Indonesia

INDONESIA

LOCATION, SIZE, AND EXTENT
TOPOGRAPHY
CLIMATE
FLORA AND FAUNA
ENVIRONMENT
POPULATION
MIGRATION
ETHNIC GROUPS
LANGUAGES
RELIGIONS
TRANSPORTATION
HISTORY
GOVERNMENT
POLITICAL PARTIES
LOCAL GOVERNMENT
JUDICIAL SYSTEM
ARMED FORCES
INTERNATIONAL COOPERATION
ECONOMY
INCOME
LABOR
AGRICULTURE
ANIMAL HUSBANDRY
FISHING
FORESTRY
MINING
ENERGY AND POWER
INDUSTRY
SCIENCE AND TECHNOLOGY
DOMESTIC TRADE
FOREIGN TRADE
BALANCE OF PAYMENTS
BANKING AND SECURITIES
INSURANCE
PUBLIC FINANCE
TAXATION
CUSTOMS AND DUTIES
FOREIGN INVESTMENT
ECONOMIC DEVELOPMENT
SOCIAL DEVELOPMENT
HEALTH
HOUSING
EDUCATION
LIBRARIES AND MUSEUMS
MEDIA
ORGANIZATIONS
TOURISM, TRAVEL, AND RECREATION
FAMOUS INDONESIANS
DEPENDENCIES
BIBLIOGRAPHY

Republic of Indonesia

Republik Indonesia

CAPITAL: Jakarta

FLAG: The national flag, adopted in 1949, consists of a red horizontal stripe above a white stripe.

ANTHEM: Indonesia Raya (Great Indonesia).

MONETARY UNIT: The rupiah (Rp) consists of 100 sen. There are coins of 1, 2, 5, 10, 25, 50, and 100 rupiahs, and notes of 100, 500, 1,000, 5,000, and 10,000 rupiahs. Rp1 = $0.00010 (or $1 = Rp9,739.35) as of 2005.

WEIGHTS AND MEASURES: The metric system is standard.

HOLIDAYS: New Year's Day, 1 January; Independence Day, 17 August; Christmas, 25 December. Movable religious holidays include the Prophet's Birthday, Ascension of Muhammad, Good Friday, Ascension Day of Jesus Christ, the end of Ramadan, 'Id al-Fitr, 'Id al-'Adha', and the 1st of Muharram (Muslim New Year).

TIME: Western, 7 pm = noon GMT; Central, 8 pm = noon GMT; Eastern, 9 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

The Republic of Indonesia consists of five large islands and 13,677 smaller islands (about 6,000 of which are inhabited) forming an arc between Asia and Australia. With a total area of 1,919,440 sq km (741,100 sq mi), Indonesia is the fourth-largest Asian country, after China, India, and Saudi Arabia. Comparatively, the area occupied by Indonesia is slightly less than three times the size of the state of Texas. It extends 5,271 km (3,275 mi) e–w and 2,210 km (1,373 mi) n–s. The five principal islands are Sumatra; Java; Borneo, of which the 72% belonging to Indonesia is known as Kalimantan; Sulawesi, formerly called Celebes; and Irian Jaya (West Irian), the western portion of the island of New Guinea. Indonesia has land boundaries with Malaysia (on Borneo), Papua New Guinea (on New Guinea), and East Timor (on Timor). It is bounded on the n by the South China Sea, on the n and e by the Pacific Ocean, and on the s and w by the Indian Ocean. Indonesia's total land boundary length is 2,830 km (1,758 mi). Its coastline is 54, 716 km (33,999 mi).

Indonesia's capital city, Jakarta, is located on the island of Java.

TOPOGRAPHY

The Indonesian archipelago consists of three main regions. One of the regions consists of Sumatra, Java, Kalimantan, and the islands that lie between them, which stand on the Sunda shelf, where the ocean depths are never more than 210 m (700 ft). Another region consists of Irian Jaya and the Aru Isles, which stand on the Sahul shelf, projecting northward from the north coast of Australia at similar depths. Between these two shelves are the Lesser Sunda Islands, the Maluku Islands (Moluccas), and Sulawesi, which are surrounded by seas with depths that reach 4,570 m (15,000 ft). The large islands have central mountain ranges rising from more or less extensive lowlands and coastal plains. Many inactive and scores of active volcanoes dot the islands, accounting for the predominantly rich volcanic soil that is carried down by the rivers to the plains and lowlands; there are over 100 volcanoes. Peaks rise to 3,650 m (12,000 ft) in Java and Sumatra. Java, Bali, and Lombok have extensive lowland plains and gently sloping cultivable mountainsides. Extensive swamp forests and not very fertile hill country are found in Kalimantan. Sumatra's eastern coastline is bordered by morasses, floodplains, and alluvial terraces suitable for cultivation farther inland. Mountainous areas predominate in Sulawesi.

Earthquakes and tsunamis often devastate Indonesia. In 1992, an earthquake off the island of Flores caused more than 2,500 deaths. More than 200 people died in 1994 from an earthquake and tsunami in eastern Java. An earthquake in Sumatra with a magnitude of 7.9 on the Richter Scale killed more than 100 people in 2000.

A disastrous tsunami struck Indonesia and its neighboring Asian countries on 26 December 2004. Stemming from an underwater earthquake about 324 km (180 mi) south off the coast of Sumatra, the city of Banda Aceh witnessed a 10-minute earthquake, the longest ever recorded as of 2005. The tsunami rolled waves onto the mainland at an estimated 800 km/h (500 mi/h), leaving about 131,000 dead and another 38,000 missing. The devastation of the disaster crushed entire villages and most of the country's coastal region.

On 19 February 2005, an earthquake measuring a 6.5 magnitude on the Richter Scale occurred at Sulawesi. Simeulue experienced a 6.8 magnitude tremor on 26 February 2005. On 28 March 2005, an earthquake measuring 8.7 struck both of the small islands of Nias and Simeulue. One of the most powerful in a century, the disaster caused hundreds of deaths and severe damage to many homes. Nias felt additional quakes on 14 May (at 6.8 magnitude) and 5 July (6.7 magnitude). Simeulue felt another quake of 6.7 magnitude on 19 May.

CLIMATE

Straddling the equator, Indonesia has a tropical climate characterized by heavy rainfall, high humidity, high temperature, and low winds. The wet season is from November to March, the dry season from April to October. Rainfall in lowland areas averages 180–320 cm (70–125 in) annually, increasing with elevation to an average of 610 cm (240 in) in some mountain areas. In the lowlands of Sumatra and Kalimantan, the rainfall range is 305–370 cm (120–145 in); the amount diminishes southward, closer to the northwest Australian desert. Average humidity is 82%.

Altitude rather than season affects the temperature in Indonesia. At sea level, the mean annual temperature is about 25–27°c (77–81°f). There is slight daily variation in temperature, with the greatest variation at inland points and at higher levels. The mean annual temperature at Jakarta is 26°c (79°f); average annual rainfall is about 200 cm (79 in).

FLORA AND FAUNA

The plant life of the archipelago reflects a mingling of Asiatic and Australian forms with endemic ones. Vegetation ranges from that of the tropical rain forest of the northern lowlands and the seasonal forests of the southern lowlands, through vegetation of the less luxuriant hill forests and mountain forests, to subalpine shrub vegetation.

The bridge between Asia and Australia formed by the archipelago is reflected in the varieties of animal life. The fauna of Sumatra, Kalimantan, and Java is similar to that of peninsular Malaysia, but each island has its peculiar types. The orangutan is found in Sumatra and Kalimantan but not in Java, the siamang only in Sumatra, the proboscis monkey only in Kalimantan, the elephant and tapir only in Sumatra, and the wild ox in Java and Kalimantan but not in Sumatra. In Sulawesi, the Maluku Islands, and Timor, Australian types begin to occur—the bandicoot, a marsupial, is found in Timor. All the islands, especially the Malukus, abound in great varieties of bird life, reptiles, and amphibians. The abundant marine life of Indonesia's extensive territorial waters includes a rich variety of corals.

As of 2002, there were at least 515 species of mammals, 929 species of birds, and over 29,300 species of plants throughout the country.

ENVIRONMENT

An extensive "regreening" and reforestation of barren land, initiated under the 1975–79 national economic development plan, was greatly expanded and integrated with flood control and irrigation programs under the national plans for 1979–84 and 1984–89. From the mid-1980s to the mid-1990s, Indonesia's forests and woodland areas increased by 1.4%. However, in 1990–2000, the deforestation rate was about 1.2% per year. Indonesia also has the world's most extensive mangrove area, which covered over 4 million hectares (9.9 million acres) in 1994. In 2000, about 58% of the total land area was forested.

Flood-control programs involve river dredging, dike strengthening, construction of new dams, and sandbagging of river banks at critical points. The burning of oil and coal along with the abuse of fertilizers and pesticides results in significant damage to the environment. The nation used 3.1 million tons of fertilizer per year at last estimate. Indonesia has 2,838 cu km of renewable water resources with 93% used in farming activity and 1% used for industrial purposes. About 89% of all city dwellers and 69% of rural dwellers have access to pure drinking water. Legislation introduced in 1982 endorsed the establishment of penalties for environmental pollution.

Protection of indigenous wildlife is entrusted to the Directorate of Nature Conservation and Wildlife Management. In 1984/85, the government set up three new national parks (of nineteen included in the 1984–89 plan) and four new natural reserves. By 2001 the government's goal to allocate 10% of the nation's land area to reserves had been met—protected lands totaled 10.1% of Indonesia's total land area. In 2003, about 20.6% of the total land area was protected, including five natural UNESCO World Heritage Sites and two Ramsar wetland sites.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 146 types of mammals, 121 species of birds, 28 types of reptiles, 33 species of amphibians, 91 species of fish, 3 types of mollusks, 28 species of other invertebrates, and 383 species of plants. Endangered species in Indonesia include the pig-tailed langur, Javan gibbon, orangutan, tiger, Asian elephant, Malayan tapir, Javan rhinoceros, Sumatran rhinoceros, Sumatran serow, Rothschild's starling, lowland anoa, mountain anoa, Siamese crocodile, false gavial, river terrapin, and four species of turtle (green sea, hawksbill, olive ridley, and leatherback). The Kalimantan mango, Buhler's rat, and the Javanese lapwing have become extinct.

POPULATION

The population of Indonesia in 2005 was estimated by the United Nations (UN) at 221,932,000, which placed it at number 4 in population among the 193 nations of the world. In 2005, approximately 5% of the population was over 65 years of age, with another 30% of the population under 15 years of age. There were 100 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 1.6%, a rate the government viewed as too high. The government was continuing efforts to curb population growth by reducing the fertility rate, which stood at 2.7 births per woman in 2005, half of what it was in the 1970s. The government's goal was to reach a fertility rate of 2.2 births per woman by 2010. The projected population for the year 2025 was 275,406,000. The population density was 117 per sq km (302 per sq mi); population distribution is uneven, with 60% of the population living in just 7% of the nation's land. Some urban areas have density equivalent to 44,030 per sq km (17,000 per sq mi).

The UN estimated that 42% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 3.22%. The capital city, Jakarta, had a population of 12,296,000 in that year. Other large cities and their estimated populations include Bandung, 4,020,000; Surabaya, 2,735,000; Medan, 2,109,000; Palembang, 1,675,000; Ujungpandang, 1,205,000; and Semarang, 816,000.

MIGRATION

Historically, there has been considerable migration from and to China. Following a decree banning foreigners from participating in retail trade in rural Indonesia, some 120,000 Chinese left Indonesia in 1960–61. After the attempted coup of 1965 and the resultant deterioration in relations with China, many more Chinese left Indonesia. Migration between the Netherlands and Indonesia has been greatly reduced since independence; at the time of independence, 250,000 Netherlands nationals—nearly all of whom have since returned home—lived in Indonesia.

Resettlement of people from crowded areas to the less populous outer islands is official government policy. The 1979–84 National Economic Plan had as a target the "transmigration" of 500,000 families from Java, Bali, and Madura to Sumatra, Kalimantan, Sulawesi, Maluku Province, and Irian Jaya. Participation was voluntary, and the actual number of families that resettled was about 366,000, containing about 1.5 million people. Since the annual population increase of Java is more than two million, the costly transmigration scheme did little to relieve that island's human congestion, but it had a considerable impact in developing sparsely settled areas. Each family was entitled to two ha (five acres) and was provided with housing, food, seedlings, fertilizers, pesticides, and other supplies that it could use to become productive. Under the 1987–91 plan, 338,433 families were resettled.

First asylum was granted to over 145,000 Indochinese refugees between 1975 and 1993. Of these refugees, 121,708 were from Vietnam. Of the Vietnam asylum seekers, 112,000 had left for resettlement in the West by 1996, with the remaining group of Vietnamese expected to return home eventually. In 2004 there were 535,000 internally displaced persons in Indonesia.

In 2004 Indonesia had 169 refugees and 59 asylum seekers, with 16,390 persons of concern to the United Nations High Commissioner for Refugees (UNHCR). Populations of concern to UNHCR in 2004 were some 16,000 from East Timor and Afghanistan. In that same year over 7,000 Indonesians applied for asylum in Malaysia, the United States, and Australia. Another 15,181 were refugees in Malaysia, and 7,626 in Papua New Guinea.

In 2005 the net migration rate for Indonesia was zero.

