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Background: The world’s largest archipelago, Indonesia achieved independence from the Netherlands in 1949. Current issues include: implementing IMF-mandated reforms of the banking sector, effecting a transition to a popularly elected government after four decades of authoritarianism, addressing charges of cronyism and corruption, holding the military accountable for human rights violations, and resolving growing separatist pressures in Aceh and Irian Jaya. On 30 August 1999 a provincial referendum for independence was overwhelmingly approved by the people of Timor Timur. Concurrence followed by Indonesia’s national legislature, and the name East Timor was provisionally adopted. The independent status of East Timor – now under UN administration – has yet to be formally established.
Government type: republic
Capital: Jakarta
Currency: Indonesian rupiah (Rp) = 100 sen

Geography of Indonesia 

Location: Southeastern Asia, archipelago between the Indian Ocean and the Pacific Ocean
Geographic coordinates: 5 00 S, 120 00 E
total: 1,919,440 sq. km
land: 1,826,440 sq. km
water: 93,000 sq. km
Land boundaries:
total: 2,602 km
border countries: Malaysia 1,782 km, Papua New Guinea 820 km
Coastline: 54,716 km
Maritime claims: measured from claimed archipelagic baselines
exclusive economic zone: 200 nm
territorial sea: 12 nm
Climate: tropical; hot, humid; more moderate in highlands
Terrain: mostly coastal lowlands; larger islands have interior mountains
Elevation extremes:
lowest point: Indian Ocean 0 m
highest point: Puncak Jaya 5,030 m
Natural resources: petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile soils, coal, gold, silver
Land use:
arable land: 10%
permanent crops: 7%
permanent pastures: 7%
forests and woodland: 62%
other: 14% (1993 est.)
Irrigated land: 45,970 sq. km (1993 est.)
Natural hazards: occasional floods, severe droughts, tsunamis, earthquakes, volcanoes
Environment – current issues: deforestation; water pollution from industrial wastes, sewage; air pollution in urban areas; smoke and haze from forest fires.
Environment – international agreements:
party to:  Biodiversity, Climate Change, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands
signed, but not ratified: Climate Change-Kyoto Protocol, Marine Life Conservation
Geography – note: archipelago of 17,000 islands (6,000 inhabited); straddles Equator; strategic location astride or along major sea lanes from Indian Ocean to Pacific Ocean.

People of Indonesia 

Indonesia’s 228 million people make it the world’s fourth-most populous nation. The island of Java is one of the most densely populated areas in the world, with more than 107 million people living in an area the size of New York State. Indonesia includes numerous related but distinct cultural and linguistic groups, many of which are ethnically Malay. Since independence, Bahasa Indonesia (the national language, a form of Malay) has spread throughout the archipelago and has become the language of most written communication, education, government, and business. Many local languages are still important in many areas, however. English is the most widely spoken foreign language. Education is free and compulsory for children through grade 9. Although about 92% of eligible children are enrolled in primary school, a much smaller percentage attend full time. About 44% of secondary school-age children attend junior high school, and some others of this age group attend vocational schools.

Constitutional guarantees of religious freedom apply to the five religions recognized by the state, namely Islam (88%), Protestantism (5%), Catholicism (3%), Hinduism (2%), and Buddhism (1%). In some remote areas, animism is still practiced.

Population: 241,973,879 (July 2005 est.)
Age structure:
0-14 years:  30.26%
15-64 years:  65.11% 
65 years and over:  4.63%
Population growth rate: 1.45% 
Birth rate: 22.26 births/1,000 population 
Death rate: 6.3 deaths/1,000 population 
Net migration rate: 0 migrant(s)/1,000 population 
Infant mortality rate: 40.91deaths/1,000 live births 
Life expectancy at birth:
total population:  68.27 years
male:  65.9 years
female:  70.75 years 
Total fertility rate: 2.58 children born/woman 
noun: Indonesian(s)
adjective: Indonesian
Ethnic groups: Javanese 45%, Sundanese 14%, Madurese 7.5%, coastal Malays 7.5%, other 26%
Religions: Muslim 88%, Protestant 5%, Roman Catholic 3%, Hindu 2%, Buddhist 1%, other 1% (1998)
Languages: Bahasa Indonesia (official, modified form of Malay), English, Dutch, local dialects, the most widely spoken of which is Javanese
definition: age 15 and over can read and write
total population: 83.8%
male: 89.6%
female: 78% (1995 est.)

History of Indonesia 

BEFORE EUROPEAN INTRUSIONS into the islands by Portuguese, Spanish, and Dutch seeking to monopolize the lucrative trade in spices and other marketable products, the more than 13,000 islands constituting the Republic of Indonesia were home to a diverse array of cultures and civilizations that had been influenced by HinduBuddhist ideas from India and by Islam, as well as indigenous beliefs. Although the Portuguese and Spanish presence in the archipelago had limited impact, the Dutch United East India Company (VOC, for this and other acronyms see table A) established a trading post on the north coast of Java–what later became known as Jakarta–seized control of the spice trade, and gradually asserted military and political control over the archipelago. This process of colonization was well advanced on Java by the mid-eighteenth century and largely completed in the rest of the archipelago by the first decade of the twentieth century.

Under both the VOC and, after 1816, the Netherlands Indies government, Dutch policies served essentially economic goals, namely the exploitation of Indonesia’s rich endowment of natural resources. Indeed, during the mid-nineteenth century, the Cultivation System on Java–the forced growing of cash crops– brought the Netherlands considerable profits. At the same time, however, a cycle of poverty and overpopulation emerged among Java’s rural population. Modern scholars have debated the degree to which this cycle can be attributed to the Cultivation System. As a result of the cycle of poverty and overpopulation, by the beginning of the twentieth century, the Dutch government sought to improve the welfare of the people under what was known as the Ethical Policy. But, although education and welfare facilities were expanded, the Dutch did little to promote self-government and did not recognize the people’s aspirations for independence.

