Indonesia

Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of economic information | Political outline

Economic indicators

Indonesia has a market-based economy in which the government plays a significant role. Indonesia, after recovering from the 1998 Asian crisis, has recapitalized its banking sector, improved oversight of capital markets, and taken steps to stimulate growth and investment. The GDP growth rate was 5.5% in 2006, 6.2% in 2007. It is estimated at 6.1% in 2008. However, there is growing disillusionment with the slow pace of economic reform (e.g. labour reforms have been abandoned due to strong opposition from trade unions) and a failure to create jobs (the unemployment rate is still around 10%). The economy faces two major challenges: huge external debt (nearly 45% of GDP) and the high rate of inflation. But it was reduced to 6% in 2007.

GDP Indicators	2004	2005	2006	2007	2008
GDP (billions USD)	257.01	286.96	364.24	410.32e	444.64e
GDP (constant prices, annual % change)	5.0	5.7	5.5	6.2e	6.1e
GDP per capita (USD)	1,187.74	1,309.08	1,640.34	1,824.13e	1,951.36e
Inflation rate (%)	6.1	10.5	13.1	6.3e	6.2e
Unemployment rate (% of the labor force)	9.9	10.3	10.5	n.c.	n.c.
Current Account (billions USD)	1.56	0.28	9.98	6.57e	5.27e
Current Account (in % of GDP)	0.6	0.1	2.7	1.6e	1.2e

Source: IMF - World Economic Outlook Database; OECD

Note: (e) Estimated data

Socio-demographic indicators	2004	2005	2006
Unemployment rate (%)	9.9	10.3	10.5

Source:

Main sectors of industry

The agriculture sector contributes 14% to the country’s GDP and employs nearly 40% of the active population. Indonesia is one of the largest rubber producers in the world. Other major crops are rice, sugarcane, coffee, tea, tobacco, palm oil, coconuts and spices. Indonesia is the only Asian country to be an OPEC member and supplies 5% of OPEC's production; however it is still a net oil importer. It has great timberlands and is a major exporter of timber. Industries contribute around 40% to GDP. The industrial sector includes manufacturing of textiles, cement, chemical fertilizers, electronics, rubber tyres, and clothes & shoes (most of these for the U.S. market). Wood processing is also a major activity. The banking sector is well developed. The Islamic ‘Sharia’ bank has grown rapidly during recent years. Tourism is a major source of revenue generation, but it has suffered due to the Bali & Jakarta attacks as well as the 2004 tsunami. The services sector contributes around 45% to GDP.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Value added (annual % change)	3.7	6.2	5.3
Value added (in % of GDP)	11.9	41.7	46.3
Employment by sector (in % of total employment)	44.0	18.0	38.0

Source: World Bank - World Development Indicators - last available data.

Monetary indicators	2002	2003	2004	2005	2006
Average annual exchange rate for 1 USD	9,311.19	8,577.13	8,938.85	9,704.74	9,159.32

Source: World Bank - World Development Indicators

Foreign trade in figures

Indonesia is a member of the WTO and ASEAN (Association of South-East Asian nations). The share of foreign trade in the country’s GDP was more than 70% in 2006. Indonesia’s top three export partners are: Japan, the USA and Singapore. The commodities mainly exported are mineral fuels & oils, electrical equipment, animal and vegetable fats & oils, nuclear reactors & boilers, and rubber. Its top three import partners are: Singapore, Japan, and China. The commodities mainly imported are mineral fuels & oils, nuclear reactors & boilers, iron & steel, electric & electronic equipment, and organic chemicals.

