By: Ms. Revenlie G.

Galapin

Formal Name: Republic of Indonesia (Republik Indonesia; the word Indonesia was coined from the
Greek indos—for India—and nesos—for island).
Short Form: Indonesia.
Former Names: Netherlands East Indies; Dutch East Indies.
Term for Citizen(s): Indonesian(s).
Capital: Jakarta (Special Capital City Region of Jakarta), located on the north coast of Java.
Major Cities: The eight largest cities in 2004 were Jakarta (Java), Surabaya (Java), Bandung(Java),
Medan (Sumatra), Palembang (Sumatra), Semarang (Java), Ujungpandang (Sulawesi), and Tangerang
(Java).
I. Geography
Location:
Indonesia is located in Southeast Asia. The approximate geographic center is at 5ES and 120EE.
It lies between the Indian and Pacific oceans and between the continents of Asia and Australia,
south of Malaysia and the Philippines, and northwest of Australia.

Size:
Estimates of the size of Indonesia’s total area vary.
Officially, the Indonesian government - the total land
area is 1.9 million square kilometers and total sea area, 7.9
million square kilometers, including an exclusive
economic zone.

Academic sources report a total land area of 2,027,087

square kilometers plus 3,166,163 square kilometers of
territorial waters and note that the country measures about
5,100 kilometers at its greatest east-west extent, and about
1,888 kilometers at its greatest expanse north to south.

According to U.S. Government sources, Indonesia has 1,826,440 square kilometers of land,
some 93,000 square kilometers of water area (the sum of all water surfaces delimited by
international boundaries and/or coastlines, including inland water bodies, such as lakes,
reservoirs, and rivers) for a total area of 1,919,440 plus a 7.9 million-square-kilometer maritime
area.

Land Boundaries:
Indonesia’s land boundaries total 1,758 kilometers, including 1,107 kilometers with Malaysia,
820 kilometers with Papua New Guinea, and 288 kilometers with East Timor.

Length of Coastline:
Indonesia’s coastline totals 54,716 kilometers on the Indian Ocean, Strait of Malacca, South
China Sea, Java Sea, Sulawesi Sea, Maluku Sea, Pacific Ocean, Arafura Sea, Timor Sea, and
other smaller seas
Maritime Claims:
Indonesia claims a 12-nautical-mile territorial sea and a 200-nautical-mile exclusive economic
zone, measured from claimed archipelagic straight baselines. The total area claimed by the
Indonesian government, including Indonesia’s territorial sea and an exclusive economic zone,
encompasses 7.9 million square kilometers.

Topography:
Indonesia is the largest archipelagic nation in the world. It encompasses more than 17,000 islands
(17,508 according to the Indonesian Hydro-Oceanographic Office). About 6,000 of these islands
are named, and about 1,000 are permanently settled. The five main islands are Java, Kalimantan,
Papua (formerly called Irian Jaya), Sumatra, and Sulawesi. There are two major archipelagos,
Nusa Tenggara and Maluku, and about sixty smaller archipelagos. The larger islands of Indonesia
are mountainous, with some peaks reaching 3,800 meters above sea level on the western islands
and as high as 5,000 meters on Papua. The highest point is Puncak Jaya (5,030 meters) on Papua.
The region is tectonically unstable with some 400 volcanoes, of which 100 are active.

Principal Rivers:
Indonesia’s waterways total 21,579 kilometers. The principal rivers are the Musi, Batanghari,
Indragiri, and Kampar rivers on Sumatra; the Kapuas, Barito, and Mahakam rivers on
Kalimantan; the Memberamo and Digul rivers on Papua; and the Bengawan Solo, Citarum, and
Brantas rivers on Java, which are used primarily for irrigation.

Climate:
Indonesia’s maritime equatorial climate typically produces high, even temperatures and heavy
rainfall; temperature variations are generally due to island structure (elevation) and time of day,
while rainfall may vary across the archipelago as a result of many different factors, among them
monsoon patterns, which themselves vary according to location. Average temperatures at or near
sea level range from about 23EC to 31EC. In most of the country, rainfall is comparatively heavy
throughout the year, with a pronounced rainy season roughly between December and March. East
of Surabaya, however, a dry season is increasingly noticeable, especially between June and
October. The high elevations of Sumatra, Kalimantan, Sulawesi, and Papua receive about 3,000
millimeters of rain annually; lower elevations, and much of Java, receive 2,000 or more
millimeters; farther east rainfall ranges between 1,000 (Sumba) and 2,000 millimeters per year
(Bali and Timor).

Natural Resources:
Petroleum and natural gas are among Indonesia’s most important natural resources. Indonesia is
the world’s largest exporter of liquefied natural gas. Most petroleum production is on central
Sumatra, but Java also has significant production, and there are substantial proven offshore
reserves. There are also large coal reserves. Other significant minerals are bauxite, copper, gold,
iron, manganese, nickel, sulfur, silver, and tin. An important nonmineral resource is timber.

Land Use:
According to 2001 estimates, 11.3 percent (206,753 square kilometers) of Indonesia’s total land
area is arable, and land planted in permanent crops, including an irrigated area of 48,150 square
kilometers, represents 7.2 percent of the total (132,051 square kilometers). There are 1,619,687
square kilometers of nonarable land and land not under permanent crops.

Environmental Factors:
 Indonesia’s geography leaves the nation vulnerable to severe flooding, unpredictable drought and
plant pest attacks, volcanic activity, and earthquakes, which are sometimes associated with tidal
waves (tsunami). The most important environmental issues associated with human activities are
forest degradation (unregulated cutting, fires, smoke and haze, and erosion); water pollution from
industrial wastes and sewage; air pollution from motor vehicles and industry in urban areas, and
generally from smoke and haze caused by forest fires; and threats to biodiversity and rare plant
and animal species.

Time Zones:
Since January 1, 1988, Indonesia has had three time zones: Western Indonesia Standard Time
(Greenwich Mean Time—GMT—plus seven hours), covering all provinces on Sumatra and Java,
and the provinces of western and central Kalimantan; Central Indonesia Standard Time (GMT
plus eight hours), covering the provinces of eastern and southern Kalimantan, all provinces on
Sulawesi, and the provinces of Bali, West Nusatenggara, and East Nusatenggara; and Eastern
Indonesia Standard Time (GMT plus nine hours), covering the provinces of Maluku and Papua.

II. PEOPLE AND SOCIETY

Population:
Indonesia has the world’s fourth largest population after China, India, and the United States,
totaling an estimated 238,452,952 individuals in July 2004, with a 1.5 percent annual population
growth rate. Sixty-nine percent of the population lives in rural areas. Java is one of the most
densely populated areas in the world, with more than 120 million people, or some 945 persons
per square kilometer. By contrast, the most densely populated Outer Islands have 90 persons or
fewer per square kilometer. Jakarta, on the western end of Java, is the largest city, with an
estimated population of 11.4 million in mid-2001.