ETHNIC GROUPS

The indigenous peoples, ethnologically referred to as Malays or Indonesians, also are found on the neighboring islands of the Philippines, in peninsular Malaysia, and even as far away as Taiwan and Madagascar. Indonesians are characterized by smallness of stature, light to dark-brown pigmentation, thick, sleek black hair, broad formation of the head, a wide nose, and thick lips. The inhabitants of eastern Indonesia have Negroid features, the result of intermarriage with the Papuans of New Guinea.

The population is officially classified into four main ethnic groups: Melanesians, who constitute the majority; Proto-Austronesians, including the Wajaks and the Irianese on Irian Jaya; Polynesians, including the Ambonese on the Maluku Islands; and Micronesians, found on the tiny islets of Indonesia's eastern borders. The Melanesians are subdivided into the Acehnese of north Sumatra; the Bataks of northeastern Sumatra; the Minangkabaus of west Sumatra; the Sundanese of west Java; the Javanese in central and east Java; the Madurese on the island of Madura; the Balinese on Bali; the Sasaks on the island of Lombok; the Timorese on Timor; the Dayaks in Kalimantan; and the Minahasa, Torajas, Makassarese, and Buginese on Sulawesi. About 45% of the population is Javanese, 14% Sundanese, 7.5% Madurese, 7.5% coastal Malays, and 26% other.

Ethnic Chinese, the principal minority, were the target of riots in 1974, 1980, and 1998. Active mainly in business in the major cities, they are relatively prosperous and widely resented by ethnic Indonesians.

LANGUAGES

Bahasa Indonesia, a product of the nationalist movement, is the official language, serving as a common vehicle of communication for the various language groups. Based primarily on Malay and similar to the official language of Malaysia, it also contains many words from other Indonesian languages and dialects, as well as from Dutch, English, Arabic, Sanskrit, and other languages. In 1973, Indonesia and Malaysia adopted similar systems of spelling. Outside of Jakarta, only 10–15% of the population speaks the language in the home, but more than half the population uses it as a secondary language. Use of some 669 local languages persists, including Sundanese, Malay, and the most widely used, Javanese. English and Dutch are widely used in industry and commerce.

RELIGIONS

According to a 2000 census, about 88.22% of the inhabitants were adherents of Islam, 5.87% were Protestant, 3.05% were Roman Catholic, 1.81% were Hindu, 0.84% were Buddhist, and 0.2% followed tribal and other religions.

Most Muslims are Sunni, but the Shia, Amadhiyah, and Sufi branches are also represented. There are also small groups of messianic Islam groups including Darul Argam, Jamaah Salamulla, and Negara Islam Indonesia. The mainstream Muslim community is divided into modernists (who embrace modern learning but adhere to scriptural orthodox theology) and traditionalists (who are generally followers of charismatic religious scholars). Many modernists belong to a social organization known as Muhammadiyah; traditionalists belong to Nahdlatul. The Muslim majorities are found in Java, Sumatra, Kalimantan, West Nusa Tenggara, Sulawesi, and North Maluku.

Hinduism was the religion of Java for several centuries, but when Islam swept over Indonesia in the 15th century, Hinduism retreated somewhat to Bali. Hindu authorities estimate that there are about 18 million Hindus in the country; government estimates, however, indicate that there are only about 3.6 million. The Naurus on Seram Island practice a combination of Hindu and animist beliefs. Of the Buddhists, about 60% ascribe to the Mahayana school and 30% adhere to the Theravada school. Tantrayana, Tridharma, Kasogatan, Nichiren, and Maitreya schools are all represented as well. The religious faith of the Chinese in Indonesia may be characterized as Christian, Buddhist-Confucians, or even a combination of the two. The chief Christian communities are found in the eastern part of the country. In central Kalimantan and Irian Jaya, as well as a few other areas, substantial numbers of Indonesians follow animist tribal religions.

The constitution provides for freedom of worship but there have been some restrictions on religious practice. Only five religions are officially recognized by the Ministry of Religious Affairs: Islam, Catholicism, Protestantism, Buddhism, and Hinduism. Other religious groups may register as social organizations, but this status comes with certain restrictions. Proselytizing is prohibited. The government actively supports Islamic religious schools and pays for a number of annual pilgrimages to Mecca. Certain Hindu, Muslim, Christian, and Buddhist holidays are observed as national holidays.

TRANSPORTATION

Indonesia is politically and economically dependent upon good communications and transportation among the islands. Transportation facilities suffered greatly from destruction and neglect during World War II and immediately thereafter. The revitalized and partially modernized system suffered an additional setback during 1957–58 as a result of the withdrawal of Dutch equipment and personnel.

Of the 368,360 km (229,119 mi) of roadways in 2002, a total of 213,648 km (132,889 mi) were paved. Indonesia had 3,556,000 passenger cars and 2,720,000 commercial vehicles as of 2003. Railways connect the main cities in Java and parts of Sumatra. As of 2004, the state owned all of the 6,458 km (4,013 mi) of railroad track in service, all of which was narrow gauge. Of that total, 125 km (78 mi) have been electrified. Air-conditioned cars and express service have been introduced in parts of Java, but no new lines have been built in recent years.

As of 2004, about 21,579 km (13,409 mi) of inland waterways form the most important means of transportation in Kalimantan and in parts of Sumatra. The principal ports of international trade are Tanjungpriok (for Jakarta) and Tanjungperak (for Surabaya) in Java, and Belawan (near Medan) and Padang in Sumatra. Ports with less traffic but capable of handling sizable ships are Cirebon and Semarang in Java; Palembang in Sumatra; Banjarmasin, Balikpapan, and Pontianak in Kalimantan; Tanjungpinang in Bintan; and Ujung Padang in Sulawesi. In 2005, Indonesia's merchant fleet included 728 vessels of 1,000 GRT or more, totaling 3,192,847 GRT. Regulations were imposed in 1982 requiring that all government imports and exports be shipped in Indonesian vessels, and port charges were substantially altered to benefit Indonesia's national carriers. In 1984, a policy of scrapping old vessels was implemented.

Indonesia had an estimated 667 airports in 2004. As of 2005, a total of 161 had paved runways, and there were also 23 heliports. The center of international air traffic is Jakarta's Sukarno-Hatta International Airport. Other principal airports include Halim Perdanak at Jakarta and Polonia at Medan. In 2003, about 12.221 million passengers were carried on scheduled domestic and international flights.

HISTORY

Evidence for the ancient habitation of Indonesia was discovered by the Dutch paleontologist Eugène Dubois in 1891; these fossil remains of so-called Java man (Pithecanthropus erectus ) date from the Pleistocene period, when Indonesia was linked with the Asian mainland. Indonesia's characteristic racial mixture resulted from at least two waves of invasions from South China by way of the Malay Peninsula and from intermarriage of these Indonesians with later immigrants, especially from India. The important population groups of today trace their descent from the immigrants of the second wave, which occurred around the 2nd or 3rd century bc. They subjugated and absorbed most of the other inhabitants. Indian influences permeated Java and Sumatra from the 1st to the 7th century ad. During this period and extending into the 15th century, local Buddhist and Hindu rulers established a number of powerful kingdoms. Among the most powerful of these was the Buddhist kingdom of Srivijaya, established on Sumatra in the 7th century; it prospered by gaining control of trade through the Strait of Malacca. To the east, in central Java, the Sailendra dynasty established its Buddhist kingdom in the 8th century. Relics of Sailendra rule include the great temple of Borobudur, Asia's largest Buddhist monument, with hundreds of bas-reliefs depicting the life of Buddha. Succeeding the Sailendra dynasty in 856 were followers of the Hindu god Shiva; these Shivaites built the great temple at Prambanan, east of Yogyakarta. Other Hindu kingdoms subsequently extended Indian influence eastward into east Java and Bali. The last of these was the Hindu kingdom of Majapahit, which was at the height of its power during the 13th century, when Marco Polo visited Java and northern Sumatra. When Majapahit collapsed around 1520, many of its leaders, according to tradition, fled to Bali, the only island in Indonesia that retains Hinduism as the chief religion. Even before Majapahit disintegrated, Muslim missionaries, probably Persian merchants, had begun to win much of the archipelago for Islam. About this time, also, the first Europeans arrived, and the first Chinese settlements were made. The Portuguese captured Malacca (Melaka), on the west coast of the Malay Peninsula, in 1511 and established control over the archipelago.

Dutch ships visited Java in 1596. The Dutch came in increasing numbers and soon drove the Portuguese out of the archipelago (except for the eastern half of the island of Timor), beginning nearly 350 years of colonial rule. The States-General of the Dutch Republic in 1602 incorporated the East Indian spice traders as the United East India Company and granted it a monopoly on shipping and trade and the power to make alliances and contracts with the rulers of the East. By force and diplomacy, the company thus became the supreme ruler of what became known as the Dutch East Indies. However, maladministration and corruption weakened the company after its early years of prosperity, and the Dutch government nullified its charter in 1799 and took over its affairs in 1800. The British East India Company ruled the Indies during the Napoleonic wars, from 1811 to 1816. During this period, Sir Th omas Stamford Raffl es became governor of Java. When Dutch rule was restored, the Netherlands government instituted the "culture system" on Java, under which the Javanese, instead of paying a certain proportion of their crops as tax, were required to put at the disposal of the government a share of their land and labor and to grow crops for export under government direction. From a fiscal point of view the system was very successful, yielding millions of guilders for the Netherlands treasury, but this "net profit" or "favorable balance" policy fell under increasing moral attack in the Netherlands and was brought to an end about 1877.

Thereafter, private Dutch capital moved into the Indies, but the augmentation of Dutch prosperity at the expense of Indonesian living standards was increasingly resented. With the adoption of what colonial administrators called the "ethical policy" at the beginning of the 20th century, the first steps were taken to give Indonesians participation in government. A central representative body, the Volksraad, was instituted in 1918. At first it had only advisory powers, but in 1927 it was given colegislative powers. An Indonesian nationalist movement began to develop during those years and steadily gained strength. Although retarded in the 1930s by the world economic depression, which was strongly felt in Indonesia, the movement revived during the Japanese occupation (1942–45) in World War II. A nationalist group under the leadership of Sukarno and Mohammad Hatta proclaimed an independent republic on 17 August 1945, adopted a provisional constitution providing for a strong presidential form of government, formed a revolutionary government, and resisted Dutch reoccupation. After four years of intermittent negotiations, frequent hostilities, and intervention by the United Nations (UN), the Netherlands agreed to Indonesian demands.

On 27 December 1949, the Dutch recognized the independence of all the former Dutch East Indies except West New Guinea (Irian Jaya) as the Republic of the United States of Indonesia. A few months later, on 17 August 1950, the federal system was rejected and a unitary state, the Republic of Indonesia, was established under a new constitution. West New Guinea remained under Dutch control until October 1962, when the Netherlands transferred the territory to the UN Temporary Executive Administration (UNTEA). On 1 May 1963, Indonesia took complete possession of the disputed territory as the province of Irian Barat (West Irian); the province was renamed Irian Jaya in 1973. Indonesia, which aimed to acquire Sarawak and Sabah (which are on the island of Borneo with Kalimantan), opposed the formation of the Federation of Malaysia in September 1963 and announced a "crush Malaysia" policy. This policy was implemented by guerrilla raids into Malaysian territory that continued until August 1966, when a formal treaty was concluded between the two countries.

Sukarno became the first president of the new nation in 1949, and Hatta the vice president. Internal diffi culties, fostered by a multiplicity of political parties inherited from Dutch colonial days, soon developed, and regional rivalries also threatened the unity of the new nation. Then as now, Java had some two-thirds of the country's population, but the great sources of wealth were found on the other, much less densely settled islands. Th ose living in the so-called Outer Islands believed too much governmental revenue was being spent in Java and too little elsewhere. After Vice President Hatta, a Sumatran, resigned in December 1956, many in the Outer Islands felt they had lost their chief and most effective spokesman in Jakarta. Territorial army commanders in Sumatra staged coups and defied the central government; other rebel movements developed in Sulawesi. The government took measures providing for greater fiscal and administrative decentralization, but discontent remained, and the rebellions were put down by force. Thereafter, Sukarno bypassed parliamentary procedures and pursued an increasingly authoritarian, anti-Western policy of "guided democracy." In 1959, he decreed a return to the 1945 constitution, providing for a centralized form of government, and consolidated his control.

Communist agitation within the country and secessionist uprisings in central and eastern Java came to a head in the 30th of September Movement under the direction of Lt. Col. Untung. Sukarno, whose foreign policy had turned increasingly toward the Communist Chinese, may have had advance knowledge of the Communist-led coup attempt on 30 September 1965, which was directed against Indonesia's top military men; the coup was crushed immediately by the army, however, and in the ensuing anti-Communist purges more than 100,000 persons (mostly Indonesian Chinese) lost their lives and another 700,000 were arrested. By mid-October, the army, under the command of Gen. Suharto, was in virtual control of the country. On 12 March 1966, following nearly three weeks of student riots, President Sukarno transferred to Suharto the authority to take, in the president's name, "all measures required for the safekeeping and stability of the government administration." In March 1967, the People's Consultative Assembly (Majetis Permusyawaratan Rakyat—MPR) voted unanimously to withdraw all Sukarno's governmental power and appointed Gen. Suharto acting president. One year later, it conferred full presidential powers on Suharto, and he was sworn in as president for a five-year term. The congress also agreed to postpone the general elections due in 1968 until 1971. Sukarno died in June 1970. On 3 July 1971, national and regional elections were held for the majority of seats in all legislative bodies. The Joint Secretariat of Functional Groups (Sekber Golongan Karya—Golkar), a mass political front backed by Suharto, gained 60% of the popular vote and emerged in control of both the House of Representatives (DPR) and the MPR.

