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Introduction

With a population of 200 million, Indonesia is the fourth most populous nation on earth. Although comprised of more than 17,500 islands in an archipelago stretching 5,000 kilometers across Southeast Asia, Indonesia is a crowded country. Indonesia’s islands are richly endowed with great diversity of natural resources, including abundant arable land, yet 59 percent of the population inhabits the island of Java. Indonesia’s rapid industrialization led to the growth of vast urban areas, especially on overcrowded Java. Transmigrasi or transmigration is Indonesia’s voluntary program for restoring a more even distribution of population to the country and is an important element in the nation’s development as a modern economy. The goal of the program is to improve the lives of poor and landless families and to develop Indonesia’s many underpopulated islands by offering land and jobs to people who have neither. The voluntary resettlement program enables people to move from the three most densely populated islands ofJava, Bali, and Madura to more sparsely populated and less-developed areas, including Sulawesi, Kalimantan, and Irian Jaya.

The Land

Indonesia’s political and economic development has been influenced by its location at the crossroads of important historical trade routes connecting the Middle East and Asia. Formerly known as the Netherlands East Indies, Indonesia proclaimed its independence from the Netherlands in 1945 and adopted a constitution. The thousands of islands that comprise the Republic of Indonesia extend across the equator, between Malaysia and the Philippines to the north and Australia to the south. The country is divided into 33 provinces, including Jakarta, the capital and largest city, situated on the northern coast of West Java.

The Resources

Indonesia’s geography, natural resources and economic and trade policies have enabled the country to sustain strong, long-term economic growth. Manufacturing has grown rapidly in recent years, and since 1991, has been Indonesia’s major economic sector, followed by agriculture. The third largest economic sector .is wholesale and retail trade. Mining and quarrying constitute the fourth largest economic sector.

Indonesia ranks 15th among world oil producers, and eighth among the Organization of Petroleum Exporting Countries (OPEC) members. Indonesia is the only Asian OPEC nation. Indonesia is also the world’s largest exporter of liquefied natural gas (LNG), accounting for over 40 percent of the world market and is the world’s seventh largest producer of natural gas. Indonesia’s major export markets for crude oil are Japan and the United States.

In the mining sector in addition to crude oil and liquefied natural gas Indonesia exports significant quantities of copper ore, nickel matte, coal and aluminium. Significant deposits of gold have also been discovered on several Indonesian islands. Indonesia is also the world’s largest tin producer, recently surpassing Brazil and Malaysia. Mining exports accounted for almost eight percent of total exports in 1995, more than five times the $503 million, or two percent value, of total exports in 1990. Since 1983, the Government of Indonesia has carried out a series of broad measures aimed at reducing its reliance on oil revenues through the development of a more diversified and competitive economy. The Government continues to take measures to reform the economy, promote investment, increase non-oil exports and expand the tourism industry and capital markets. The economy has responded well, with strong growth in non-oil exports. In 1984, oil and gas contributed up to 80 percent of export earnings and 70 percent of government revenues. By 1995, these figures were cut to 23 and 19 percent, respectively. In addition, the value of approved foreign investment has increased significantly, reaching $40 billion in 1995, four times that of 1992.

Industrial Progress

In manufactured and industrial exports, Indonesia is the world’s largest exporter of plywood, with annual sales of over $3.46 billion; a major producer of textiles and apparel, with annual sales of $6.2 billion; and a growing exporter of footwear and electric apparatus, with rapidly growing annual sales of $4 billion. Other products include furniture, cement, fertilizer, steel and glassware. Indonesia is the world’s second-largest producer of rubber, the third-largest producer of coffee, the leading single source of rattan, and a major producer of palm oil, spices and essential oils. Through the introduction of new rice strains and the Government’s efforts at improving and expanding irrigation systems, Indonesia, which in 1975 was the world’s largest importer of rice, became a net exporter in 1984. In the high technology arena, Indonesia has the most sophisticated aircraft industry in Southeast Asia. Indonesian Aircraft Industries, produces small, fixed-wing aircraft that are sold to buyers around the world. Other aviation exports include aircraft parts, helicopters and engines. Besides the aircraft industry, Indonesia has a growing range of automotive and electronic production capabilities.