Demography:
According to estimates of Indonesia’s age structure, 29.4 percent of Indonesians are under 14
years of age; 65.6 percent are between 15 and 64; and only 5.1 percent are 65 and older.
Estimates made in 2004 indicate a birthrate of 21.1 births per 1,000 and a death rate of 6.26
deaths per 1,000. In 2004 life expectancy was estimated at 71.8 years for women and 68.8 for
men, or 69.3 years total. Estimates for infant mortality ranged from 37 to 63 per 1,000 live births.
The total fertility rate estimated for 2004 was 2.47 children per woman.

Ethnic Groups:
Indonesia is a culturally very diverse nation. Ethnic identities are not always clear, stable (even
for individuals), or agreed upon; ethnic groups may appear or profess to be more distinct socially
or culturally than they actually are. But there are about 350 recognized ethnolinguistic groups in
Indonesia, 180 of them located in Papua; 13 languages have more than 1 million speakers (see
below). Javanese make up 45 percent of the population, Sundanese 14 percent, Madurese 7.5
percent, coastal Malays 7.5 percent, and others 26 percent.

Languages:
The official national language is Bahasa Indonesia (or Indonesian), a modified form of Malay,
with an estimated 17 million to 30 million mother-tongue speakers and more than 140 million
second-language speakers or readers. Additionally, as many as 725 other languages and dialects
are spoken. Some have large numbers of speakers: Javanese (75 million), Sundanese (27 million),
Madurese (nearly 14 million), and Malay (10 million). Other languages with more than 1 million
speakers each, in descending order, are Minangkabau, Balinese, Buginese, Acehnese, Batawi,
Banjarese, Sasak, Toba Batak, Chinese of various dialects, Makasarese, Lampung, Dairi Batak,
and Rejang. Since independence, and particularly since 1965, English has replaced Dutch as the
main Western language spoken and is widely used in government and business circles.

Religion:
Indonesia has the largest Islamic population of any nation. Most Indonesians (88 percent) count
themselves as Muslims and observe Islamic practices to varying degrees; another 5 percent of
Indonesians are Protestant, 3 percent are Roman Catholic, 2 percent are Hindu, 1 percent are
Buddhist, and 1 percent observe other religions. In some remote areas, animism is practiced. The
constitution guarantees religious freedom for the five religions (the first five mentioned)
recognized by the state. In 2002 the People’s Consultative Assembly (Majelis Permusyawaratan
Rakyat—MPR) rejected a proposal to introduce Islamic law as a constitutional requirement.

Education and Literacy:

Indonesia has a twelve-year public and private education system (primary—grades one through
six; junior high school—grades seven through nine; and senior high school—grades ten through
twelve). An estimated 3.7 percent of government expenditures go toward education. Schooling is
compulsory at the primary and, since 1993, junior high levels; senior high school education is
optional. The system is supervised by the Ministry of National Education (which is responsible
for nonreligious, public schools—about 92 percent of total enrollment at the primary level and 44
percent at the secondary level) and the Ministry of Religious Affairs (which is responsible for
religious, private, and semiprivate schools—about 15 percent of total enrollment). Pesantren
(Islamic religious boarding schools) doubled in number between 1980 and 1996 and enrolled
more than twice the number of students, which in 1996 amounted to 1.9 million. Nearly 98
percent of students complete primary school according to United Nations Educational, Scientific,
and Cultural Organization (UNESCO) estimates in 2001. The adult literacy rate ranges between
88.5 percent, according to a U.S. Government estimate for 2003, and 90.2 percent, according to a
2001 UNESCO estimate. In public schools, emphasis on moral and civil studies under the rubric
of a state philosophy known as Pancasila (Five Principles: monotheism, humanitarianism,
nationalism, democracy, and social justice), was altered after the end of the New Order. Since
2000, for example, courses in “Pancasila Morality” have been known as “Civic Education” and
their intensity and propagandistic qualities much reduced. Most religious schools emphasize
Islamic values and thought. There are some 1,634 institutions of higher education, including the
University of Indonesia in Jakarta, founded by the Dutch in the 1930s, and Gadjah Mada
University in Yogyakarta, founded by Indonesians in 1946.

Health:
Indonesia had a three-tiered system of community health centers in the late 1990s, with 0.66
hospital beds per 1,000 population, the lowest rate among members of the Association of
Southeast Asian Nations (ASEAN). In the mid-1990s, according to the World Health
Organization (WHO), there were 16 physicians per 100,000 population in Indonesia, 50 nurses
per 100,000, and 26 midwives per 100,000. Both traditional and modern health practices are
employed. Government health expenditures are about 3.7 percent of the gross domestic product
(GDP). There is about a 75:25 percent ratio of public to private health-care expenditures. Human
immuno-deficiency virus/acquired immune deficiency syndrome (HIV/AIDS) has posed a major
public health threat since the early 1990s. In 2003 Indonesia ranked third among ASEAN nations
in Southeast Asia—after Burma (Myanmar) and Thailand—with a 0.1 percent adult prevalence
rate, 130,000 HIV/AIDS cases, and 2,400 deaths. In Jakarta it is estimated that 17 percent of
prostitutes have contracted HIV/AIDS; in some parts of Papua, it is thought that the rate of
 inflection among village women who are not prostitutes may be as high as 26 percent. Two other
health hazards facing Indonesia in 2004 were dengue fever and dengue hemorrhagic fever (DHF)
and avian influenza. All 30 provincial-level units were affected by dengue fever and DHF,
according to WHO. The outbreak of highly pathogenic avian influenza (A/H5N1) in chickens and
ducks in Indonesia was said to pose a significant threat to human health.

Welfare:
Of the government budget for FY2002, 8.8 percent was devoted to the category of “social
welfare, health, and the empowerment of women.”

III. GOVERNMENT AND POLITICS

Government Overview:
Indonesia is a republic based on limited separation of powers among the executive, legislative,
and judicial branches. The constitution of 1945 is in force, but, based on a constitutional
amendment of August 2002, beginning with the 2004 presidential elections, the once powerful,
party-centered presidency is subject to popular election and limited to two five-year terms. Prior
to the 2004 elections, the People’s Consultative Assembly (Majelis Permusyawaratan Rakyat—
MPR) chose the president and vice president, who were not necessarily from the same political
party. Under the new law, the president and vice president are elected on a single ticket and the
winning ticket must win more than 50 percent of the popular vote and at least 20 percent of the
vote in half of the provinces. If these percentages are not met, a second-round runoff election is
held. The president is both chief of state and head of government.

The MPR, the highest authority of the state, has both elected and appointed members. Under the
amendment that surrendered its presidential election powers, the MPR also replaced its 200
nonelected members (representatives of provinces and various social groups) with elected 14
Library of Congress – Federal Research Division Country Profile: Indonesia, December 2004
members of a new legislative body, the 200-seat House of Regional Representatives (Dewan
Perwakilan Daerah—DPD), which was established by constitutional amendment in 2001. The
DPD joins the existing 500-seat House of People's Representatives (Dewan Perwakilan Rakyat—
DPR) in a bicameral, all-elected legislature. The members of both houses make up the MPR.