Suharto Gains Control

In March 1973, the MPR elected Suharto to a second five-year term. Thus Suharto, with key backing from the military, began a long period of dominance over Indonesian politics. Under Suharto's "New Order," Indonesia turned to the West and began following a conservative economic course stressing capital development and foreign investment. In foreign affairs, Suharto's government achieved vastly improved ties with the United States, Japan, and Western Europe while maintaining links with the USSR.

On 7 December 1975, following Portugal's withdrawal from East Timor, a power struggle developed among various political groups, including the Revolutionary Front for an Independent East Timor (Frente Revolucionário de Este Timor Independente—Fretilin). The left-wing independence movement achieved military dominance forcing the Indonesian government to send troops into the former Portuguese colony and assume full control of the territory. On 17 July 1976, the Suharto government incorporated the territory as an Indonesian province. This action was neither recognized by the UN, which called on Indonesia to withdraw and allow the Timorese the right to self-determination, nor accepted by Fretilin. Discontent with the Suharto regime mounted after the elections of 1977, in which Suharto's Golkar Party gained an overwhelming majority. The government acknowledged holding 31,000 political prisoners; according to Amnesty International, the total was closer to 100,000. Student riots and criticism of government repression resulted in further government measures: political activity was suspended, and leading newspapers were temporarily closed. Suharto was elected by the MPR to a third five-year term in 1978; during late 1977 and 1978, some 16,000 political prisoners were released, and the remainder of those detained in 1965 were released by the end of 1979. Golkar made further gains in the 1982 elections, and Suharto was elected for a fourth five-year term in March 1983.

To strengthen the government in the face of rising Muslim militancy, Suharto began to reestablish Sukarno as a national hero eight years after his death. Suharto called for greater loyalty by all political groups to the Pancasila ("five principles") framed by Sukarno in 1945. The credo encompassed belief in the one supreme being, humanitarianism, national unity, consensus democracy, and social justice. Muslim groups strongly objected to the new government program and organized demonstrations that took place in 1984 and 1985. The war against Fretilin continued into the 1980s, with reports of massacres by government troops and severe economic hardship among the Timorese. Negotiations with Portugal, still considered responsible for decolonization by the UN, began in July 1983. In Irian Jaya, the Organization for a Free Papua (Organisasi Papua Merdeka—OPM), which desires unification with Papua New Guinea and has been active since the early 1960s, increased its militant activities in 1986. The Indonesian Army (ABRI) continued to play a dual military and socioeconomic function, and this role was supported by legislation in 1988. Golkar made further gains in the 1987 elections, and Suharto was again reelected for a fifth five-year term in March 1988. During disagreements over nomination procedures for the vice presidency, ABRI's influence was eroded.

Golkar sought to create national unity through its resettlement policies. From 1969–92, the Transmigration Program, a policy aimed at redistributing population in Indonesia for political purposes and demographic reasons, resulted in almost 1,488,000 families moving from the Inner Islands to the Outer Islands. The Transmigration Program suffered from land disputes with local residents and environmental concerns over deforestation. The program alienated local populations and fueled ethnic conflict throughout the country. In Irian Jaya, OPM attempted to sabotage the government's program, which was turning the indigenous Melanesian majority into a minority. Indonesian troops attempting to capture Melanesian separatists would cross the border into Papua New Guinea. Indonesia and Papua New Guinea agreed to provide greater cooperation on security and trade issues and the leader of OPM, Melkianus Salossa, was eventually arrested in Papua New Guinea and deported to Indonesia and sentenced to life in prison in 1991. In 1989, tension from land disputes in Java and the Outer Islands produced social unrest that resulted in clashes between villagers and the armed forces. In 1990 an armed rebellion in northern Sumatra at Aceh arose over hostility toward government exploitation of mineral resources and its transmigration program. The government squashed the rebellion with a massive display of force.

Political openness was increasingly espoused during 1990–91 by political and labor organizations. In 1990 a group of prominent Indonesians publicly demanded that Suharto retire from the presidency at the end of his current term; in 1991 labor unrest increased with a rash of strikes, which the army was called in to quell. Government efforts to raise funds through a state lottery were opposed and finally forbidden on religious grounds when the country's highest Islamic authority declared the lottery haram (forbidden).

On 12 November 1991, during a funeral for a young Timorese killed in demonstrations against Indonesia's rule of East Timor, soldiers opened fire on the defenseless mourners, provoking worldwide condemnation. Although the government took unprecedented steps to punish those involved, Western governments threatened to suspend aid, and demands were made linking aid to human rights issues. The Netherlands' demand linking its aid to improvements in human rights was rejected when Suharto refused Dutch economic aid on 25 March 1992. In the aftermath of these events, Suharto spoke at the Nonaligned Movement summit in Jakarta and to the UN General Assembly, suggesting that developing nations needed to take a more prominent role in opposing North-South economic inequality. Suharto's challenge received a cool reception from Western nations, but it clearly signaled a reassessment of Indonesia's future international presence. In early December 1992 government forces captured Jose Alexandre (Xanana) Gusmao, leader of the Fretilin, who was hiding in Dili, East Timor. On 21 May 1993 he was sentenced to life imprisonment. In late 1992, tensions between Muslims and Christians increased to the point of violence and vandalism of churches and mosques. Suharto requested that religious tolerance be practiced. By 1993 US policy toward Indonesia shifted, toward criticism of Indonesia's rule in East Timor and a threat to revoke trade privileges pursuant to Indonesia's treatment of the largest independent trade union, the Indonesian Prosperous Labor Union (SBSI). Adding further scrutiny to Indonesia's tarnished international image was a UN resolution on Indonesia's human rights violations placing the country on a rights "watch" list in 1993.

Although its total share of votes declined, Golkar won the 1992 elections, securing 282 of the 400 elective seats. In March 1993, Suharto was elected to a sixth term as president. Try Sutrisno, the commander in chief of ABRI, was chosen as vice president. Despite Golkar's victory, the country continued to experience economic and political diffi culties. A major scandal occurred in March 1993 with the sale of $5 million in fake shares on the Jakarta Stock Exchange (JSE). In January 1994 President Suharto inaugurated 12 electric power plants with combined installed capacity of more than 2,000 MW. Violent labor unrest broke out in Medan in April 1994 with the mysterious death of a union activist. Ethnic Chinese, who are only about 3% of the population of Indonesia, were the target of demonstrators; one Chinese factory manager was killed. The success of the Chinese is widely envied and they are accused of exploiting the workers. On 21 June 1994 the government closed Tempo and two other publications by revoking publishing licenses. Tempo was accused of violating the journalistic code of ethics and pitting one person against another to the point where it affected national security based on its coverage of a controversial purchase of 39 warships from the former East German navy. Other publications were accused of more technical infractions, including the failure to comply with registration procedures and publishing political and general news in spite of license restrictions limiting a popular tabloid's coverage to detective stories and crime stories.

Violent outbreaks, clashes, and riots increased in Indonesia from 1995–97. Riots between Catholics and Muslims broke out in East Timor in September 1995, leaving Dili's central marketplace in ashes. This was before Timor's Roman Catholic bishop, Carlos Filipe Ximenes Belo, and pro-independence advocateJosé Ramos-Horta, shared the Nobel Peace Prize in 1996. Many incidents of rural unrest, including land disputes and ethnic strife, continued in 1995–96. The campaign for the 29 May 1997 elections was an unusually violent one, dubbed the "festival of democracy," as voters and demonstrators brought rocks, bricks, knives, machetes, and even snakes to the campaign. There was a ban on parades of trucks, cars, and motorcycles. This followed the uproar resulting from the ouster of Megawati Sukarnoputri as the Indonesian Democratic Party (PDI) chairperson in June 1996. Her political involvement was seen as a rallying point for democratic change. Golkar took 74% of the vote in elections that were seen to be marked by fraud; over 200 people were killed during the campaign. The Muslim-oriented United Development Party (PPP) obtained 22% and the PDI, 3%.

In other violence, hundreds of lives were lost in a full-scale ethnic war in Kalimantan, as clashes between the Dayaks, the indigenous people of the area, and Muslim settlers from the island of Madora, broke out in December 1996. The fighting led to Malaysia closing part of its border with Indonesia in February 1997. In 1997, the country experienced the dual effect of increased ethnic conflict and economic decline. These twin forces were the harbinger for the decline of Golkar and the departure of Suharto from Indonesian politics. In the May 1997 legislative elections, Golkar allegedly secured 74.3% of the popular vote, amid massive violence that killed over 100 political activists. Violence continued after the elections and was worsened by the Asian economic crisis. After severe devaluation of the rupiah in August and October of 1997, Suharto accepted an International Monetary Fund (IMF) loan package but failed to carry out IMF-imposed conditions for economic reform. By December, news of Suharto's declining health furthered doubt on his ability to see Indonesia through a worsening economic and political situation.

After Suharto won an unopposed presidential election in March 1998, student protests swept Jakarta and ethnic tensions also swelled as Chinese merchants were attacked. In East Timor, José Ramos-Horta urged the government to agree to a cease-fire and cooperation with the UN to determine the ultimate governance structure for the country. On 21 May 1998, Suharto resigned as president, after hundreds of people were killed, looting swept through the capital, and thousands of foreigners living or working in Indonesia were evacuated in months of unrest. B. J. Habibie, the former vice president, was sworn in as president. Upon assuming the presidency, he adopted a conciliatory posture toward defusing the East Timor crisis by stating that East Timor may be given "special status" with increased autonomy within Indonesia. In August 1998, Portugal and Indonesia met to discuss the future of the province. After significant pressure from the United Nations, Australia, and Portugal, Habibie agreed on 27 January 1999 to hold a referendum for the province. Despite widespread violence instigated by the pro-Indonesia armed militia, 98% of voters cast their ballots on 30 August, with 78.5% in favor of independence. Th is was followed by a rampage by pro-Indonesia forces who looted and burned the entire province creating a major humanitarian situation and refugee crisis. With the aid of Australian troops, the UN intervened with approximately 8,000 troops to restore order and establish humanitarian programs. Meanwhile, in Irian Jaya and Aceh, the military forces and the national police continued to commit extra-judicial killings in 2000.

B. J. Habibie's political fortunes waned in the aftermath of the UN-sponsored referendum in East Timor. His state of the nation address to the People's Consultative Assembly in October 1999 did not allay the perception that he had not exercised the appropriate leadership in handling domestic and international matters. Pressure on Habibie mounted and he subsequently resigned as a result of a no-confidence vote. In 20 October elections in the People's Consultative Assembly, the first free elections in 44 years, Abdurrahman Wahid, the leader of the National Awakening Party and a near-blind Muslim cleric, was pitted against Megawati Sukarnoputri, Sukarno's daughter. Megawati's party won the most votes, but rather than negotiate with other politicians to form a coalition, Megawati allowed the more experienced Wahid to become president. Despite protest from her supporters, Megawati asked backers to refrain from violent protest. She became vice president. Wahid worked to curb the influence of the military and promised major reforms in the government.

In July 2001, after months of opposition from legislators over the competence of his administration, Wahid declared a state of emergency and ordered parliament dissolved. On 23 July 2001, legislators in the People's Consultative Assembly voted 591–0 to remove Wahid from the presidency. He had been charged with corruption and incompetence, being accused of embezzling us$4.1 million in state funds and illegally accepting us$2 million from the Sultan of Brunei. He was cleared of all charges that May, but the parliament continued to insist upon impeachment proceedings based on dissatisfaction with his administration. Megawati was sworn in as president immediately after Wahid's removal.

Megawati, a Muslim who was identified with nationalist-secular policies, faced demonstrations upon assuming office from strict Islamic fundamentalists calling for the establishment of Shariah law. She also had to face the Aceh independence movement, as more than 1,000 people were killed in the province in 2001, adding to the thousands more that had been killed in the past decade. Megawati expressed support for the US-led war on terrorism following the 11 September 2001 terrorist attacks, and she visited the United States the following week.

Following the fall of Suharto, Indonesia experienced a resurgence of Islamic activity. The main extremist Islamist organizations in Indonesia are Darul Islam, the Islamic Defender's Front, and Laskar Jihad. Laskar Jihad is the most prominent and organized of Indonesia's radical Islamist organizations, and between 300–400 new members joined within the first month following the 11 September attacks. On 12 October 2002, Indonesia experienced its own major terrorist attack. Two nightclubs in the resort town of Kuta on the island of Bali were bombed, killing 202 people, the majority being young Western tourists, many from Australia. On 18 October, President Megawati issued an emergency decree to give the government expanded powers to fight terrorism. This act came after international criticism directed at her government for not taking the necessary steps to address the problem of terrorism. Megawati permitted the arrest of Abubakar Bashir, a Muslim cleric who is the spiritual leader of Jemaah Islamiyah. Jemaah Islamiyah, accused of staging the Bali bombings, has links to the al-Qaeda organization. Bashir in 2003 was cleared of treason charges but jailed for subversion and immigration offenses. The subversion charge was later overturned, but in 2005 he was found guilty of conspiracy over the 2002 Bali bombings, and sentenced to 2½ years in prison. Later bombing attacks took place in August 2003 outside the Marriott Hotel in Jakarta, killing 14 people; in September 2004 outside the Australian embassy in Jakarta, which killed 9 and injured more than 180 people; and in October 2005 on the island of Bali, when 3 suicide bombings killed 22 people, including the bombers.

