly raises producers' costs and deters investment.
On 1 March 2005 the Government enacted a controversial reduction in the fuel price subsidy, resulting in a 29 per cent rise in the average cost of fuel. The Government has pledged to use the savings, an estimated 40 trillion rupiah ($4.6 billion), on priority areas including increased expenditure on education, health care and poverty alleviation.
On October 1 2005 the government took the step to further decrease the fuel subsidy resulting in a price increase of up to 126% on the cost of fuel. This was coupled with a comprehensive compensation package to the poorest families in an attempt to alleviate some of the initial economic hardship.
Indonesia's economy has stabilised in recent years. Real GDP grew by 5.6 percent in 2005, the fastest rate since the Asian financial crisis of 1997-98. Most economists are in consensus that the growth in 2006 will be at least 5.6%. Structural reforms have made tremendous progress and Indonesia is on track to return 95% of the banking assets to the private sector. The budget deficit was reduced to 1.3% of GDP last year and it is expected to be around 1.2% in 2006.
The Indonesian economy grew by 5.4% in 3rd qtr of 2006. It was mainly derived from the increase of government spending and exports. The larger portions of government spending came from goods and services spending, while exports were from mining and agriculture sectors. Leading indicators to consumer spending increased significantly in September. Inflation forecast for 2006 is now 7%. The impending investment law and tax law have, to some extent, stalled the investment opportunities for the country. Although most of the economic indicators show positive results, unemployment (10.8% of working age population (+ 11 million people)) remains a problem.
Trade and Investment with the UK
Indonesia is an important trading partner for the UK, and offers considerable potential for further growth. The market has been accorded "Emerging Market" status under UKTI's new 5 year strategy.
The balance of trade is historically in Indonesia's favour; UK exports in 2005 were over £400 million, placing UK as the second largest EU exporter after Germany.
UK exports in the first half of 2006 were almost £180 million and cover a wide spectrum of goods including pulp and waste paper, industrialised machinery, iron and steel and organic chemicals. Imports to the UK from Indonesia for the same period were worth £517 million -predominantly textile products and footwear. Total Imports in 2005 were valued at £912 million.
The UK is a leading foreign investor in Indonesia. BP alone has invested over US$6 billion and the presence of household names such as Standard Chartered, HSBC, the Jardine Matheson Group, AMEC, GlaxoSmithKline, Astra Zeneca and Wedgwood-Royal Doulton are proof of the range and depth of UK interest. The UK retail sector is also well represented by Debenhams, M&S, Body Shop, Next, Boots, Mothercare, Burberry, Dunhill, Topshop and French Connection amongst others.
The key priority for President Yudhoyono's economic policy is infrastructure development, which will require major foreign investment to help boost economic growth and activity, create jobs and increase exports. New infrastructure and other projects should offer British companies valuable opportunities.
The UK Government continues to rigorously apply the Consolidated EU and National Arms Export Licensing Criteria to all applications for export licences for military or dual-use equipment to Indonesia.
INTERNATIONAL RELATIONS
Indonesia's relations with neighbours
As a founding member of ASEAN, Indonesia has traditionally been seen as the lynchpin of the organisation. Indonesia is keen to promote good co-operation with ASEAN countries, particularly on trade and on regional issues such as piracy and smuggling. This co-operation was strengthened following the Tsunami, with ASEAN countries being among the first to provide assistance to Indonesia. Despite disputes with some ASEAN countries, including Indonesian illegal immigrants in Malaysia and territorial disputes over the Amblat Islands, relations remain strong. President Yudhoyono's first official visit after taking office was to Malaysia and Singapore in February 2005.
Indonesia has made significant efforts to improve its relations with East Timor after the violence that followed the popular consultation in East Timor in 1999 and Indonesia's withdrawal. The relationship was boosted by President Megawati's decision to attend East Timor's Independence Day celebrations in Dili on 20 May 2002, despite significant opposition from members of parliament, and President Yudhoyono's visit in April 2005. During this visit, Yudhoyono signed a provisional border agreement with East Timor's Prime Minister Alkatiri, overcoming one of the obstacles to closer relations with East Timor. Indonesia and Timor Leste have established a bilateral Truth and Friendship Commission to address the issue of human rights abuses committed during Indonesia's time in East Timor.
Indonesia's relations with the international community
This relationship has been boosted following the international community's overwhelming support following the tsunami. The Indonesian government has worked closely with the UN, international NGOs and foreign military to alleviate humanitarian suffering in Aceh in the immediate aftermath of the crisis. The UN and international NGOs continue to work in Aceh for the foreseeable future to assist the Indonesian Government's long term reconstruction of the province.
Indonesia took up its seat as a non-permanent member of the UN Security Council in January 2007.
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