The highest court of the land is the Supreme Court (Mahkamah Agung), composed of justices
appointed by the president from a list of candidates approved by the legislature. In 2004 the
Supreme Court was preparing to assume administrative responsibility for the lower-court system,
currently run by the Ministry of Justice and Human Rights. Under the Supreme Court is a
quadripartite judiciary of general, religious, military, and administrative courts. Appeals can be
made, sequentially, from a district court to a high court to the Supreme Court. A separate
Constitutional Court was established in 2003. The Supreme Audit Board (Badan Permeriksa
Keuangan) oversees accountability of public finance and is independent of the chief executive,
but its members are chosen by the president.

The judicial branch is theoretically equal to the executive and legislative branches and has the
right of judicial review over laws passed by the DPR, as well as government regulations and
presidential, ministerial, and gubernatorial decrees. In practice, however, the judiciary is less
influential than the executive and legislative branches, and it has often been heavily influenced by
the executive branch. Indonesia has not accepted compulsory International Court of Justice
jurisdiction.

Administrative Divisions:
Indonesia has 30 provincial-level units: 27 provinces (propinsi), two special regions (daerah
istimewa; Aceh and Yogyakarta), and one special capital city region (daerah khusus; Jakarta).
Since January 1, 2001, when central control over local affairs was lessened, the 357 districts
(kabupaten) and municipalities (kotamadya)—the first-level provincial subdivisions—became the
administrative units responsible for providing most government services. Following a 1999
referendum agreed to by the legislature, and a period of United Nations stewardship, the province
of Timor Timur became the independent nation of the Democratic Republic of Timor-L’este
(East Timor or Timor Lorosa’e) on May 20, 2002.

Provincial and Local Government:

Provinces (propinsi) are divided into districts or regencies (kabupaten), which are further divided
into subdistricts (kecamatan). There also are some municipalities or city governments
(kotamadya) that are on the same administrative level as the districts and others that are on the
subdistrict level. The lowest level of the administrative hierarchy is the village (desa). The chief
executives are provincial governors, district or regency heads, mayors of cities, and village heads.
Legislation is handled by provincial and district parliaments. Under the revised election laws,
governors, mayors, and district heads (regents) were to be directly elected for the first time in
2004.

Judicial and Legal System:

The legal system is based on Roman-Dutch law, modified by indigenous concepts and by new
criminal procedures and election codes. There are 2,418 district courts, each of which has a panel
of judges that conducts trials by posing questions, hearing evidence, deciding on guilt or
innocence, and assessing punishment. Both the defense and prosecution can appeal verdicts.
Arbitrary arrest and detention are prohibited, but the government lacks adequate enforcement
mechanisms, and authorities have routinely violated the 15 Library of Congress – Federal
Research Division Country Profile: Indonesia, December 2004 Criminal Procedures Code. The
code provides prisoners with the right to notify their families promptly, and specifies that
warrants must be produced during an arrest. Exceptions are allowed if, for example, a suspect is
caught in the act of committing a crime. The law allows investigators to issue warrants; at times,
however, authorities make arrests without warrants.

Electoral System:
Indonesia has direct, popular election of its parliamentary representatives. All citizens 17 years of
age and older are eligible to vote. Indonesia’s first free parliamentary elections since 1955 were
held in July 1999 and resulted in a major victory for a new party under the leadership of
Sukarno’s daughter, Megawati Sukarnoputri—the Indonesian Democratic Party of Struggle (PDI-
P). The PDI-P, although receiving the greatest share of the vote, did not have sufficient support
within the People’s Consultative Assembly (MPR), which instead chose the Muslim leader and
progressive intellectual Abdurrahman Wahid as president and permitted the appointment of
Megawati to the office of vice president. Up to and including this election, the president and vice
president were elected separately by the MPR for five-year terms. When Wahid was found
incompetent, he was deposed by the MPR, which then elected Megawati to the presidency. In
accordance with constitutional changes, the 2004 election of the president and vice president was,
for the first time, by direct vote of the citizenry. The first round in the presidential elections held
in July 2004 narrowed the field of candidates, with the Democratic Party candidate, retired army
general Susilo Bambang Yudhoyono, gaining the most votes and Megawati coming in second
among the five candidates. In the second round, in September, Megawati was decisively defeated
and Yudhoyono was sworn in as president in October 2004.

Politics and Political Parties:

The old emphasis on consensus, unity, and controlled political development came to an end in the
post-Suharto era, starting in 1998. Whereas the official government party, Golkar, once held an
absolute majority, there are now numerous parties vying for power, and none enjoys national
majority support. These parties include the Crescent Moon and Star Party (PBB), Democratic
Party (PD), Indonesia Democratic Party-Struggle (PDI-P), National Awakening Party (PKB),
National Mandate Party (PAN), Prosperous Justice Party (PKS), and United Development Party
(PPP). As a result of the April 2004 parliamentary elections, Golkar had 128 seats, PDI-P 109
seats, PPP 58 seats, PD 57 seats, PKB 52 seats, PAN 52 seats, PKS 45 seats, and other parties 49
seats.

Mass Media:
The constitution provides for freedom of speech and freedom of the press; however, the
government has a history of restricting these rights in practice. In August 1990, the government
formally announced that it would refrain from censoring domestic and foreign media and from
revoking the publishing licenses of newspapers that violated regulations governing the press. Yet
in practice, the government’s policy toward the press did not change, and in 1994 it revoked the
licenses of three major news magazines, Editor, DeTik, and Tempo. After President Suharto’s
resignation in May 1998, the government once again officially disavowed censorship, and within
six months both DeTik and Tempo had resumed publication (the latter under the name DeTak).
Private press in current operation includes nearly 50 daily newspapers, dozens of magazines, 10
foreign press bureaus, and five private commercial television stations. There are also 10 foreign
press bureaus, two government radio stations (Radio Republik Indonesia and Voice of Indonesia),
one government news agency (Antara), and one independent national news agency (Kantorberita
Nasional Indonesia). The government does not restrict Internet usage or content.

Foreign Relations:
Indonesia is a charter member of the Nonaligned Movement, which was established in September
1961. The April 1955 Asian-African Conference—held in Bandung, Indonesia—was an
important milestone in the development of the Nonaligned Movement’s goal of independence
from the Cold War superpowers (the United States and the Soviet Union) and the former
colonialist powers and put Indonesia on the international stage for a time. As the Sukarno era
progressed, however, Indonesia’s government was at odds with the Dutch over West New Guinea
(now called Papua) and increasingly hostile toward neighboring Malaysia to the point that
Sukarno withdrew Indonesia from the United Nations when Malaysia was appointed a
nonpermanent member of the Security Council in 1964.

In the mid-1960s, following an attempted coup and subsequent upheaval, in which hundreds of
thousands of communists and suspected communists were killed, power was transferred from
Sukarno to General Suharto and a “New Order” established in which the military was paramount.
This government moved quickly to rejoin the United Nations and reopen Indonesia to Western
investment and influence. Relations with China, which was widely thought to have aided the
Indonesian Communist Party (PKI), were suspended. In 1967 Indonesia participated in
establishing a new officially nonaligned grouping of neighbors, the Association of Southeast
Asian Nations (ASEAN), which was friendly toward the Western powers. Its secretariat was
placed in Jakarta, and its first secretary general was an Indonesian. The commemoration of the
thirtieth anniversary of the Bandung Conference in 1985 saw Indonesia’s full reemergence on the
world stage, allowing Jakarta to project itself as a leading voice in the Nonaligned Movement and
providing it with an extra-regional platform for claiming proper international standing.
Indonesia’s diplomatic relations with China had been reinstituted in 1990. Then, in 1991,
Indonesia gained its long-sought goal of chairing the Nonaligned Movement, but the 1992 Jakarta
summit came at a time when the Cold War had ended and superpower rivalries were a thing of
the past.