Indonesia was territorially a creation of Dutch imperialism: with the exception of Portuguese (East) Timor, it encompasses all the territories of the old Netherlands Indies. Intellectually, however, Indonesia was a creation of early twentieth century nationalists who sought cultural, linguistic, and social bases for national unity. Although deeply immersed in Javanese culture, Sukarno (1901-70), the most important pre-World War II nationalist and long-time president, envisioned a new republic reaching far beyond the Netherlands Indies–a Greater Indonesia–Indonesia Raya- -which would include northern Borneo and the Malay Peninsula.

The Japanese occupation in the early 1940s shattered the Dutch colonial regime and opened up new opportunities for Indonesians to participate in politics, administration, and the military. Although Tokyo’s primary goal was exploitation of natural resources, especially oil, vitally necessary for the war effort in other parts of Asia, the Japanese tolerated political movements by Sukarno, Mohammad Hatta (1902-80), and others, especially on Java. With the cooperation of some Japanese military officers, Sukarno and Hatta declared Indonesia’s independence on August 17, 1945, two days after Japan’s surrender to the Allies. A revived Dutch administration, however, was determined to reimpose colonial control or as much colonial rule as they could manage. This not being possible, the Dutch sought to ensure that an independent Indonesia was regionally fragmented and maximally amenable to Dutch economic and other interests. This renewed oppression led the nationalists to wage a bitter war of independence–the National Revolution–between 1945 and 1949, which resulted in the shortlived federal Republic of the United States of Indonesia (RUSI) in 1950.

The new state faced ethnic, religious, and social divisions throughout the archipelago. Early 1950s’ practices of parliamentary democracy ended with Sukarno’s adoption of Guided Democracy in the 1959-65 period. Sukarno had a vast mass following, but his power base rested on the support of two antagonistic groups: the Armed Forces of the Republic of Indonesia (ABRI) and the Indonesian Communist Party (PKI). What has been officially described as a PKI attempted coup d’état on September 30, 1965, resulted in Sukarno’s displacement from power, a massacre of PKI supporters on Java and other islands, and the rise of General Suharto to supreme power.

Suharto’s New Order regime placed ABRI firmly in control of Indonesia’s political system and, to an extent, its economy as well. Friendly ties were restored with Western countries and Japan, and Indonesia accepted large amounts of Western and Japanese aid and private investment. Under rational economic planning policies, the country experienced orderly development and increases in the standard of living for most of the population. But Suharto’s strong anticommunism and insistence on using the Pancasila as the ideological foundation of all groups in society contributed to a tightly controlled, centralized system. The regime’s occupations of West New Guinea (which became Indonesia’s Irian Jaya Province) and East Timor (which became Timor Timur Province) were a focus of international criticism, stemming from charges of human rights violations. Reelected repeatedly to the presidency, Suharto was regarded by many observers as indispensable to the system’s stability and continuity.

Indonesia  Economy

Economy – overview: Indonesia, a vast polyglot nation, faces severe economic problems, stemming from secessionist movements and the low level of security in the regions, the lack of reliable legal recourse in contract disputes, corruption, weaknesses in the banking system, and strained relations with the IMF. Investor confidence will remain low and few new jobs will be created under these circumstances. Growth of 4.8% in 2000 is not sustainable, being attributable to favorable short-term factors, including high world oil prices, a surge in nonoil exports, and increased domestic demand for consumer durables.

GDP: purchasing power parity – $654 billion (2000 est.)
GDP – real growth rate: 4.8% (2000 est.)
GDP – per capita: purchasing power parity – $2,900 (2000 est.)
GDP – composition by sector:
agriculture: 21%
industry: 35%
services: 44% (1999 est.)
Household income or consumption by percentage share:
lowest 10%: 3.6%
highest 10%: 30.3% (1996)
Inflation rate (consumer prices): 9% (2000 est.)
Labor force: 99 million (1999)
Labor force – by occupation: agriculture 45%, industry 16%, services 39% (1999 est.)
Unemployment rate: 15%-20% (1998 est.)
revenues:  $26 billion
expenditures:  $30 billion, including capital expenditures of $NA (2000 est.)
Industries: petroleum and natural gas; textiles, apparel, and footwear; mining, cement, chemical fertilizers, plywood; rubber; food; tourism
Industrial production growth rate: 7.5% (2000 est.)
Electricity – production: 78.674 billion kWh (1999)
Electricity – production by source:
fossil fuel:  80.36%
hydro:  14.63%
nuclear:  0%
other:  5.01% (1999)
Agriculture – products: rice, cassava (tapioca), peanuts, rubber, cocoa, coffee, palm oil, copra; poultry, beef, pork, eggs
Exports: $64.7 billion (f.o.b., 2000 est.)
Exports – commodities: oil and gas, plywood, textiles, rubber
Exports – partners: Japan 18%, EU 15%, US 14%, Singapore 13%, South Korea 5%, Hong Kong 4%, China 4%, Taiwan 3% (1999 est.)
Imports: $40.4 billion (c.i.f., 2000 est.)
Imports – commodities: machinery and equipment; chemicals, fuels, foodstuffs
Imports – partners: Japan 17%, US 13%, Singapore 10%, Germany 9%, Australia 6%, South Korea 5%, Taiwan 3%, China 3% (1999 est.)
Debt – external: $144 billion (2000 est.)
Economic aid – recipient: $43 billion from IMF program and other official external financing (1997-2000)
Currency: Indonesian rupiah (IDR)

Map of Indonesia