Foreign trade indicators	2002	2003	2004	2005	2006
Imports of goods (millions USD)	35,652	39,546	50,615	63,856	n.c.
Exports of goods (millions USD)	59,165	64,109	70,767	86,179	n.c.
Imports of services (millions USD)	17,045	17,400	20,856	23,728	n.c.
Exports of services (millions USD)	6,663	5,293	12,045	12,926	n.c.
Imports of goods and services (annual % change)	-4.2	1.6	27.1	12.3	8.6
Exports of goods and services (annual % change)	-1.2	5.9	13.5	8.6	8.9
Imports of goods and services (in % of GDP)	26.4	23.0	27.2	28.6	28.6
Exports of goods and services (in % of GDP)	32.7	30.5	31.8	32.9	30.2
Trade Balance (millions USD)	23,513	24,563	20,152	22,323	n.c.
Trade Balance (including service) (millions USD)	13,131	12,456	11,341	11,520	n.c.
Current Account (millions USD)	7,824	8,107	1,563	929	n.c.
Current Account (in % of GDP)	4.0	3.5	0.6	0.3	n.c.
Foreign trade (in % of GDP)	59.1	53.5	58.9	61.5	58.8

Source: World Bank - World Development Indicators

Main partner countries

Main customers (% of exports)	2006
Japan	21.6%
United States	11.2%
Singapore	8.9%
China	8.3%
South Korea	7.6%

Main suppliers (% of imports)	2006
Singapore	16.4%
China	10.9%
Japan	9.0%
United States	6.7%
Saudi Arabia	5.5%

Source: 2006

Main products

Main exports (% of exports)	2006
Mineral fuels, oils, distillation products, etc	27.4%
Electrical, electronic equipment	7.2%
Animal,vegetable fats and oils, cleavage products, etc	6.0%
Rubber	5.5%
Ores, slag and ash	5.0%

Main imports (% of imports)	2006
Mineral fuels, oils, distillation products, etc	31.2%
Nuclear reactors, boilers, machinery, etc	12.1%
Organic chemicals	5.6%
Electrical, electronic equipment	5.1%
Iron and steel	4.7%

Source: 2006

To see more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of economic information

Ministries: http://www.depkeu.go.id/Ind/">Ministry of Finance Ministry of Industry Ministry of Commerce
Statistical Office: http://www.bps.go.id/index.shtml">Statistical Office
Central Bank: http://www.bi.go.id/web/en">Central Bank of Indonesia
Stock Exchange: http://www.idx.co.id/">
Jakarta Stock Exchange
Online newspapers: http://www.balipost.co.id/">Bali Post
http://web.bisnis.com/">Bisnis Indonesia (in Indonesian)
http://www.republika.co.id/">Republika (in Indonesian)
Tempo
Kompas (in Indonesian)
The Jakarta Post
Search Engines: Indo
Google
Economic portals: Economic, commercial and sectoral information about Indonesia and Asia in general

Political outline

Executive Power: The President is both the head of the State and the head of the government. The President enjoys the executive powers and appoints the cabinet. Both the President and the Vice-President are elected through direct universal suffrage for five-year terms. The President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
Legislative Power: The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of People’s Representatives – lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. The President cannot dissolve the parliament but the President has the power to veto bills, and in turn a supermajority of legislators may act to override the veto.The people of Indonesia have limited political rights.
Main political parties: Indonesia has a multi-party system where a single party does not often have a chance of gaining power alone. Thus parties need to work together to form coalition governments. The major political parties in Indonesia are:
- PD (Democratic Party) - advocates ‘Pancasila’ – the 5 principles the Constitution is based on;
- Golkar (Functional Groups Party) – initially an alliance of NGOs opposing communism, now advocates democratic and liberal values;
- PBB (Crescent Moon and Star Party) – a moderate Islamist party;
- PDI-P (Indonesian Party for the Democratic Fight) – based on ‘Pancasila’ ideology, a split-away group from the PD led by ex-President Megawati Sukarnoputri.
Current political leaders: President: Susilo Bambang YUDHOYONO (since October 2004) - PD
Vice-President: Muhammad Yusuf KALLA (since October 2004) - Golkar
Next election dates: Presidential: Year 2009
Parliamentary: Year 2009