Indonesia continues to play an important role in ASEAN affairs, particularly in efforts to settle
the Cambodia crisis. Indonesia’s most contentious regional relations are those with Australia,
mostly over the situation in East Timor. In the 2000s, the Indonesia government proclaims that its
relations with all major nations are based on the principles of nonalignment and what it calls an
“independent and active foreign policy.”

Membership in International Organizations:

Indonesia is a member of the Association of Southeast Asian Nations (ASEAN), the Nonaligned
Movement, the United Nations (UN), and numerous other international organizations, including:
the Asian Development Bank, Center for International Forestry Research, Developing Eight,
Food and Agriculture Organization, Group of 15, Group of 77, International Atomic Energy
Agency, International Bank for Reconstruction and Development, International Civil Aviation
Organization, International Conference of Islamic Scholars, International Committee of the Red
Cross, International Finance Corporation, International Labour Organization, International
Maritime Organization, International Monetary Fund, International Telecommunication Union,
Organisation for the Prohibition of Chemical Weapons, Organization of Petroleum Exporting
Countries, Organization of the Islamic Conference, UN Children’s Fund, UN Conference on
Trade and Development, UN Development Programme, UN Economic and Social Commission
for Asia and the Pacific, UN Educational, Scientific, and Cultural Organization, UN Fund for
Population Activities, UN Industrial Development Organization, UN Information Centre, UN
Office of the High Commissioner for Refugees, World Food Program, World Health
Organization, World Meteorological Organization, World Tourism Organization, and World
Trade Organization. Major International Treaties: Indonesia is a party to numerous multilateral
conventions, including the Biological Weapons Convention, Chemical Weapons Convention,
Comprehensive Test Ban Treaty, Geneva Conventions, Treaty on the Non-Proliferation of
Nuclear Weapons, and others. Indonesia also is a signatory to international environmental
conventions on Biodiversity, Climate Change, Desertification, Endangered Species, Hazardous
Wastes, Law of the Sea, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical
Timber 94, and Wetlands, and, as of May 2004, had signed, but not ratified Climate Change-
Kyoto Protocol or Marine Life Conservation.

Modern Political Culture

The major components of Indonesia's modern political culture were derived from two central
goals of the New Order government: stability and development. If authority in the Suharto era
was based on ABRI's coercive support, the government's legitimacy rested on its success in
achieving sociopolitical stability and economic development. Indonesian political culture in the
early 1990s primarily reflected nontraditional, nonethnic, and secular values. Urban centered,
truly national in its scope, and more materialistically focused, Indonesia's politics in the 1990s
were influenced by both domestic and international developments.

Like Islam, Indonesia's modern political culture was not monolithic. In the early 1990s, there was
a variety of subcultures: bureaucratic, military, intellectual, commercial, literary, and artistic,
each with its own criteria for judging politics, but all directed to the successful operation of the
modern political system. Perhaps the two most important modern subcultures were the military
and the intellectuals. It was the military subculture that set the tone for the first two decades of the
Suharto government, both in terms of its ethos and in the direct participation of military officers
at all levels of government and administration. Although increasingly professional in a technical
 sense, ABRI never lost its conception of itself as the embodiment of the national spirit, standing
above the social, ethnic, and religious divisions of the country as a unifying institution. Even
though factions existed within ABRI, it exemplified dwifungsi, the special link between soldier
and state. ABRI was not above politics, but it was not part of the open political competition. The
concerns of academics, writers, and other intellectuals in the early 1990s were different and they
were more likely to be influenced by Western political values. It was from these circles that the
pressure for democratization came. Their outlet was not political parties but cause-oriented
nongovernmental organizations (NGOs), workshops, seminars, rallies, and, occasionally,
demonstrations. The government undertook a major effort to subsume all of Indonesia's political
cultures, with their different and often incompatible criteria for legitimacy, into a national
political culture, an Indonesian culture based on the values set forth in the Pancasila.

IV. Economy
Character and Structure:
Although the New Order brought spectacular development to Indonesia during the 1970s and
1980s, lifting the nation out of the dire economic conditions of the previous two decades, this
success did not solve major structural problems and, indeed, may have created new kinds of
difficulties. Increasingly in the 1990s, the economic outlook was weakened by charges dubbed
“Corruption, Collusion, and Nepotism” (Korupsi, Kolusi, dan Nepotisme—KKN), which after
1996 were leveled particularly at Suharto and his family.
Despite liberalization and surveillance policies enacted in the late 1980s, these factors grew in
importance and left the economy particularly vulnerable to, and ill-prepared to address, the
financial crisis of 1997-98, which saw the gross domestic product (GDP) drop an officially
estimated 13 percent and inflation rise to nearly 60 percent in 1998 alone. In mid-1999, nearly 25
percent of the population was thought to be living in absolute poverty, compared with about 10
percent five years earlier. Since then, Indonesia’s economic growth has been slow and somewhat
erratic. Major factors are slow progress on legal, banking, and corporate reforms; continued
military action in resource-rich Aceh; and terrorism targeting international capital and tourism.

During the New Order, the economy was transformed from one having virtually no industry
in1965 to production of steel, aluminum, and cement by the late 1970s. At present, Indonesia is
the world’s number-one exporter of liquefied natural gas (LNG) and the seventeenth largest oil
producer in the world, responsible for about 1.8 percent of world production and 5.2 percent of
total Organization of Petroleum Exporting Countries (OPEC) production in 2004. The emphasis
in the early 2000s was on less government interference in private business and greater technology
inputs. Agriculture predominates and benefits from an infusion of modern technology by the
government. Indonesia is a major aid recipient.

Indonesia’s major trade partners are Japan, the European Union, the United States, Singapore,
and the Republic of Korea (South Korea); trade with Association of Southeast Asian Nations
(ASEAN) members is increasing. In spite of government liberalization of previously restrictive
investment rules, foreign investors continue to experience numerous difficulties in conducting
business. Since the late 1990s, companies have remained wary of investing in Indonesia, and an
increasing number of manufacturers have relocated outside the country because of security issues,
deteriorating infrastructure, substantial corruption, high interest rates, and increasing labor costs.
The 1997–98 economic downturn hurt Indonesia more deeply and for a longer time than other
Southeast Asian nations. In 2003 the government terminated its loan program with the
International Monetary Fund (IMF) because of its reluctance to continue implementing unpopular
economic restrictions. However, there are positive economic signs in steady domestic
consumption, a strengthened currency, and successful small and medium business enterprises.
Gross Domestic Product (GDP)/Purchasing Parity Power (PPP):
In 2002 GDP was Rp1, 609.8 trillion (US$172.9 billion; for value of the rupiah—Rp—see
below). However, average annual growth of both GDP and GDP per capita have slowed
substantially since the1980s. The average annual growth of GDP in 1982–92 was 6.9 percent; in
the 1992–2002 period, it was 2.5 percent. The average annual growth in GDP per capita for
1982–92 was 5.0 percent, and in 1992–2002 it was 1.1 percent. In 2002 PPP was Rp6, 052.2
trillion (US$650 billion), and PPP per capita was Rp28.6 million (US$3,070), which ranks as 141
out of 208 countries listed by the World Bank. Estimated PPP was Rp7058.7 trillion (US$758.1
billion) in 2003. The estimated average PPP per capita for 2003 was Rp29.8 million (US$3,200).