Following its independence referendum held in August 1999, East Timor was governed by UNTAET (the United Nations Transitional Administration in East Timor) and a National Consultative Council. A constituent assembly was elected in September 2001 with the task of writing a constitution for the country. In April 2002 José Alexandre "Xanana" Gusmão was elected president, and on 20 May 2002 East Timor became an independent nation.

In June 2000, 2,500 activists representing 250 tribal groups in Irian Jaya declared the region—which they call West Papua—a sovereign state. The region was granted limited autonomy by parliament in October 2001, but many inhabitants, including independence rebels, rejected the measure and called for full independence. On 9 December 2002, the government and the separatist Free Aceh Movement (GAM) signed a peace deal aimed at ending over three decades of violence. The accord provided for autonomy and free elections in Aceh; in return the GAM was to disarm. In May 2003, peace talks between the government and GAM broke down; the government mounted a military offensive against GAM separatists in Aceh and imposed martial law. In August 2005, the government and GAM separatists once again signed a peace agreement providing for the disarmament of rebels and the withdrawal of government soldiers from Aceh. In September, rebels began handing in their weapons.

Demonstrators protested price increases on basic necessities such as fuel and electricity commodities that have been rooted in corruption, in January 2003. Megawati, originally seen as a friend of the poor, was urged to resign by some for failing to eliminate corruption. In April 2004, parliamentary and local elections were held: the Golkar party of former President Suharto took the greatest share of the vote, with Megawati's PDI-P (Indonesia Democracy Party–Struggle) party coming in second. In July 2004, the country's first direct presidential election was held. In the runoff held on 20 September 2004, Megawati was defeated by Susilo Bambang Yudhoyono, who received 60.6% of the vote. The election was hailed as the first peaceful transition of power in Indonesian history.

On 26 December 2004, a powerful undersea earthquake off the coast of Sumatra generated massive tidal waves. The tsunami devastated Indian Ocean communities as far away as Th ailand, India, Sri Lanka, and Somalia. More than 160,000 people were dead or missing in Indonesia alone. In March 2005, another earthquake off the coast of Sumatra killed at least 1,000 people, most of them on the island of Nias.

GOVERNMENT

The provisional constitution of 17 August 1950 provided for a unitary republic. The president and vice president, "elected in accordance with rules to be laid down by law," were to be inviolable, but cabinet ministers were jointly and individually responsible. The House of Representatives was to be a unicameral parliament. Its members were elected by a system of proportional representation for a four-year term, but it might be dissolved earlier by presidential decree. Sukarno and Hatta, the first president and vice president, were elected by parliament; no term of office was stipulated by the constitution. In practice, the government was not truly parliamentary, since President Sukarno played a role far greater than is usual for the head of state in a parliamentary system. He was the great national revolutionary hero, and his popularity with the masses enabled him to exert great influence on government policy. Parliament was not strong enough to hold the president to the role prescribed by the constitution. In 1957, Sukarno adopted a more authoritarian policy of "guided democracy." He further strengthened his powers in 1959 by decreeing a return to the provisional 1945 constitution, which called for a strong president and stressed the philosophy of Pancasila as a national ideology. On 5 March 1960, Sukarno suspended parliament and began to rule by decree. In June, he appointed a new 283-member parliament drawn from 9 political parties and 14 "functional groups." In midAugust, Sukarno named another 326 legislators who, with the 283 members of parliament, were to constitute the Provisional People's Congress. This congress was to meet at least once every five years and to be responsible for drawing up the outlines of national policy and electing the president and vice president. In 1963, the congress elected Sukarno president for life. Following the political upheavals of 1965–66, the army, led by Gen. Suharto, moved to establish a "New Order." In 1967, Sukarno formally relinquished power to Suharto, who had become Indonesia's effective ruler in March 1966. Suharto reorganized the cabinet, making all of its 12 ministers responsible to him. In February 1968, he dismissed 123 members of the People's Consultative Assembly (Majelis Permusyawaratan Rakyat or MPR), an outgrowth of the Provisional People's Congress, and replaced them with his own nominees. In June of that year, following his appointment to a five-year term as president, Suharto formed a new cabinet, with himself as prime minister and defense minister.

On 3 July 1971, general elections—the first since 1955—were held for portions of two reconstituted national bodies, a 460-seat House of Representatives (Dewan Perwakilan Rakyat or DPR) and a 920-seat People's Consultative Assembly or MPR. In 1987, the memberships were increased to 500 and 1,000, respectively. The number of seats in the MPR was later reduced to 700. The People's Consultative Assembly included the DPR plus 200 indirectly selected members; it met every five years to elect the president and vice president and to approve broad outlines of national policy and also had yearly meetings to consider constitutional and legislative changes. Legislative responsibility was vested in the DPR, which consisted of 462 elected members and 38 members appointed by the president from the military (Armed Forces of People's Republic of Indonesia, Angkatan Bersenjata Republik Indonesia or ABRI). Under the Suharto government, the MPR acted as a consultative body, setting guidelines for national policy; its principal legislative task was to approve the broad outlines of state policy. In March 1973, the MPR elected President Suharto to a second five-year term; he was reelected to a third term in 1978, a fourth in 1983, a fifth in 1988, a sixth in 1993, and a seventh in 1998. However, Suharto was forced to step down in May 1998 in favor of his vice president, B. J. Habibie. Habibie sought to decrease the role of the military in Indonesian politics and promised major political and economic reforms. He too was forced to resign after the People's Consultative Assembly questioned his leadership. In a surprise move, the body chose Abdurrahman Wahid as president in October 1999. Wahid, a well respected Muslim cleric, promised democratization and an end to corruption. Ironically, Wahid was eventually removed from office in July 2001, for corruption and political incompetence. Megawati Sukarnoputri, the daughter of Sukarno, became president. She also took on the perennial problem of corruption, but had to face the issue of international terrorism as well.

In August 2002, the People's Consultative Assembly (MPR) approved constitutional amendments to take effect in time for the presidential elections held in 2004. Seats in the 550-member DPR were no longer reserved for the armed forces; in return, members of the military were allowed to vote. Members of the DPR are elected for five-year terms. The MPR rejected the imposition of Shariah for Muslims. A second standing body, the Regional Representative Council (Dewan Perwakilan Daerah–DPD), now functions as a senate in Indonesia. Parliament no longer elects the president; instead, he or she is now directly elected.

In 2004, Megawati was defeated in the second round of the first direct presidential elections held in Indonesia. Susilo Bambang Yudhoyono became president with 60.6% of the votes.

POLITICAL PARTIES

Until the autumn of 1955, when the first national elections were held, members of the House of Representatives were appointed by the president in consultation with party leaders. Of the 37,785,299 votes cast in the 1955 general election, six parties received more than one million votes each: the Indonesian Nationalist Party (Partai Nasional Indonesia—PNI), 22.3% of the total; the Council of Muslim Organizations (Masjumi), 20.9%; the Orthodox Muslim Scholars (Nahdlatul Ulama—NU), 18.4%; the Indonesian Communist Party (Partai Komunis Indonesia—PKI), 16.4%; the United Muslim Party, 2.9%; and the Christian Party, 2.6%. In all, 28 parties won representation in the 273-member parliament. Almost all the political parties had socialist aims or tendencies. The PNI, many of whose prominent members were leaders in the prewar nationalist movement, represented a combination of nationalism and socialism. Government officials and employees had originally constituted its backbone, but subsequently it grew powerful among labor and farmer groups as well. The Masjumi was more evenly distributed throughout Indonesia than any other party. Although it contained a large percentage of the small middle class, its principles were markedly socialist, owing to the influence in the party of a religious socialist group. The NU, which broke away from the Masjumi largely because of differences in religious outlook, represented the orthodox but not strictly conservative views of the rural people and religious teachers. The Christian Party was founded by Protestants; a smaller Roman Catholic Party was also formed. On 17 August 1960, Sukarno ordered the dissolution of the Masjumi and socialist parties on the grounds of disloyalty. A month later, on 13 September, political action by all parties was barred.

Early in 1961, notice was given that all political parties were required to apply for permission to function. On 15 April, parties certified to continue in existence included the PKI, PNI, NU, Catholic, Islamic Association, Indonesian Protestant Christian, Indonesian Islam Sarekat, and the League for Upholding Indonesian Independence. The PKI, which at the height of its power in 1965 had an estimated three million members and was especially strong on Java, was banned by Gen. Suharto in March 1966, by which time more than 100,000 PKI members were estimated to have been killed in riots, assassinations, and purges; many more PKI members were arrested. Since then, the party has operated underground. The Masjumi dissolved in 1960. Under the Suhar- to government, political opposition in Indonesia had become increasingly quiescent. Prior to the 1971 elections, the government formed a mass organization, known as Golkar (Golongan Karya), as the political vanguard for its "New Order" program. Golkar drew upon elements outside traditional party ranks—the civil service, labor, youth, cooperatives, and other groups—and succeeded in effectively circumventing the parties' ability to play a national role. Prior to the 1971 voting, a government-appointed election committee screened all prospective candidates, eliminating 735 from the initial list of 3,840; only 11 of those eliminated were from Golkar. Candidates were forbidden to criticize the government or to discuss religious issues. In the elections, held on 3 July 1971, Golkar candidates received 63% of the vote, while winning 227 of the 351 contested seats in the House of Representatives. Besides Golkar—which is not formally considered a political party—9 parties took part in the elections, as compared with 28 in 1955. The Orthodox Muslim NU placed second in the balloting, with 58 seats; the moderate Indonesian Muslim Party (Parmusi), an offshoot of the banned Masjumi Party, won 24 seats; and the PNI, Sukarno's former base, won only 20 seats. Four smaller groups—the Muslim Political Federation, the Protestant Christian Party, the Catholic Party, and the Islamic Party—divided the remaining 22 seats. The government subsequently announced that 57 million persons, or over 95% of the electorate, had taken part in the voting. An act of 1975 provided for the fusion of the major political organizations into two parties—the United Development Party (Partai Persuatan Pembangunan—PPP) and the Indonesian Democratic Party (Partai DemoKrasi Indonesia—PDI)—and Golkar. The PPP, then Golkar's chief opposition, is a fusion of the NU, Parmusi and other Muslim groups, while the PDI represents the merger of the PNI, the Christian Party, the Roman Catholic Party, and smaller groups. In the third general election, held on 2 May 1977, Golkar won 232 seats in the House of Representatives, against 99 seats for the PPP and 29 seats for the PDI. Golkar made further gains in the elections of 4 May 1982, winning 246 of the 364 contested seats, against 94 for the PPP and 24 for the PDI. Both opposition parties charged that the government had falsified the vote totals. Rioting marred the campaign period, and 35,000 army troops were stationed in Jakarta on election day. In the election of 23 April 1987, Golkar won 292 of the 400 elected seats (73.2%), against 64 for the PPP (16%) and 44 for the PDI (10.8%).

For the 1992 election the campaign rules banned automobile rallies and picture posters of political leaders; large outdoor rallies were discouraged, radio and televised appeals had to be approved in advance by the elections commission, and no campaigning took place in the five days before the elections. In 1992 there were 17 million first-time voters in a population of 108 million registered voters. More than 97 million Indonesians voted, 90% of the registered voters. Golkar won 68% of the popular vote, down by 5% from 1987. The PPP took 17% of the vote. The PDI took 15% of the vote compared to 10.9% in 1987. These results in terms of DPR seats were: Golkar, 281 (down 18 seats from 1987); PPP, 63 (down 2 seats from 1987); and PDI, 56 seats (an increase of 16 seats).

The most violent election campaign in recent years was in 1997 as the ruling Golkar party took 74% of the vote. The 29 May 1997 elections were marked by fraud. More than 200 people were killed in the campaign, which banned motorcades. The PPP took 22% of the vote and the PDI, 3%. The 7 June 1999 elections resulted in a victory for Megawati Sukarnoputri's PDI-P (Indonesia Democracy Party–Struggle); however, she relinquished the presidency in favor of Abdurrahman Wahid. The PDI-P took 37.4% of the vote, Golkar took 20.9% of the vote, Wahid's National Awakening Party (PKB) took 17.4% of the vote, and the PPP took 10.7%. Megawati became president on the removal of Wahid in July 2001.

The next parliamentary elections were held in April 2004. Golkar took 21.6% of the vote (128 seats), followed by the PDI-P, with 18.5% (109 seats). The PPP won 8.2% of the vote (58 seats). The National Awakening Party (PKB) won 10.6% of the vote (52 seats); the Democratic Party won 7.5% of the vote (55 seats); the National Mandate Party (PAN), 6.4% (53 seats); the Prosperous Justice Party (PKS), 7.3% (45 seats). Other parties won a collective 19.9% of the vote and held 50 seats. Due to election rules, the number of seats won does not always follow the number of votes received by the parties.

LOCAL GOVERNMENT

The structure and organization of local governments follow the pattern of national government. Indonesia is divided into 30 provinces. There are three special territories, namely the capital city of Jakarta, the special territory of Yogyakarta, and the special territory of Aceh. Each province is administered by a governor chosen by the central government from candidates proposed by the provincial assembly. Governors must be approved by the president. Provinces are divided into districts (kabupatens ), administered by bupati appointed in the same manner as governors. Both provincial and district governments are granted autonomy. There are also municipalities (kotamadyas ) headed by a mayor (walikota ), subdistricts (kecamatan ) headed by a camat, and villages. Desa are rural villages and kelurahans are urban villages. The head of a desa is elected by the village community. The head of a kelurahan, a lurah, is a civil servant appointed by a camat on behalf of the governor. A unique feature of village life is the village council of elders, composed of 9 to 15 prominent village leaders. With the implementation of decentralization on 1 January 2001, the 357 districts became the key administrative units responsible for providing most government services.