Indonesia is embarking on an ambitious program to expand and modernize its telecommunications network and will install at least five million new lines by the end of Repelita VI. In addition, Indonesia will develop about 600,000 cellular lines, expected to be in operation by the end of the decade. Electronic goods are manufactured for domestic as well as export markets.

International Relations

Indonesia plays an important role in global affairs while also embracing its responsibility to its millions of citizens whose primary right is an opportunity to continue improving their quality of life and that of future generations. Indonesia’s principal trading partners include Japan, the United States, members of the European Community and the other nations of the Association of Southeast Asian Nations (ASEAN). ASEAN has been extremely successful in its efforts to promote economic, social, cultural and scientific relations between its members.

Indonesia is also fully committed to its obligations to the World Trade Organization and that group’s goal of encouraging an open and fair multilateral trading system and transparent laws and regulations governing national economies. Indonesia’s commitment to a global economy is also reflected in its leadership in the Asia-Pacific Economic Cooperation Conference (APEC), a grouping of Pacific Rim countries. As host of the second Leader’s meeting, Indonesia was able to promote agreement on the Bogor Declaration, which aims to establish free and open trade and investment in the Asia-Pacific region by the beginning of the 21st Century.

Politically, Indonesia has adopted an increasingly important international role. It co-chaired the Cambodian peace process, and as Chair of the Non-Aligned Movement has chartered a course for that organization, which aims to move from the traditionally confrontational North/South divisiveness to mutually beneficial cooperation. Indonesia supports the Middle East Peace Process and has played a vital role in United Nations peacekeeping operations, including those following the Arab-Israeli War, the Vietnam War and more recently, in Bosnia and Somalia.

Indonesia has also taken the lead in maintaining regional stability, including participating in the ASEAN Regional Forum, which focuses on security; brokering a peace agreement between the Philippine Government and the Moro National Liberation Front, ending decades-long conflict there; and as part of efforts to support nuclear non-proliferation, contributing to the Korean Peninsula Energy Development Organization (KEDO).

Improving Social Services

The Government of Indonesia has emphasized education as an important factor in social and economic development. As a result of the Government’s efforts in mass education, with expenditures representing between 12 and 18 percent of the country’s annual budget, the literacy rate of the population has increased steadily. According to estimates following the October 1990 census, the literacy rate of the urban population is 90.5 percent and that of the rural population is 77.4 percent.

The Indonesian Government as well as local communities operate health facilities throughout the country. Recent figures indicate that Indonesia has approximately 1,700 hospitals with a total of 121,700 hospital beds. In addition, there are some 27,800 community health centers and approximately 27,900 practicing doctors in Indonesia. The average life expectancy in Indonesia has risen dramatically, from 41 years in 1965 to 63 years in 1994, while infant mortality rates have plummeted.

Indonesia has implemented an extremely successful National Family Planning Program, a voluntary plan based on education, health awareness, community involvement and contraceptive choice. The program stresses the benefits of limiting family size to two children. It has been one of the most effective of its kind in the world and has helped ease the burden of population growth on the country’s developing economy.

Measuring Results

Indonesia’s political system has produced a government that has brought a quarter-century of unprecedented prosperity and peace. In just 2 5 years, Indonesia’s per capita income has risen from only $70 to approximately $1,000; the poverty rate has plummeted from over 60 percent to 11 percent; life expectancy has risen from 45 to 63 years; and the economy has grown at a rate of seven percent annually over the past ten years. Indonesia’s middle class has expanded to the tens of millions, larger than the entire population of neighboring Australia. The country has successfully made the transformation from an agrarian economy, based on commodities and raw materials, to a dynamic and diversified economic structure. In addition, through a restrictive monetary policy and a conservative fiscal stance, the Government has confined annual inflation to the five to ten percent range in the last five years. Current government policy is aimed not only at sustaining this progress, but at increasing it.

 

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