Government Budget:
For 2003 Indonesia’s government budget was Rp 334.5 trillion (US$39 billion) in revenues and
Rp 368.8 (US$43 billion) in expenditures, including capital expenditures. The budget is
formulated by the Ministry of Finance and approved by the legislature. Budgets are developed as
part of five-year economic development plans (Repelita—Rencana Pembangunan Lima Tahun).

Inflation:
The estimated inflation rate in Indonesia for 2003 was 6.6 percent. This level ranked Indonesia
163rd in the world. Among Southeast Asian nations, only East Timor, Laos, and Papua New
Guinea had higher inflation rates.

Agriculture, Forestry, and Fishing:

In 2004 agriculture represented a declining share (17.5 percent or lower; down from 20.6 percent
in 1993) of gross domestic product (GDP) but employed a majority of workers (an estimated 45
percent of the total labor force) in 2004. Only about 11.3 percent of the total land is arable.
Farming is by smallholders and on large private and government-owned commercial plantations.
Rice dominates food production, but cassava, corn, fruits, sweet potatoes, and vegetables also are
important subsistence crops. Green Revolution technological advances and increased use of
fertilizers, pesticides, and irrigation improved rice production in the 1970s and 1980s. Cash crops
include cocoa, coffee, copra, palm oil, peanuts, rubber, soybeans, sugar, tea, and tobacco. Animal
husbandry (dairy and beef cattle, poultry and eggs, and pigs) and fishing are small but valuable
parts of the agricultural sector. Attempts to ameliorate rural poverty by means of a transmigration
program moving families from crowded agricultural regions such as Central Java to less crowded
areas in, for example, Sumatra and Kalimantan, have failed. Greatly expanding a program begun
by the Dutch early in the twentieth century, at the program’s height in the 1979–84 period the
Suharto government moved 500,000 people. Poor funding and preparation, local hostility,
suspicions about ulterior motives, and (somewhat ironically) economic growth on Java, brought
about a precipitous decline; in 2000 the transmigration program was ended.

Mining and Minerals:

Mining and mineral production represented about 11.9 percent of gross domestic product (GDP)
and employed about 0.5 percent of the labor force in 2004. Crude petroleum and natural gas are
predominant. About 1.2 million barrels of petroleum are produced per day, a decline from peak
levels of production enjoyed in 1995, when production was at 1.6 million barrels per day. Most
proven reserves (estimated at 7.1 billion barrels) are offshore.
Central Sumatra is the largest oil-producing region and also has about 60 percent of the reserves
of coal, of which a total of 114 million tons were produced nationwide in 2003. Indonesia is the
world’s largest exporter of liquefied natural gas. An estimated 69 billion cubic meters were
produced in 2001, and Indonesia had an estimated proven reserve of 5.5 trillion cubic meters in
2002. Other minerals of significance are bauxite, copper, gold, iron sands, nickel, silver, and tin;
most of these minerals are highly localized and often difficult and costly to extract.

Industry and Manufacturing:

The industrial sector accounts for an increasing share of gross domestic product (GDP)—42
percent in 2002, up from 27 percent in the late 1980s—and employed about 19 percent of the
work force in 2001. Basic industries are automotive and transportation manufactures, food
processing, forest products processing, metal manufactures, oil and natural gas processing, and
textiles, as well as such other industries as electronic goods, footwear, furniture, garments, and
paper goods. Most production is on Java and Sumatra.

Energy:
Efforts are underway to decrease dependence on petroleum and to increase the use of alternative
energy sources, especially natural gas and coal to generate electric power. Modernized electric
power generation produced 95.78 billion kilowatts in 2001, using fossil fuels (86.9 percent),
hydropower (10.5 percent), and other sources (2.6 percent). Indonesia has no nuclear power
generation. Rural electrification projects have brought power to more than 14 million village
homes since the early 1990s.

Services:
Services are estimated to produce between 38 and 42 percent of gross domestic product (GDP)
and employed about 37 percent of the work force in 2001. Government service is one of the
fastest growing sources of employment and attracts a majority of the best-educated personnel.
The sector is characterized by a mix of modern government-operated utilities, stable private
services, and numerous self-employed operators in the informal, personal services sector.

Banking and Finance:

Much like Indonesia’s general economic performance, the country’s banking and finance have
exhibited both positive and negative signs. Relations with the
International Monetary Fund (IMF)—a benchmark for foreign investors’ attitudes toward the
country—have been tense, and the government formally terminated its loan program with the
IMF in December 2003. In the future, Indonesia will likely have to rely on bilateral arrangements,
and Japan has indicated that it will pick up some of the slack. Furthermore, the rapid growth in
capital markets during the early 1990s has slowed considerably, and share indices have not yet
regained their pre-1997 levels.

During the financial crisis of 1997–98, a great many domestic banks collapsed. In 1998 the
government allowed foreign ownership of banks and removed restrictions on foreign bank
branches outside Jakarta. However, slow progress in bank restructuring has also made foreign
investors cautious. The Indonesian Bank Restructuring Agency (IBRA) was established in 1998
to rebuild the private-sector banking industry and dismantle crony conglomerates, which involved
selling the banks around which the conglomerates were structured and establishing holding
companies to liquidate conglomerates’ assets. The Salim banking groups assets were successfully
dispersed in this fashion; IBRA also sold majority stakes in Bank Niaga to foreign concerns in
November 2002 and in Bank Kanamon Indonesia in July 2003. In addition, IBRA merged five
smaller banks into the new Bank Permata. Nevertheless, investors have been cautious because of
price manipulations in sales of bank shares, such as the case in which the
Riady group was able to resume its previous control over the Lippo Bank, and public opinion has
shown anxiety about losing the country’s assets to foreign investors.
Indonesia’s continued efforts to deal with both domestic and international debts have hindered its
attempts to attract foreign investment as well as its efforts to help business and banking recover.

Limited corporate restructuring and continuing uncertainties about capital inflows have hindered
banks’ efforts to increase private-sector lending. Although bank loans started to rebound in
2001–02, foreign subsidiaries generally rely on foreign financial markets to raise capital, and for
local services they tend to use foreign bank branches. Small businesses and consumers are
increasingly obtaining credit from pawn shops.

Tourism:
The 1990s, dubbed by the government a “Visit Indonesia Decade,” saw concerted efforts to
increase foreign tourism. Travel agencies increased more than 600 percent to nearly 2,500, and
rapid construction of facilities took place. Tourist arrivals quintupled, reaching about 5 million in
1996 and earning in excess of US$6 billion. The upheaval and violence associated with the end of
the New Order brought declines, however; 2001 saw about 4.2 million arrivals and, as a result of
deflation of the rupiah, estimated receipts of under US$4 billion.