JUDICIAL SYSTEM

Since 1951, the administration of justice has been unified. Government courts, each with a single judge, have jurisdiction in the first instance in civil and criminal cases. In December 1989, the Islamic Judicature Law gave wider powers to Shariah courts. The new law gave Muslim courts jurisdiction over civil matters, including marriage. Muslims and non-Muslims can decide to appear before secular courts. The Supreme Court has as its primary function the review of decisions by lower courts. The high court hears appeals in civil cases and reviews criminal cases. Judges are appointed by the president from a list of candidates chosen by the legislature. On 16 August 2003, a separate Constitutional Court was invested by the president. In March 2004, the Supreme Court assumed administrative and financial responsibility for the lower court system from the Ministry of Justice and Human Rights. In the villages, customary law (adat ) procedures continue unchanged.

Islamic law (Shariah) governs many noncriminal matters involving Muslims, including family law, inheritance and divorce; however, the People's Consultative Assembly (MPR) rejected the imposition of Shariah for Muslims in 2002. A civil code based on Roman law is applied to Europeans; a combination of codes is applied to other groups such as ethnic Chinese and Indians. Military and administrative courts also exist below the Supreme Court level.

ARMED FORCES

The Indonesian armed forces in 2005 consisted of 302,000 active personnel and 400,000 reserves. The Army, estimated at 233,000, included provincial and special forces. The Army's weapons included 350 light tanks, 142 reconnaissance vehicles, 11 armored infantry fighting vehicles, 356 armored personnel carriers, and 1,060 artillery pieces. The Army's aviation arm had 2 attack and 37 utility helicopters. The Air Force had 24,000 personnel, with 94 combat capable aircraft, including 26 fighters and 18 fighter ground attack aircraft. The Navy had an estimated 29,000 personnel (including an estimated 1,000 naval aviation personnel and 15,000 Marines). The Navy's major units consisted of 2 tactical submarines, 13 frigates, 16 corvettes, and 23 patrol/coastal craft. Paramilitary forces consisted of a 280,000-member police force and 3 other armed security forces. Indonesia's defense budget for 2005 totaled $2.53 billion. Indonesia provided support to UN peacekeeping missions in five countries.

INTERNATIONAL COOPERATION

Indonesia was admitted to the United Nations on 28 September 1950 and is a member of ESCAP and several nonregional specialized agencies. Following the seating of Malaysia in the Security Council, Indonesia withdrew from the United Nations on 7 January 1965; it resumed its seat on 28 September 1966. Indonesia is also a member of the WTO, the Asian Development Bank, Colombo Plan, G-15, G-77, APEC, the WTO, the Organization of the Islamic Conference (OIC), APEC, and OPEC. Indonesia became one of the founding members of ASEAN in 1967. Indonesia was a founding member of the Nonaligned Movement.

In March 1970, a treaty of friendship was signed between Indonesia and Malaysia; the treaty also established the boundary between the two countries in the Strait of Malacca. Relations between Indonesia and much of the international community were strained following the 1999 East Timorese referendum through which that nation voted for its independence from Indonesia. Indonesian military forces supported violent upheavals in East Timor immediately following the referendum, but these were calmed by the arrival of the Australian-led peacekeeping mission of the International Force for East Timor (INTERFET).

In environmental cooperation, Indonesia is part of the Basel Convention, the Convention on Biological Diversity, Ramsar, CITES, International Tropical Timber Agreements, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change and Desertification.

ECONOMY

In colonial times Indonesia depended upon the export of a relatively small range of primary commodities. In the 17th and 18th centuries, the basis of the export-oriented economy was spices. In the 19th century, it shifted to sugar and coffee; in the 20th century, production of oil, tin, timber, and rubber became fundamental. Despite export gains, however, subsistence agriculture, with rice as the chief crop, remains the principal occupation of a large proportion of Indonesians, and standards of living are low. In 1991, the share of manufacturing in GDP exceeded that of the agricultural sector for the first time. In the early 2000s, the services sector expanded with a determined effort to promote tourism, and in 2005 it accounted for 40.4% of GDP and employed more than one-third of the workforce. Indonesia's record of economic growth and diversification was among the most successful in the developing world; but the onset of the Asian financial crisis in 1997 with Indonesia at the epicenter, followed by the 1998 political unrest and drought, contributed to a recession that hit the country hard, severely depressing the economy and halting economic growth. The economy slowly recovered in the beginning of the 21st century, however, with a 5.1% GDP growth rate in 2004, the fastest rate since the Asian financial crisis. The 26 December 2004 Indian Ocean tsunami resulted in the deaths of an estimated 131,000 Indonesians and left another 38,000 missing, with 570,000 displaced persons and $4.5 billion in damages and losses. Nevertheless, the overall impact of the tsunami on the economy was small: the large amount of donor aid and assistance and the beginning of reconstruction was projected to contribute to a further increase in GDP growth. A recovery in investment demand was projected to enable GDP growth to average 5.2% a year in 2006–07.

Indonesia is exceptionally rich in coal, oil, and other industrial raw materials, but industrial development has lagged in relation to the size of the population and the national income. In part, this was a consequence of expropriation policies carried out by Sukarno and of chronic inefficiency and corruption among government officials. After the 1964–66 political crisis, the government of President Suharto took steps to stabilize the economy. Exporters were allowed to keep a larger proportion of their foreign exchange earnings. The government also imposed strict controls on imports, encouraged foreign investment, returned many nationalized assets, ended nonproductive projects, and reduced government control of the economy. The inflation rate, which had been 635% in 1966 and 120% in 1967, fell to 85% in 1968 and further declined to 10% in 1971. National economic planning was used to guide economic growth. Under the 1969–74 plan, the government successfully introduced fiscal and credit restraints, rescheduled internal debts, returned expropriated properties, liberalized foreign investment laws, and actively sought assistance from overseas. Economic growth was set back by the near-collapse in 1975 of Pertamina, the giant government-backed oil conglomerate; growth was restored as rising oil prices increased revenues in the late 1970s. The economy was again severely strained in the early 1980s as falling oil prices forced the government to cut back on spending plans. Legislation requiring majority participation of ethnic Indonesians (pribumi ) in all enterprises formed since 1974 also slowed foreign investment. Indonesia's obligation to reduce production of oil, then its chief export, in line with OPEC agreements, together with the decline in non-oil export earnings, severely strained the government's resources. In an effort to meet the nation's developmental needs, Suharto was forced to end subsidies on food and to reduce subsidies on kerosene and other fuels. He also announced new trade policies to spur exports in an effort to reverse the nation's worsening economic condition.

Restrictive monetary policy and a conservative fiscal stance held inflation to below 10%. Real growth climbed to 7.3% and 7.5% in 1994 and 1995, respectively, before peaking in 1996 at 7.8%. Inflation was held to single digits. The official unemployment rate was 3%, although underemployment was estimated at 4%. Economic catastrophe struck in mid-1997, when the collapse of currencies began in Thailand and spread swiftly to Indonesia. Within a year, 75–80% of all businesses in Indonesia were technically bankrupt as the rupiah went from about 2,600 to one US dollar in June 1997 to a low of 17,000 to one US dollar in June 1998. GDP growth, which had been 8% in the first quarter of 1997, and 7% in the second quarter, fell to 3% in the third quarter and 2% in the fourth. In November 1997 an international bail-out package was arranged that included a stand-by agreement with the IMF with a $11.5 billion line of credit, an $8 billion loan from the World Bank and the Asian Development Bank (ADB), $5 billion loan from its own reserves, and $3 billion in US loan guarantees. The extended impact of the crisis can be seen in the figures for 1998, when real GDP fell by over 13%, industrial production was down by 18.24%, and the net outflow of invested capital reached of about $13.8 billion.

Economic distress erupted in bloody pogroms against resident Chinese in which over 1,000 people were killed, dozens of women raped, over 2,500 shops were looted or destroyed, and the streets were left strewn with more than 1,000 vandalized vehicles. On 19 May, students took over the parliament building, and two days later President Suharto resigned, ending 32 years of autocratic rule. His designated successor was B. J. Habibie, the architect of Indonesia's ambitious shipping and aircraft manufacturing industry. Habibie promised elections, which were held in 1999.

The government's official debt situation was being radically altered. Before the crisis of 1997, the government had incurred virtually no domestic debt, borrowing all capital primarily from the World Bank and the Asian Development Bank (ADB). External debt was 25–27% of GDP. In 1998, total debt rose to 78% of GDP, but with no domestic borrowing. In 1999, however, domestic borrowing went from $0 to $68.7 million, and combined with a record $75.8 million in foreign loans, government debt reached a peak of 102% of GDP. In 1999 real growth returned, but only at an anemic 0.2% level, as there was a net outflow of investment funds of almost $10 billion—a net loss of $2.7 billion in FDI and a net loss of $7.2 billion in portfolio investment. The outflow continued, as did rising violence throughout the country around the parliamentary election, and, of particular international concern, before and after the referendum on the independence of East Timor. Economic frustrations doubtless aggravated the conflicts. In February 1999 the government estimated that 27% of the population was living in poverty, with inflation at 20%.

In 2000, however, the economy showed signs of recovery with a real GDP growth rate of 4.8%, a budget deficit of 3.2% of GDP, and an inflation rate of 3.75%. In February 2000, the government entered into an extended agreement with the IMF that included a $5 billion line of credit. In April 2000, a second agreement was reached with the Paris Club members for the rescheduling another $5.8 billion of principal owed on official debt.

Unfortunately, both internal and external factors soon contrived to slow the momentum of the recovery. In December 2000, Indonesia's agreement with the IMF was suspended, and President Wahid, through a combination of neglect and defiance, was failing to implement the requirements of the IMF programs. Tensions were increased as thousands of Wahid's Islamic followers vowed to fight to the death his removal from office. It was not until August 2001, after Wahid's removal in July and the installation of Vice President Megawati Sukarnoputri as president, that discussions with the IMF could be reopened. Megawati's economic team promised a favorable response in the international economy, but this was cut short, first by the global economic slowdown of 2001, and then the aftershocks of the 11 September 2001 terrorist attacks on the United States. GDP growth averaged 3.3% for the year. Inflation returned to double digits, at 11.5%, and the government reported that poverty had increased, to 14.5% of the population. The net outflow of capital continued, reaching $9 billion for 2001.

In 2002, the economy began to look up. The total debt-to-GDP ratio for the government fell from 90% for 2001 to 70% in 2002, and the annual budget deficit was estimated to have fallen to below 2% of GDP. Hopes that Indonesia might be safely on its way out of its postcrisis stagflation were shattered by the terrorist bombs in Bali on 12 October 2002. Beyond the death toll of nearly 200 was the message that Indonesia was no longer safe for foreign visitors and foreign investors. After the Bali bombings, the rupiah depreciated to more than 9,000 to one US dollar and the Jakarta Stock Exchange Index fell back below 400. (By 2003 both indicators of investor confidence had returned to near their pre-bombing levels.)

Real GDP growth climbed to 4.1% in 2003, and to 5.1% in 2004, its fastest rate since the 1997 crisis. The budget deficit registered 1.3% of GDP in 2004, and was projected to be lower in 2005, when GDP growth was projected to be 5.3%. President Yudhoyono, elected in 2004, claimed he wanted the economy to grow by 7% or more, in part to generate enough jobs for Indonesia's large unemployed population. Yudhoyono, in March 2005, reduced subsidies on various fuels, raising gas prices by some 30%. The government had been spending more on fuel subsidies than it was on health and education combined. Economists welcomed the move for Southeast Asia's largest economy, although the reduction in subsidies resulted in a decline in popularity for Yudhoyono. In August 2005, a run on the currency took place, and prompted the government to enact an average 126% fuel price increase in October. The resulting inflation and interest-rate hikes were projected to temper growth prospects in 2006, although the government planned to spend more money on promoting infrastructure development. Nevertheless, a recovery in investment demand was forecast to lead to annual GDP growth rates of 5.2% in 2006–07. Average annual inflation was projected to rise in 2006, owing to the increase in fuel prices, but inflation was projected to fall significantly in 2007 as global oil prices eased. Indonesia became a net oil importer in 2004, due to declining production and a lack of new exploration investment.

INCOME

The US Central Intelligence Agency (CIA) reported that in 2005 Indonesia's gross domestic product (GDP) was estimated at $899.0 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $3,700. The annual growth rate of GDP was estimated at 5.3%. The average inflation rate in 2005 was 9.3%. It was estimated that agriculture accounted for 15.1% of GDP, industry 44.5%, and services 40.4%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $1.489 billion or about $7 per capita and accounted for approximately 0.6% of GDP. Foreign aid receipts amounted to $1,743 million or about $8 per capita and accounted for approximately 0.9% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Indonesia totaled $136.60 billion or about $635 per capita based on a GDP of $238.5 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 5.4%. In 2001 it was estimated that approximately 47% of household consumption was spent on food, 6% on fuel, 5% on health care, and 14% on education. It was estimated that in 2004 about 15.2% of the population had incomes below the poverty line.

LABOR

In 2005, Indonesia's labor force numbered an estimated 110.4 million people. In 2002, agriculture accounted for 44.3% of the workforce, with 18.8% in industry, and 36.9% in services. Unemployment figures for 2005 were estimated at 10%.