Labor:
The New Order period saw the rapid growth of an industrial work force and increasing labor
unrest. There were about 350 strikes in 1996, nearly twenty times the number only seven years
earlier. Government policy attempted to repress labor activism, but at the same time adopted a
policy of raising the minimum wage annually; by 1997 it was three times what it had been six
years earlier. The fall of Suharto lifted many pressures on unions and raised minimum wages
even more quickly, Jakarta’s rising nearly 40 percent in 2001 alone and steadily after that, to
about US$80 a month in 2004. In 2002 Indonesia’s the labor force numbered 100.5 million, of
which an estimated 10.5 million were unemployed. Another 32 million individuals fell into the
category of “disguised unemployment.”

Foreign Economic Relations:

The principal export trade is with, in descending order of importance, Japan, the European Union,
the United States, Singapore, South Korea, China, and
Taiwan. The most important export commodities are crude petroleum and petroleum products;
electrical and telecommunications equipment, natural gas (mostly to Japan), natural rubber,
plywood, and textiles also are important. Key import partners are Japan, the European Union, the
United States, Singapore, South Korea, China, Australia, and Taiwan. The principal imports are
machinery and equipment, chemicals, fuels, and foodstuffs.
Trade Balance: Indonesia registered a positive trade balance throughout the 1980s and 1990s
despite the sharp decline in oil prices in the mid-1980s. In 2003 exports were estimated at
US$63.2 billion versus US$38 billion in imports.

Balance of Payments:
Since 1999, Indonesia’s balance of payments has fluctuated from
+US$1.2 billion in 1999 and 2000, to –US$717 million in 2001, to +US$6.4 billion in 2002.
Indonesia’s current account balance in 2003 was US$US7.6 billion, ranking it 25th in the world
and 4th among Association of Southeast Asian Nations (ASEAN) members (behind Singapore,
Malaysia, and Thailand).

External Debt:
 At the end of 2002, Indonesia’s external debt was US$131.3 billion. This figure represented a
slight decline from the immediately preceding years. About 56 percent of this indebtedness was
in the governmental sector and the rest in private-sector enterprises and domestic securities
owned by nonresidents. A total

debt of US$132.9 billion was estimated for 2003, compared with US$2.4 billion about fifteen
years earlier.

Foreign Investment:
Foreign investment in Indonesia has been on the decline since the Asian banking crisis. In 1997
Indonesia received a total of US$33.1 billion in approved foreign direct investment, most of it in
the manufacturing sector (and most of that in chemicals and pharmaceuticals). By 2000 the total
had plummeted to US$15.2 billion, with manufacturing and chemicals and pharmaceuticals
receiving the greatest share. Further decreases were experienced in the succeeding years. In 2003
Indonesia received a total of US$9.3 billion with the same relative distribution.

Foreign Aid:
Indonesia received US$43 billion in International Monetary Fund (IMF) aid in 2003, and this
assistance has traditionally been an important part of the central government’s budget. From 1967
to 1991, most aid was coordinated through the Inter-Governmental Group on Indonesia (IGGI)
founded and chaired by the Netherlands; since 1992, without the Netherlands, the organization
has been known as the Consultative Group on Indonesia (CGI). Although
Indonesia terminated its IMF aid program in December 2003, it still receives bilateral aid through
the CGI, which pledged US$2.8 billion in grants and loans for 2004. Japan and the Asian
Development Bank also have been key donors.
Currency and Exchange Rate: Indonesia’s currency is the rupiah (Rp, also sometimes Indonesian
rupiah—IDR). The exchange rate in December 2004 was US$1=Rp9,176.

Fiscal Year:
Calendar year. Prior to 2001, the fiscal year ran from April 1 to March 31.

V. NATURAL RESOURCES AND ENERGY

Indonesia has abundant mineral resources, including tin, gold, natural gas, coal, nickel and
copper. Silver, bauxite and petroleum are also available in smaller quantities.

Globally, the country is:

A leading producer of copper, nickel and gold.
A leading exporter of liquefied natural gas (LNG).
The second largest producer of tin.

Industrial Minerals
Indonesia’s chief industrial mineral is cement, and many cement companies in the country have
planned expansions in order to increase the capacity of cement production by 2015. One such
company is PT Semen Gresik, which has planned to construct two new cement plants and a
power plant. The cement produced from this company is expected to increase from 19 Mt/yr in
2010 to 25 Mt/yr in 2012 and to 29 Mt/yr in 2015.

Metals
Indonesia’s Grasberg mine is the third largest copper mine in the world and the largest gold mine
in terms of output and size. In 2009, 1,444,000 ounces of gold was produced from this mine.
 Indonesia has about 13,000 Mt of coal reserves and 400 Mt of iron ore reserves. In 2010, 9 Mt of
steel was imported by the country to meet the domestic demand of 11 Mt.

In 2010, Indonesia was a leading global supplier of tin and the country exported 85% of its tin
production. In the same year, the production of tin decreased by 6.1% to about 43,000 t due to
several reasons that include severe weather conditions that hit the mining operations in the
country, illegal mining activities and declining reserves.

Fossil Fuels
In 2010, Indonesia produced about 257 Mt of coal and was globally ranked as the second largest
coal exporter. The country’s leading coal producing region is the Kalimantan Island, and the
Central Kalimantan Province contains about 1,400 Mt of high-quality metallurgical coal reserves.

In 2010, the Natuna natural gas project in Indonesia accounted for 25% of the country’s overall
gas reserves that are commercially recoverable. In view of the increasing demand for domestic
gas, the country has plans to start coal-bed methane (CBM) production.

The government also has plans to produce 1 million barrels (Mbbl) of petroleum in 2012 by
increasing the production in the Chevron’s field and in the Cepu Block.

VI. TRANSPORTATION AND TELECOMMUNICATIONS

Overview:
Although government programs are aimed at improving the overall transportation network,
Indonesia’s economic situation and archipelagic character make that a daunting task. Passenger
and freight transportation via interisland and inland waterways is probably the most important
form of transportation in Indonesia. Railroads are heavily used on Java (including Madura) and
Sumatra for passengers and cargo but are nonexistent on the other islands. Air transportation has
expanded, though unevenly, in the past decade.

Roads:
Based on 1999 estimates, Indonesia had a total of 342,700 kilometers of roads, mostly (about 60
percent) located on Java, Madura, Bali, and Sumatra; 158,670 kilometers (46 percent) were
paved, of which 27,358 kilometers were classified as main roads and 40,490 kilometers as
secondary roads. Another 184,030 kilometers (54 percent of the total) were unpaved. About 32
percent of the

roads were classified as highways. There are smaller networks of roads on Sulawesi and
Kalimantan, while smaller islands often have limited roads within or connecting major
settlements. Urban transit is dominated by motor vehicles; the use of automobiles (there were 3.4
million in use in 2002), buses, minibuses, and motorcycles is widespread, even in seemingly
remote areas.

Railroads:
Track length totaled 6,458 kilometers in 2002, of which 125 kilometers were electrified. All rail
facilities were government-owned and -operated until 1991, when government liberalization
created a public corporation, now called PT Kereta Api (Persero), which operates Indonesian
Railways. The corporation possesses almost total commercial freedom, with the exception of
some passenger fares that remain fixed by the government, but it continues to face financial
problems as the rising demand for its services is coupled with shortfalls in investment and
revenues. However, some of this demand has been met by private passenger and freight service
operators that have entered the market since 1995. All railroads are narrow gauge, with 5,931
kilometers 1.067 meter gauge, and 497 kilometers 0.750 meter gauge in 2002. Some 211
kilometers of roadbed are double tracked, and 125 kilometers of 1.067 gauge electrified, all on
Java. Other railroads are located on Madura and Sumatra. Most were used for passenger
transportation as of 2002, but there was increasing use for freight from the early 1980s onward. A
15-kilometer-long mass rapid transit system, partly underground, was planned for Jakarta, but as
of 2004 (it was initially expected to be completed in 2001) construction had not begun because of
a lack of funds.

Ports:
Indonesia has 379 ports and harbors controlled by the Ministry of Communications for
international and interisland trade. The four main ports—all designated gateways to handle
Indonesia’s exports—are at Tanjung Priok (near Jakarta), Tanjung Perak (near Surabaya),
Belawan (Medan), and Makassar (South Sulawesi). Other major ports are at Cilacap, Cirebon,
and Semarang (all on Java), Kupang (Timor), and Palembang (Sumatra). Some 127 ports are
classified as capable of handling international shipping. As a result of port improvements begun
in the mid-1980s, container handling capacity has doubled at both Makassar and Tanjung Perak,
and there are future plans to provide much-needed improvements to Tanjung Priok and Belawan.
However, no foreign shipping lines call at Makassar because the port does not meet International
Ship and Port Security (ISPS) code. Interisland maritime transportation is crucial, supported by a
large fleet of traditional and modern boats and ships.

Inland and Coastal Waterways:

Interisland transportation is critical to domestic commerce. Traditional sailing craft are widely
used, but they increasingly are motorized. The merchant fleet is composed of 718 ships of 1,000
gross registered tons or more. These ships include, by type, the following: cargo (398),
refrigerated cargo (2), container (57), bulk carrier (47), roll on/roll off (15), petroleum tanker
(128), chemical tanker (13), specialized tanker (12), liquefied natural gas (6), passenger (10),
passenger/cargo (13), short-sea passenger (9), vehicle carrier (7), and livestock carrier (1). There
also are 35 oceangoing vessels, 259 interisland vessels, more than 1,000 modernized local-use
vessels, almost 4,000 traditional vessels, and 1,900 special bulk carriers. River transport plays a
major role in eastern Sumatra, Kalimantan, and Papua. Most of Indonesia’s major rivers are at
least partly navigable, but those on Java are used primarily for irrigation.

Civil Aviation and Airports:

The government owns one airline, Garuda Indonesia, and one smaller subsidiary, Merpati
Nusantara Airlines. Civil aviation as a private-sector venture has greatly increased from one
private airline in 1993 to 27 private domestic airlines by 2004. The major air facility is Sukarno-
Hatta International Airport, which opened outside Jakarta in 1985, and in 1991 an additional
terminal greatly increased airport capacity. There are other major airports in Denpasar, Medan,
Surabaya, and Batam Island. In 2003 there were an estimated 661 airports in Indonesia, of which
154 had paved runways (four with more than 3,000-meter runways) and 507 had unpaved
runways. Six of the larger airports can accommodate wide-bodied aircraft. Additionally, there
were 22 heliports in 2003. Indonesia had a fledgling domestic turboprop airliner industry under
development under the government-owned Indonesia Aerospace in the late 1990s, but it reached
only a prototype-level of production.

Pipelines:
In 2003 Indonesia had 672 kilometers of condensate, 125 kilometers of condensate/gas, 8,183
kilometers of gas, 7,429 kilometers of oil, 66 kilometers of oil/gas/water, 1,329 kilometers of
refined products, and 72 kilometers of water pipelines.
 Telecommunications:
Indonesia has been a pioneer in national satellite communications since 1975. A third generation
of satellites, known as Palapa C1 and C2, was launched in 1996; these satellites provide a number
of interisland and international telecommunications services. In 2002 there were some 7.8 million
telephones and 11.7 million mobile cellular telephones in use, producing a ratio of some 91 units
per 1,000 people. International telephone service was widely available. Radio and television were
long dominated by government networks, but private stations have been on the rise since the
early 1990s. As of 1998, there were 678 AM, 43 FM, and 82 shortwave radio stations and more
than 31 million radios. In 2000 more than 31.7 million television receivers were in use. Estimates
vary as to the number of Internet users in Indonesia— between nearly 4 million and 8 million. By
2002 there were more than 2.3 million personal computers, producing a ratio of 11.9 units per
1,000 people.

VII. ARMED FORCES

The Indonesia Armed Forces (Tentara Nasional Indonesia—TNI) totaled some 346,000 active-
duty personnel in 2004. The component services are the Army (TNI—Angkatan Darat), 265,000;
Navy (TNI—Angkatan Laut), an estimated 57,000, of which 15,000 are marines and 1,000 are
part of Naval Aviation; and Air Force (TNI—Angkatan Udara), 24,000, of which 4,000 are
“quick-action” paratroopers. There is a reserve force of 400,000. With the transition to
democratic rule beginning in 1998, the government endeavored to undertake steps to reform the
TNI in order to improve public opinion about the military and to bring the military under civilian
control. Among such steps were the devolution of the national police from the armed forces to the
Office of the President and official transfer of responsibility for internal security from the TNI to
the police in April 1999, focusing the military’s attention on national defense rather than
domestic policing. Another important reform was a provision that military personnel had to retire
or resign before occupying an elected or appointed civilian government position. However, the
TNI successfully resisted transformation of its territorial command structure because of threats of
terrorism and separatism, and because it needs this structure to support its huge business empire,
from which it obtains an estimated two-thirds of its funding (the government budget provides
only one-third of the funds needed to operate and equip the military and national police). After
several years in disrepute because of revelations of extensive human rights abuses, the TNI has
regained much of its lost prestige. Many Indonesians appear to favor military firmness as the
country is facing terrorist, separatist, and ethnic conflict as well as a moribund economy.

Foreign Military Relations:

Indonesia enjoys cordial military-to-military relations with a wide range of nations. Its closest ties
are with fellow members of Association of Southeast Asian Nations (ASEAN). Formerly close
ties to the United States, Australia, and some European countries became strained in the 1990s
over human rights issues; many countries cut back their military relations with the TNI after the
rampage of army and army-supported militia forces in East Timor in 1999. Because of arms sales
embargoes imposed by its primary sources in the United States, Indonesia has turned to Russia
and other nations of the former Soviet Union, South Korea, and Poland, among others, for major
arms purchases.