The law protects the right to form and join unions to all workers regardless of political affiliation. Ten or more workers can unionize, and thousands of unions have been registered. However, a union can be banned by the government if its foundation goes against the constitution. Sometimes there are clashes between different unions within one workplace. With the exception of civil servants, workers have the right to strike after mandatory mediation. Collective bargaining is utilized, but most contracts do not provide workers with more than the government minimum standards. The reported size of Indonesia's unionized labor force varies, depending upon how it is measured. According to a survey of union membership conducted in 2005 by the Ministry of Manpower, when compared to the total workforce, unionized workers accounted for under 4%. However, when compared to the number of employees in the nation's formal workplace, the unionized workforce totaled 14%.

Although children under age 18 were prohibited from working as of 2005, the nation's laws recognized that some children must work to supplement family income. As a result, there is an exception for 13–15 year olds, who can work but are limited to working no more than three hours per day. In additiuon, they must have parental consent, cannot work during school hours, and must be paid legal wages. The law however was silent on exceptions for 16–17 year olds. In addition, children are not legally permitted to work in hazardous occupations, but child labor laws are not enforced.

There is no national minimum wage. Wages are set by area wage councils who estimate the amount a worker needs to earn to provide for his or her basic needs. In 2005, the minimum wage in Jakarta was $71 per month. However, many employers do not pay this minimum wage. The 40-hour workweek and a 7- to 8-hour day are established by law throughout Indonesia, although these standards are not regularly enforced.

AGRICULTURE

About 48% of Indonesian workers are engaged in agriculture, which accounted for 17% of GDP in 2003. Some 34.4 million hectares (78.5 million acres) were under cultivation, with 35–40% of the cultivated land devoted to the production of export crops. Some 60% of the country's cultivated land is in Java.

There are three main types of farming: smallholder farming (mostly rice), smallholder cash cropping, and about 1,800 large foreign-owned or privately owned estates, the latter two producing export crops. Small-scale farming is usually carried out on modest plots—those in Java average about 0.8–1 hectares (2–2.5 acres)—often without benefit of modern tools and methods, good seed, or fertilizer. Although rice, vegetables, and fruit constitute the bulk of the small farmer's crops, about 20% of output is in cash crops for export, the chief of which is rubber. Of the estategrown crops, rubber, tobacco, sugar, palm oil, hard fiber, coffee, tea, cocoa, and cinchona are the most important. Dutch, United Kingdom, United States, French, and Belgian capital financed estate agriculture in colonial times, with the Dutch share being the largest. Management of Dutch interests was taken over by the Indonesian government in December 1957; in 1964, the 104 UK-operated plantations were confiscated without any compensation, and Indonesian managers were appointed. The following year, the US-operated plantations were expropriated, and all foreign plantations were placed under the control and supervision of the Indonesian government. In 1967, some of the estates seized in 1965, including the US-leased rubber plantations, were returned, but the majority were retained by the government.

Because the population is rapidly increasing, the government seeks to achieve food self-suffi ciency through expansion of arable acreage, improved farm techniques (especially the use of fertilizers and improved seeds), extension of irrigation facilities, and expanded training for farmers. Production of rice, the staple food, has been gradually increasing, and production comes close to meeting domestic requirements. This increase has resulted less from extension of cultivated area through the government's resettlement policy than from expanded use of irrigation, fertilizers, and pesticides and cultivation of high-yielding hybrid rice, especially insect-resistant hybrids. It also reflects the success of the government's "mass guidance" program, which provides technical assistance, easy credit terms, and marketing support through a system of village cooperatives. Additional support was provided by the National Logistics Board, which is responsible for price regulation and the national rice-rationing programs.

Rice is the primary staple crop; production in 2004 totaled 54,000,000 tons. Other staple crops in 2004 included cassava (19,264,000 tons), corn (11,355,000 tons), and sweet potato (1,876,000 tons). Vegetable and melon production in 2004 totaled 6,729,410 tons. Sugar is the largest commercial crop, with production reaching 24,600,000 tons in 2004. About 2,767,000 tons of rubber were produced in 2004, as compared with about 648,400 in 1964. Faced with the prospect of declining yields, the government began an extensive replanting and rehabilitation program in 1981. In 2004, Indonesia was the world's third-largest producer of coffee (after Brazil and Vietnam); some 702,000 tons of coffee were grown that year, as compared with 188,900 tons in 1972 and an annual average of 120,400 tons during 1960–65. Indonesia is the world's second-largest producer of palm oil (after Malaysia); 15.2 million tons were produced in 2004/05. Palm kernels (3.63 million tons in 2004/05) and copra (1.4 million tons in 2004/05) are also important export crops.

ANIMAL HUSBANDRY

In 2005, the livestock population was 11,500,000 head of cattle, 13,182,000 goats, 8,306,000 sheep, 6,267,000 hogs, and 405,000 horses. There are also about 2,248,000 buffalo in the country. The production of meat (about 2,477,000 tons in 2005) and cows' milk (341,990 tons) is secondary to the raising of draft animals for agricultural purposes and transportation. The government has established cattle-breeding stations and artificial-insemination centers to improve the stock and has been carrying on research to improve pastures. Technical and other assistance is also offered to chicken and duck farmers in an effort to increase protein supplies. There were an estimated 1.25 billion chickens and 34.3 million ducks in 2005, when some 1.1 million tons of eggs were produced. Local demand for animal products is constrained by low purchasing power, but increases in consumer income will raise demand for animal protein. Dairy and egg exports exceeded $69 million in 2005.

FISHING

As Indonesia is the world's largest archipelago (13,667 islands), fish is a readily-available source of animal protein for domestic consumption. In 2003, the total catch was 5,960,930 tons (81% from marine fishing), ranking Indonesia sixth in aquaculture and fourth in capture fishing in the world. Fishing is more important than statistics indicate, because the catch of many part-time fishermen never enters trade channels. Commercial fishing is confined to a narrow band of inshore waters, especially off northern Java, but other fishing also takes place along the coast and in the rivers, lakes, coastal swamps, artificial ponds, and flooded rice fields. The government has stocked the inland waters, encouraged cooperatives to provide credit facilities, introduced improved fishing methods, provided for the use of motorized fishing boats and improved tackle, and built or rehabilitated piers. Fish and fish product exports had a value of $1.55 billion in 2003, 12th-highest in the world.

FORESTRY

Forests represent a potentially vast source of wealth in Indonesia. Of the 146.3 million hectares (361.5 million acres) of forests, nearly three-fourths are in Kalimantan and eastern Indonesia, and 68% are commercial forests. The more accessible forest areas of Sumatra and Kalimantan furnish the commercially cut timber for domestic consumption and export. Indonesia has over 4,000 species of trees, including 120 types of hardwood suitable for commercial use. Timber estates produce fast growth species such as pine, eucalyptus, albizia, and acacia for the pulp and paper industry. Practically all forestlands belong to the state. In Java, excessive cutting has caused soil erosion, aggravated floods, created water shortages, and damaged some irrigation facilities. Replanting and rehabilitation of the Javanese forests and reforestation in the Outer Islands are promoted as part of the nation's "regreening program." Meranti, kruing, kapur, and bakau are the leading types of logs produced. Teak and other tropical hardwoods are the most valuable species, but there is hope of obtaining wood pulp from pine and bamboo and commercial timber from new plantings of fir and pine.

Indonesia is the largest producer of tropical hardwood plywood in the world. Export sales of processed wood in 2004 amounted to $4.57 billion, representing 6.4% of all Indonesian exports. Production of sawn wood in 2004 totaled 6.25 million cu m (220 million cu ft); plywood, 6.4 million cu m (226 million cu ft); and particleboard, 427,000 cu m (15.1 million cu ft). About two-thirds of the timber output is exported. French, Japanese, US, and Philippine interests have large investments in the timber industry. Indonesia is the world's second-largest producer of tropical hardwood logs and lumber, after Malaysia. Due to a hardwood log export ban enacted in 1985 to protect rapidly diminishing forests, Indonesia has exported no logs since then. Prohibitive export taxes imposed in 1990 have all but eliminated tropical hardwood exports, in order to conserve declining forest resources for production and export of higher value items such as plywood. The annual allowable cut of logs is set at 5.74 million cu m. However, up to 68 million cu m of logs are cut illegally, with some 10 million cu m of logs illegally shipped out of the country. With plummeting annual allowable cuts of logs, industries are using conversion forests, community forests, and timber estates.

MINING

Indonesia's principal mineral resources (excluding oil, natural gas, and coal) are copper, gold, nickel, and tin. Indonesia was also a major world supplier of tin, nickel, copper and gold, with large reserves of each. In addition, Indonesia was a leading regional producer of cement, bauxite, and nitrogen fertilizer. Indonesia also produced hydraulic cement, dolomite, feldspar, granite, gypsum, marble, nitrogen, salt, quartz sand, silica stone, sulfur, and zeolite.

Mined copper output (content in ore) in 2003 was 1,005,837 metric tons, down from 1,171,726 metric tons in 2002. Bauxite production in 2003 (wet basis, gross weight) was 1.263 million tons, and 1.283 million tons in 2002. Indonesia possessed large deposits of high-grade bauxite, from mines in Kijang (Bintan Island) and Sumatra. Most of the output was exported to Japan, the remainder to the United States.

Tin mine output in 2003 was 71,694 metric tons. The chief deposits of tin were in Bangka, Belitung, and Singkep, islands off the east coast of Sumatra. Indonesia is the world's second-largest producer of tin (after China). The industry in Indonesia is dominated by PT Koba Tin and PT Tambang Timah. However, the industry has, for several years, faced depleting resources, community conflicts in several mining sites, and illegal mining and smuggling, the latter resulting in increased compensation to company contractors and high tin output from offshore mining.

Gold mine output in 2003 was 141,010 kg, down from 142,238 kg in 2002. Illegal mining activity and associated mercury contamination was an ongoing problem for the Indonesian government and legal gold mining operators.

Nickel mine output in 2003 totaled 143,000 metric tons, up from 123,000 metric tons in 2002. Nickel was produced in Soroako (North Sulawesi), Pomalaa (South Sulawesi), and the Maluku and Gebe islands, with some of the largest reserves in the world.

Iron ore was found in sizable quantities, but was commercially exploited only in central Java. There were fair-to-good reserves of gold, silver, iodine, diamond (industrial and gem quality), and phosphate rock, and considerable supplies of limestone, asphalt, bentonite, fireclay, and kaolin powder. Herald Resources Ltd. of Australia announced the discovery of significant lead and zinc resources in the Dairi area, Bukit Barisan Highland; the exploration concentrated in the Anjing Hitam area; it was estimated that the deposit contained an indicated resource of 7.5 million tons of lead and zinc at 10.3% lead, 16.7% zinc, and 14 grams per ton of silver and an inferred resource of 2.5 million tons at 6.8% lead and 11.3% zinc.

Indonesia's constitution places all natural resources in the soil and waters under the jurisdiction of the state. In 1999, the government increased taxes and royalties that created a less competitive investment environment. Restructuring and privatization of state-owned industries has been very slow, and new investment was still low. As the world's fourth-most-populous country, Indonesia could become one of the largest steel-consuming countries. However, its volatile political situation and uncertain economic climate hampered development. The state-owned general mining company, PT Aneka Tambang, was privatized, with its stock trading on the Jakarta Stock Exchange.

ENERGY AND POWER

Indonesia ranks among the world's leading petroleum-producing countries. Proven reserves in 2004 were estimated at 4.9 billion barrels. However, resources may be much larger. Sumatra, the richest oil area, produces about 70% of Indonesian oil. Kalimantan is the second-leading producer; Java and Madura have a scattering of smaller producing wells. Lesser amounts are also produced in Irian Jaya. Indonesia's production and consumption of oil in 2003 was estimated at 971,000 barrels per day, and at 1.183 million barrels per day respectively. Exports in 2003 averaged 518,100 barrels per day, with oil imports placed at 370,500 barrels per day for that year.

Indonesia also has significant reserves of natural gas. Proven reserves of natural gas in 2004 were put at 2.549 trillion cu m. For 2003, it was estimated that natural gas exports were placed at 39.7 billion cu m; consumption at 55.3 billion cu m; and production at 77.6 billion cu m, respectively. Indonesia is the world's largest exporter of LNG; its major customers are Japan, South Korea, and Taiwan.

Power facilities are overtaxed, despite heavy government investment in electrical installations. Total electric power generating capacity in 2002 was placed at 24.706 million kW, as compared with 10,830,000 kW in 1988. Production in 2003 totaled 110.2 billion kWh, up from 102.273 billion kWh in 2002. In 2002, about 85% was generated by fossil fuels, 9.6% from hydropower, and the remainder from other sources. Electricity consumption in 2003 was 92.35 billion kWh. The nation's first geothermal electric power station was inaugurated in 1974 in West Java, and a 750 MW hydroelectric plant was completed there in 1985. In 1995, P.T. Perusahaan Listrik Negara (PLN), the state-owned electric company, projected that electricity demand would rise 14% annually, with a generating capacity at 25,000–30,000 million kW needed by 2010.

INDUSTRY

The leading industries by value are petroleum and natural gas; textiles, apparel and footwear; mining; cement; chemical fertilizers; plywood; rubber; food; and tourism.

Industrial expansion is given a high priority in development plans. Labor-intensive industries are stressed, together with industries producing consumer items for domestic consumption and export and products accelerating agricultural development. The government encourages industrial investors, particularly those who plan to export, to locate in one of its eight bonded zones (BZs), the Batam Industrial Park or free trade zone (FTZ) or in an export-processing zone (EPZ). The Batam Industrial Park, located on Batam Island in the Malacca Strait 20 km (12.5 mi) south of Jakarta, was designed to attract investment away from crowded Singapore.

Industries that process Indonesia's abundance of natural resources include those based on petroleum, wood, sugar, rubber, tea, coconuts, palm kernels, sisal, kapok, rice, and cassava. Manufactured products include consumer goods such as tires and tubes, rubber shoes, radios, batteries, soap, margarine, cigarettes, light bulbs, textiles, glass, paper, tractors, and trucks. Other industries include the Krakatau Steel Industrial Estate at Cilegon (in north-west Java), plywood factories, cement works, spinning mills, knitting plants, iron works, copper and other foundries, a ceramics plant, a leather-goods plant, and a glass factory. Petrochemicals and urea fertilizers are manufactured, and there are facilities for automobile assembly, shipbuilding, and aircraft manufacture.

From World War II until the 1990s, overall industrial growth was small, with agriculture the dominant sector of the Indonesian economy. However, in the 1990s, industry and services took over as the dominant sectors, respectively contributing about 41% and 42% of the GDP, with agriculture falling to 17%. Although the government has put an emphasis on developing labor-intensive industries, industry accounts for only for 16% of employment, compared to a 45% share for agriculture and 39% for services. In 1991, textiles were the key industrial export, accounting for 47% of the total. In 2001 textiles and garments were technically still the leading industrial export, but only accounted for 13.6% of total export earnings. The textile sector remains characterized by small producers, with more than 1,200 registered textile companies in Indonesia, employing more than a million workers. In January 2005, the WTO abolished world textile quotas, and Chinese exports to the United States and European Union (EU) soared. Both the United States and EU responded during the course of 2005, reimposing certain quotas to protect their textile industries, thus putting a slight curb on the flow of Chinese goods. Th is policy bode well for Indonesia and other Southeast Asian textile exporters, as competition with China was eased. Indonesia and other developing countries in the long term, however, must pursue strategies to save their clothing industries from being obliterated in a quota-free world.

The petroleum refining industry has declined over the last decade. In 2004, Indonesia had seven refineries, all operated by Pertamina, the state oil company. (Pertamina was slated to be fully privatized in 2006.) The combined capacity of Indonesia's seven refineries was nearly 993,000 barrels per day in 2004. Statistics on refined petroleum products consumption are questionable because of considerable smuggling out of Indonesia to escape its price controls. In 2004, Indonesia became a net importer of petroleum, due to declining production and a lack of new exploration investment. Natural gas production has steadily increased; Indonesia in 2005 was the world's leading exporter of liquid natural gas (LNG). Coal production reached 70 million metric tons per year by 1999, and in 2003 production was 114 million metric tons, up 11% from 2002. The regulation and licensing of the coal industry in Indonesia was decentralized in legislation that went into effect in 2001.

The steel industry in Indonesia basically consists of one large integrated mill—the PT Krakatau Steel complex—plus numerous mini mills that use scrap steel as their raw material input. In 1992 steel billet production was 560,000 tons. In 2000, total steel billet capacity was 2.34 million tons across 11 companies, but the plants were only running at 60% capacity. In the Asian financial crisis, Indonesia's total steel production dropped from 7.3 million tons in 1997 to 2.7 million tons in 1998 as domestic demand collapsed. The industry was able to survive through exports. What recovery had been achieved in 2000, however, was cut off abruptly in 2001 when the United States, its biggest customer, placed dumping duties on Indonesian steel. These were lifted in 2003. In 2004, Indonesia produced a total of 2.8 million metric tons of crude steel and was ranked 37th in the world in terms of crude steel production.

Indonesia produces nitrogen, phosphate, and potash fertilizers, but the strongest prospects are for the urea industry because of Indonesia's natural gas deposits. Prospects are good for an export market in urea, but most fertilizer output in the early 2000s was for domestic consumption and fertilizer formed less than 1% of exports.

Wood and wood products have traditionally been Indonesia's second-largest industrial export group, accounting for 11% or 12% of total export value, though electronics sometimes claims a larger share. The robust growth in the output of wood and wood products, from 4 million cu m in 1967 to an estimated 60 to 70 million cu m in the early 2000s, is the cause of international controversy because of the rapid deforestation involved. Global Forest Watch estimates that forest cover declined from 162 million hectares to 98 million hectares (39.5%) from 1995 to 2000. Laws are in place to curb the rate of exploitation, but it is estimated that over half of the logging done is illegal. Wood products, pulp, paper, and paper products, are Indonesia's second-largest sector of industrial exports.

The chemical industry experienced an annual growth rate of 13% prior to 1993; after 1997, the depreciation of the currency encouraged chemical production for the export market. In the consumer goods manufacturing sector, activities are run primarily by private enterprise. All oil and natural gas processing have historically been controlled by government enterprises, as have been other major heavy industries, such as basic metals, cement, paper products, fertilizer, and transport equipment. After the recession in 1998, the government proposed liberalizing heavy industry. Of the 168 parastatals, 140 were scheduled for privatization. As of 2004, however, the government controlled 158 state-owned enterprises.

In July 1992 nontariff barriers were reduced and key industries were deregulated to allow free importation of essential manufacturing inputs. There is a shortage of skilled technical personnel to support high-tech industries; most technology has been imported through joint ventures. The agency for strategic industries, a state-owned holding company including aircraft, telecommunications, and high-technology industries, formed a joint venture with a major foreign multinational technology corporation to promote technology transfer to Indonesia. Most industrial enterprises were negatively affected by the 1998 recession, with an overall decline of at least 15%. The Indonesian Bank Restructuring Agency (IBRA) took over the majority of Indonesia's nonperforming industrial assets in 2000 with plans to sell, including: cement factories, mining facilities, manufacturing plants, food processing firms, plywood production plants, vehicle assembly lines, chemical plants, property, and agribusinesses.

SCIENCE AND TECHNOLOGY

Like many developing nations, Indonesia has a shortage of scientific personnel and engineers. The Indonesian Institute of Sciences, a government agency established in 1967, has centers for research and development in biology, oceanology, geotechnology, applied physics and applied chemistry, metallurgy, limnology, biotechnology, electricity and electrical engineering, information and computer sciences, telecommunications, strategic electronics, component and material sciences, and calibration, instrumentation, and metrology. The country has 45 other research institutes concerned with agriculture and veterinary science, medicine, the natural sciences, and technology. Courses in basic and applied sciences are offered at 53 state and private universities. At a more basic level, Agricultural Training Center programs provide workshops throughout Indonesia to acquaint rural workers with the use of plumbing and automotive equipment, small engines, electric tools, and chain saws, and to familiarize farmers with the use of modern hybrid seeds, pesticides, and fertilizers.

In 1987–97, total expenditures for research and development amounted to 0.07% of GDP. There were also 182 scientists and engineers per million population actively engaged in research and development. During the same period, science and engineering students accounted for 39% of all college and university students. In 2002, high-tech exports were valued at $5.070 billion and accounted for 16% of manufactured exports.

DOMESTIC TRADE

Jakarta, the capital and chief commercial city, is Indonesia's main distribution center. The principal business houses, shipping and transportation firms, and service agencies have their main offices there and branches in other cities. After the end of World War II, the government sought to channel trade and business activities into Indonesian hands by a policy of granting special privileges to Indonesian firms—including export license monopolies, sole agency rights, and exclusive licenses to import and sell specific goods—and of making government purchases through Indonesians. In 1998, however, most of these restrictions of foreign retail investment were removed. Foreign investment is also allowed in wholesale and distribution activities; however, in many cases, the company must be represented locally by an Indonesian firm or national. Most trade is conducted through small and medium-sized importers who specialize in specific product lines. Direct marketing has become popular for a variety of goods and services.

Commercial business hours vary, but are usually 8 am to 5 pm, Monday through Friday, and from 8 am to 1 pm on Saturday, although some Indonesians take Saturday off. Many shops are open from 9 am to 10 pm, Monday through Saturday. Muslims are released for prayers every Friday from 12 to 1 pm. Local banks transact business from 9 am to 3 pm, Monday through Friday. Newspapers, magazines, television, radio, posters, and billboards are the most popular advertising media. English is widely used in business and government.

FOREIGN TRADE

Trade balances since World War II have invariably been favorable. Trade liberalization began in 1982 as an effort to increase nonoil exports. By 1987, non-oil exports matched revenue from oil and gas exports for the first time. Imports, which are closely regulated in government efforts to restrain growth of merchandise imports, consist mainly of machinery and raw materials, indicating a reliance on imports to support industry. The late 1990s revealed shrinking exports of plywood, and slow growth in exports of garments and textiles. Emerging exports such as footwear and consumer electronics also showed weak growth. However, rising world prices for oil, rubber, and other commodities kept these exports

Country	Exports	Imports	Balance
World	61,058.2	32,550.7	28,507.5
Japan	13,603.5	4,228.3	9,375.2
United States	7,386.4	2,702.4	4,684.0
Singapore	5,399.7	4,155.1	1,244.6
Korea, Republic of	4,323.8	1,527.9	2,795.9
China	3,802.5	2,957.5	845.0
Malaysia	2,363.9	1,138.2	1,225.7
Other Asia nes	2,233.2	877.1	1,356.1
Australia	1,791.6	1,648.4	143.2
India	1,742.5	665.6	1,076.9
Germany	1,416.8	1,181.2	235.6
(…) data not available or not significant.

high. Economic, political, and social crisis was accompanied by a small leap in exports due to currency depreciation, but earnings in the non-oil sector remained low nonetheless.

In the 1970s, Japan became Indonesia's dominant trade partner, taking over 41% of Indonesia's exports (mainly petroleum) and supplying over 25% of its imports. Although Japan remains the dominant trade partner, other trade partners—including the United States, Singapore, South Korea, and China—have become important to the economy. Trade with the Netherlands, which was of primary importance in colonial times when Indonesia was known as the Dutch East Indies, has decreased since 1957. With the creation in 1992 of the ASEAN Free Trade Area (AFTA), trade within the region increased.

Indonesia puts out a large amount of gas and crude petroleum into its commodities export market. Other major exports include apparel, textiles, paper products, plywood, footwear, and copper ore. In percentage terms, the major exports in 2004 were crude petroleum and petroleum products (11.5% of total exports); textiles and apparel (11.4%); liquefied natural gas (10.4%); and wood and wood products (5.2%). The major imports in 2004 were machinery and transportation equipment (26.3% of all imports); flues and lubricants (23.5%); chemicals (16.3%); and manufactures (12.8%).

Indonesia's leading markets in 2004 were Japan (24.3% of all exports), the United States (15.2%), Singapore (10.2%), and South Korea (8.8%). Leading suppliers included Japan (21.6% of all imports), Singapore (12.6%), China (11.7%), and South Korea (7.6%).

BALANCE OF PAYMENTS

Indonesia had persistent balance-of-payments difficulties from the time of its independence. Indonesia's payments position brightened considerably in the late 1970s as a result of a rapid increase in oil prices mandated by OPEC. However, expansion of the non-oil export industries failed to keep pace with burgeoning import requirements

Current Account			7,534.0
Balance on goods		23,990.0
Imports	-39,262.0
Exports	63,252.0
Balance on services		-12,107.0
Balance on income		-6,218.0
Current transfers		1,869.0
Capital Account			…
Financial Account			-949.0
Direct investment abroad		…
Direct investment in Indonesia		-597.0
Portfolio investment assets		…
Portfolio investment liabilities		2,251.0
Financial derivatives		…
Other investment assets		-5.0
Other investment liabilities		-2,599.0
Net Errors and Omissions			-2,937.0
Reserves and Related Items			-3,647.0
(…) data not available or not significant.

for some consumer goods and machinery, equipment, and spare parts for development programs. The current account deficit averaged -2% of GDP between 1992 and 1997, but accrued a surplus of over 4% of GDP in 1998 due to currency devaluation and a one-third cut in imports.

In 2004, merchandise exports rose by 12.6% to $72.4 billion, and imports rose by 21.9% to $50.6 billion, resulting in a trade surplus of $21.8 billion. At the same time, the deficit rose slightly to $18.5 billion, up from $12.1 billion in 2003, leaving a currentaccount surplus of $3.3 billion. The current account balance averaged 3.9% of GDP over the 2001–05 period.

BANKING AND SECURITIES

The government's Bank Negara Indonesia (BNI) was established in 1953 as the successor to the Java Bank. In 1965, all state banks with the exception of State Trading Bank were incorporated into the BNI as separate units. In 1969, this policy was reversed, and the state banks were again reorganized as individual banks. In 1967, as part of the new regime's policy of encouraging foreign investment, foreign banks were permitted to operate in Indonesia, on condition that they invested at least $1 million, of which at least $500,000 had to be brought into the country. The law also provided that foreign banks were to appoint Indonesian banks as their correspondents for any dealings outside Jakarta. The Indonesian banking system transformed after 1980, through a process of gradual but steady reform that culminated in the 1992 banking law. Joint ventures were allowed with Indonesian partners. The partial liberalization of the banking industry had a dramatic impact. A precipitous growth in bank credits threatened to undermine economic stability by stimulating a sharp increase in import demand and inflationary pressures. Responding to this threat, the government initiated an abrupt tightening of monetary policy during the 1990s. From 1992 until 1997, the rupiah was managed in relation to the dollar, but in 1997, the currency was allowed to float because of Asian currency depreciation. Political and social unrest resulted in a highly volatile currency. The 1998 economic failure brought about a major restructuring of the banking system, which was literally bankrupted. State-owned banks held $80 billion in corporate debt and more than two-thirds of their loans were nonperforming in 1999. Bank Indonesia alone faced a deficit of over $4.1 billion in 2000.