Human rights and political issues have also affected sales of foreign military equipment to
Indonesia, but such tensions eased after East Timor gained independence in 2002. In 1992 the
U.S. Congress terminated grant military training assistance (International Military Education and
Training—IMET) after learning of Indonesian military human rights abuses in East Timor. This
restriction was partially relaxed in 1995, but assistance was suspended again in 1999 as a result of
violence following the referendum on East Timor’s separation from Indonesia.
External Threat:
Indonesia has no conventional external threat to its security. The primary outside threat is that of
international terrorism. Terrorists belonging to the regional terrorist group Jemaah Islamiyah
(Community of Islam) have conducted a number of recent bomb attacks, including the bombing
of two night clubs on Bali in October 2002 that killed 202 people and injured more than 300,
while a bombing at the Marriott Hotel in Jakarta in August 2003 killed 12 people and injured 150.
Prompt police investigative actions and international cooperation resulted in the arrests of dozens
of suspects and revealed an extensive network of affiliations among al-Qaeda, Jemaah Islamiyah,
and Islamic extremist groups inside Indonesia. More than 30 men were convicted in the Bali
bombing case and several more in the Jakarta attack. Many of them were also involved in other
terrorist attacks across Indonesia dating back to 2000. Another terrorist bombing, that of the
Australian Embassy in Jakarta in September 2004, killed ten people and injured 160 and led to a
new round of investigations and tightened security. Other threats to Indonesian security include
piracy, particularly in the Strait of Malacca, smuggling, and maritime poaching.

Defense Budget:
Indonesia’s defense budget officially totaled approximately Rp1.26 trillion (US$1.4 billion using
an exchange rate of Rp9,000 to US$1), or 1.06 percent of the gross domestic product (GDP) in
FY 2004. However, most analysts believe that approximately two thirds of military spending is
derived from sources other than the official defense budget (diversions from other budgetary
entities and from the military’s huge business empire) and that actual expenditures for FY 2003
were closer to nearly Rp 3.8 trillion (US$4.2 billion).

Major Military Units:

The army includes 30 battalions under the centrally controlled Army Strategic Reserve Command
(Kostrad), 100 battalions under 12 Military Regional Commands (Kodams), 3 operational groups
in the Army Special Forces Command (Kopassus), and a 2- squadron Aviation Command. The
navy has two fleets (Armadas), and the air force has two operational commands (Ko-Ops).

Major Military Equipment:

The army is equipped with 325 light tanks, 175 armored reconnaissance vehicles, more than 600
armored personnel carriers (APCs), 245 towed artillery pieces, 70 self-propelled artillery pieces,
415 air defense guns, more than 100 surface-to-air missiles, 11 fixed-wing aircraft, and almost
100 helicopters. The navy’s inventory includes 2 submarines, 15 frigates, several dozen patrol
and coastal combatants of various sizes, 12 mine warfare ships, and 26 amphibious forces ships
(landing ship tanks). Many of the navy’s main line ships are in poor or non-seaworthy condition,
particularly those acquired in the mid-1990s from the former East Germany. The navy has no
combat aircraft but does have more than 40 noncombatant fixed-wing aircraft, 37 armed
helicopters, and 17 transport helicopters. The marines (Kormar) have 100 light tanks, 10 anti-
infantry fighting vehicles, 84 APCs, 48 towed artillery pieces, and about 50 air defense guns. The
air force is equipped with 94 combat aircraft, 3 maritime reconnaissance aircraft, 2 tankers, 63
transports, 100 trainers, and 40 helicopters. As is the case with the navy, many of the aircraft are
non-operational because of a lack of spare parts and other maintenance problems. The current
inventory has arms supplied by the Netherlands, South Korea, Russia, Singapore, the United
Kingdom, and the United States. There is increasing emphasis on domestic production of such
items as light aircraft, small arms, and ammunition; helicopters and transport aircraft are
assembled under licensing agreements. Senior officials with the air force and navy have
complained that few ships, planes, or weapons systems are operational, and most are obsolete.

Military Service:
The earliest age of service is 18, and two years of selective conscription of males are authorized.

Military Forces Abroad:

Indonesian forces abroad are currently involved in several United Nations peacekeeping
operations: the United Nations Organization Mission in the Democratic Republic of the Congo
(MONUC; 13 peacekeepers, including 4 observers), United Nations Organization Mission in
Georgia (UNOMIG, 4 observers), and United Nations Mission in Sierra Leone (UNAMSIL, 10
observers).

Police:
The strength of the Indonesian National Police stood at approximately 285,000 in 2004. The
national police force was formally separated as a branch of the armed forces and placed under the
Office of the President in 1999. It also includes 12,000 marine police and an estimated 40,000
People’s Security (Kamra) trainees who serve as a police auxiliary and report for three weeks of
basic training each year. There has been occasional friction between police and the military, with
several instances of armed combat between them, usually caused by disputes over “turf” and
shady business enterprises.

Internal Threats and Terrorism:

There are two general threats to Indonesian domestic security: terrorism and ethnic and religious
conflict. The terrorists causing the greatest problems in Indonesia are members of the regional
group, Jemaah Islamiyah (Community of Islam). Although Jemaah Islamiyah operates primarily
in Indonesia, it has operational units in peninsular Malaysia, Singapore, Australia, and Papua
New Guinea. Jemaah Islamiyah has perpetrated significant terrorist acts and is believed to have
strong links with al-Qaeda. The government announced at the time of the October 2002 Bali
bombings that terrorism was “a real and potential threat to national security” and has called upon
the public to confront domestically based terrorists.

Center-region relations have been perennially problematic, with the government continuing to
experience difficulties in maintaining order and the rule of law in outlying regions. The most
pressing threats are separatists in Aceh and Papua (formerly Irian Jaya). The major insurgent
groups are Gerakan Aceh Merdeka (GAM—Free Aceh Movement), which wants an independent
Islamic state in Aceh and has an estimated strength of 2,000 armed activists; and Organisasi
Papua Merdeka (OPM—Free West Papua Movement), which seeks independence for Papua and
has an estimated 150 activists.

Other regions also experienced outbreaks of violence, some of them very serious, after 1996.
These include religious violence in Maluku and Central Sulawesi, ethnic violence over land use
and local power in Kalimantan and other locales, and violence involving both political-religious
hostility as well as hysteria about the misuse of supernatural powers in East Java. There have
been many incidents of anti-Chinese riots in urban areas, some of them very destructive. On
several occasions, most notably in 2001, radical Muslim groups have “swept” parts of Jakarta,
cities in central Java, and other tourist areas, threatening Westerners.

Human Rights:
The United States Department of State’s Human Rights Report for 2003 (issued in February
2004) rates the Indonesian government’s human rights record as “poor” and notes that Indonesia
has “continued to commit serious abuses.” Murders, torture, rape, beatings, and arbitrarily
detaining civilians and members of separatist movements were all documented as abuses by
security force members. The government also was accused of having frequently failed to protect
adequately the fundamental rights of children, women, peaceful protesters, journalists, disabled
persons, religious minorities, and indigenous people, among others. Aceh and Papua provinces
were seen as the scenes of the most apparent human rights abuses, but human rights appeared to
have improved in some provinces, for example Maluku and North Maluku, despite sporadic
outbreaks of violence.