Bank Indonesia, as the central bank, is responsible for the administration and regulation of the four state banks and other banking operations. Among the state banks, Bank Rakjat Indonesia specializes in credits to agricultural cooperative societies but also provides fishing and rural credit in general. Bank Tabungan Negara promotes savings among the general public. Bank Negara Indonesia (BNI) provides funding for industry. After the financial crash in 1999, four of the state banks were merged into the new Bank Mandiri; including the Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor, and BAPINDO. Bank Bumi Daya provided credits to estates and forestry operations; Bank Dagang Negara provided credits to the mining sector; and Bank Ekspor Impor Indonesia specialized in credits for the production, processing, and marketing of export products; and the Development Bank of Indonesia (Bank Pembangunan Indonesia-or BAPINDO) provided financial assistance to government enterprises and approved new industries. There were 128 private domestic commercial banks in 1998; 38 of them were liquidated in 1999, 8 were taken over by the government, 8 were able to function with government aid, and 71 private banks were able to continue without assistance. Foreign investment in the banking system is now allowed up to 99%.

The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $16.6 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $81.6 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 15.03%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 17.62%.

Indonesia's first stock exchange was established in December 1912 in Jakarta, although both this and two subsequent exchanges established in Surabaya and Semarang in 1925 were shut down during the Japanese occupation. An attempt to revive the capital markets in the early 1950s proved futile. It was not until August 1977 that the Jakarta Stock Exchange (JSE) was successfully relaunched amid a comprehensive set of institutional reforms that resulted in the establishment of the Capital Market Executive Agency (Badan Pelaksana Pasar Modal-BAPEPAM) to manage the market, as well as a state-owned securities firm, Danareksa, to facilitate the flotation of shares. After sinking to 276 in the fall of 1998, the JSI rose to just below 500 in early 1999 to above 700 in mid-1999. It was back down to 508 in mid-2000 and below 400 by 2001. As of 2004, a total of 331 companies were listed on the JSE, which had a market capitalization of $73.251 billion that year. In 2004, the JSE Composite Index rose 44.6% from the previous year to 1,000.2.

INSURANCE

The insurance and reinsurance industry is governed by an insurance law issued in February 1992 that allows foreign ownership of insurance companies. The industry is regulated by the Ministry of Finance as well as the Insurance Council of Indonesia. The growth of the industry over the past decade is reflected in an impressive increase in many of the industry's financial variables, including assets, gross premiums, and investments. Third-party motor liability insurance, workers' compensation, and passenger accident insurance are compulsory. Workers' compensation must be insured with the government company, ASTEK, and employees have no right to sue. A 1998 Financial Services Agreement with the WTO equalized capital requirements for both domestic and foreign insurance firms. In 2003, the value of direct premiums written totaled $3.107 billion, with nonlife premiums accounting for the largest portion at $1.733 billion. Tugu Pratama was Indonesia's largest nonlife insurer in 2003, with gross written nonlife premiums totaling $175.5 million. Bumiputera was the largest life insurer that same year, with gross written life premiums of $294.2 million.

PUBLIC FINANCE

Government expenditures (including capital expenditures) have outrun public income by a considerable margin each year since 1952, and this cash deficit has been met by foreign aid receipts. Since 1985, however, Indonesia has discouraged public sector and monetary growth. The East Asian financial crisis of 1998 hit Indonesia

Revenue and Grants	307,892	100.0%
Tax revenue	190,614	61.9%
Social contributions	6,106	2.0%
Grants	52	0.0%
Other revenue	111,121	36.1%
Expenditures	359,038	100.0%
General public services	272,493	75.9%
Defense	10,673	3.0%
Public order and safety	7,400	2.1%
Economic affairs	12,747	3.6%
Environmental protection	…	…
Housing and community amenities	4,726	1.3%
Health	4,542	1.3%
Recreational, culture, and religion	2,257	0.6%
Education	13,433	3.7%
Social protection	30,766	8.6%
(…) data not available or not significant.

hard. In 1998, the government deficit reached over 3% of GDP, partially because of subsidized rice imports and investment in the failing banking sector. As of 2002, the economy was just beginning to recover to pre-1997 levels, and the growth rate was not considered high enough to achieve full employment anytime soon. At the end of 2001, Indonesia's external debt was the equivalent of 20% of total GDP.

The US Central Intelligence Agency (CIA) estimated that in 2005 Indonesia's central government took in revenues of approximately $56.1 billion and had expenditures of $58.7 billion. Revenues minus expenditures totaled approximately -$2.5 billion. Public debt in 2005 amounted to 52.6% of GDP. Total external debt was $140.6 billion.

The International Monetary Fund (IMF) reported that in 2001, the most recent year for which it had data, central government revenues were Rp307,892 billion and expenditures were Rp359,038 billion. The value of revenues in millions of US dollars was us$30 million and expenditures us$36 million, based on a market exchange rate for 2001 of us$1 = Rp10,260.9 as reported by the IMF. Government outlays by function were as follows: general public services, 75.9%; defense, 3.0%; public order and safety, 2.1%; economic affairs, 3.6%; housing and community amenities, 1.3%; health, 1.3%; recreation, culture, and religion, 0.6%; education, 3.7%; and social protection, 8.6%.

TAXATION

Taxes on oil companies are the largest single source of central government income. Indonesia's corporate tax is progressive, with a top rate of 30% on income exceeding Rp100 million. A 30% withholding tax is payable on branch profits after corporate tax. However, concessional rates are available for tax treaty countries. Special corporation taxes, with generous depreciation and other deductions from taxable income, cover petroleum, mining, shipping, airline, and insurance companies. Individual incomes are taxed at the same rate as those of corporations. An eight-year carried-forward loss for investment in eastern Indonesia is allowed. Indirect taxes include a 10% value-added tax (VAT) that applies to most transactions. However, the building services are subject to a 4% VAT, while services provided by travel agents and couriers are taxed at 1%. Indonesia also imposes a 10% luxury tax on luxury homes, soft drinks, radios, and cosmetics. Higher rates are applied to certain vehicles, carpets and television sets. Dividend, interest and royalty payments to nonresidents are subject to a 20% withholding rate.

Indonesia has a progressive individual income tax that has a top rate of 35% on incomes over Rp200 million.

CUSTOMS AND DUTIES

Indonesia has attempted to liberalize its foreign trade, but unanticipated problems have prevented substantial progress. Most tariffs are designed to stimulate exports and to protect infant domestic industries. However, the tariff system is burdensome and time consuming and evasion is widespread. Exempt from import duties are raw materials and manufactured items imported for use in government-backed or approved labor-intensive enterprises. Duties on imports from ASEAN member countries were lowered to 20% in 1978. Two years later, duties on 384 products—including cement, sarongs, engine pistons, cameras, and telecommunications equipment—were reduced or abandoned, regardless of origin. Many items may only be imported by government-approved importers and there are quotas for certain nondurable goods. A three-tiered tariff structure, with rates of 0%, 5%, of 10 % applied to various commodities, has been implemented to satisfy Indonesia's IMF commitments. An import sales tax is imposed on imports at point of entry (except for those goods considered essential by the government) at rates of 5–30%. Distilled spirits have a duty rate of 170% and vehicle taxes range from 5% for trucks up to 75% for some sedans. Indonesia has also committed to the ASEAN Free Trade Agreement and its Common Effective Preferential Tariff (CEPT), and is further liberalizing its trade in order to meet the provisions of that compact. There is a free trade zone on Batam Island that is exempt from all import and export taxes; a free trade facility near Tanjung Priok, the country's main port; a bonded warehouse in Cakung, near Jakarta; and a number of other export processing zones.

FOREIGN INVESTMENT

Foreign investments have played a key role in the Indonesian economy since the turn of the 20th century. The Dutch were for decades the principal foreign investors in Indonesia, involving themselves heavily in the production of sugar, cinchona, coffee, tobacco, rubber, and oil. UK investments were in oil, rubber, and manufacturing. Rubber estates, particularly those in northern Sumatra, were operated by Belgian, UK, Danish, French, Norwegian, Swiss, and US individuals and companies. In the dispute with the Netherlands over Irian Jaya, the Indonesian government took over Dutch enterprises in the country and seized Dutch assets. Although Indonesians recognized that foreign capital was needed to develop their economy, government policies were ambiguous and hesitant throughout the 1950s and early 1960s. The foreign investment law of 1958 attempted to provide certain guarantees to foreign investors and to establish safeguards for Indonesian interests. At the same time, the government guaranteed some foreign-owned industrial enterprises that they would not be expropriated by the state or nationalized for a maximum period of 20 or, in the case of large agricultural enterprises, 30 years. In November 1964, the government began to reverse this policy by nationalizing all British-owned commercial enterprises and placing them under direct Indonesian management and control. A decree of 25 February 1965 nationalized all US-owned rubber plantations in northern Sumatra, and another decree of 19 March placed three oil companies—two of them US companies—under the supervision and control of the government. Finally, on 24 April 1965, President Sukarno ordered the seizure of all remaining foreign property in Indonesia. This policy was again reversed after the ouster of Sukarno.

During 1967–70, the confiscated estates were gradually returned to their former owners (except in cases where the owner opted to accept compensation). The Foreign Capital Investment Law of 1967 governed foreign direct investment. The overall flow of private investments from overseas sources increased during the early 1970s, in response both to liberal terms offered under the Suharto government and to favorable world markets for Indonesian oil and other primary products. The annual flow of foreign investment funds approved by the government increased from $333 million in 1972 to $1,050 million in 1974. Some 65 US firms invested more than $1 billion in petroleum enterprises during 1967–74, accounting for about 90% of the country's total production; in 1975 alone, an additional $1.2 billion was spent in the oil sector by US interests.

During 1967–85, Japanese investments led all others in non-oil sectors, totaling $3.9 billion; US investors were second, supplying $1.4 billion. In all, between 1967 and 1980, a total of $8 billion was invested by foreign companies, of which $6.6 billion was in the petroleum sector. Between 1982 and 1985, foreign direct investment averaged $242.3 million annually. Since 1973, all foreign investment has been channeled through the Investment Coordinating Board (BKPM), and Indonesian partners were mandated for all foreign concerns established after 1974. Among the incentives for investment approved in 1986 were regulations allowing foreign investment in more industries (arms production is still prohibited) and granting foreign partners in joint ventures the right to distribute the products themselves. The Negative Investment List of 1989 (amended in 2000) specifies the business areas that are closed to, or impose limitations on, foreign investors.

Between 1967 and 1992, more than 1,590 manufacturing projects involving $59 billion in foreign investment were approved by the BKPM. Japan was a major investor accounting for 21% of the total, along with Hong Kong (9%) and Taiwan (7%). In 1993 the 1967 Foreign Capital Investment Law was amended to set new regulations for share ownership, to streamline the investment approval process, and to reduce import tariffs on various goods. A new deregulation package approved in 1994 further increased incentives for foreign investment by allowing 5–51% foreign ownership in infrastructure (harbors, electricity, telecommunications, shipping airlines, railways, and water supply). New foreign investment approvals for 1992–98 were estimated at a total of $160 billion. From 1967 to 1998, Japan received approval for investments in Indonesia totaling approximately $35 billion; the United Kingdom, $24 billion; Singapore, $18 billion; and Hong Kong, $14 billion.

In 1998 and 1999, new regulations paved the way for increased foreign investment; including concessions to foreign interests in distribution and the financial sector, tax concessions, and simplification of the licensing process. Sectors that remain closed to foreign investment include freshwater fishing, forestry, public transport, broadcasting and film, and medical clinics. More than one-third of the investment since 1967 has been in the chemicals industry, followed by mining and natural gas.

By 2004, improved political and economic stability had encouraged investor confidence and improved growth in the economy. Despite economic success, however, overall investment remained about 20% of GDP, below the pre-1997 Asian financial crisis levels of 30%. Indonesia remains relatively open to foreign investment, although such challenges as corruption, security, judicial reform, taxation, and labor issues face investors. Indonesia tracks only investment approvals, which, if they occur at all, may take years to realize. In the first five months of 2004, the overall value of investment approvals fell 41%, to $2.5 billion from $4.2 billion over the same period in 2003. Declining sales of state-owned assets and extremely low levels of new investment in 2004 were responsible for the decline in investment approvals.

ECONOMIC DEVELOPMENT

From the late 1960s through the mid-1980s, the Suharto government focused its efforts on financial stabilization, relying heavily on advice and assistance from multilateral aid donors. The results were mixed. The fiscal crisis threatened by the accumulated debts of the Sukarno years was averted through debt rescheduling and improved economic management; nevertheless, the depth of Indonesia's continuing reliance on foreign aid remained apparent through the mid-1980s. Public expenditures on the first five-year plan (1956–60) included 25% for mining and manufacturing, 25% for transport and communications, 15% for power projects, and 35% for all other categories. A subsequent plan (1969–74) placed emphasis on the development of agriculture. The 1975–79 plan placed considerable focus on the rural economy, stressing laborintensive industries along with improved provision of housing and education. Labor unions were encouraged to help improve the lot of plantation and industrial workers.

Efforts to restructure the economy in the 1980s resulted in an expansion of real GDP 6% annually on average. The 1979–84 development plan, called Repelita III, emphasized the "development trilogy" of economic growth, equity, and national stability. Top priorities were tourism and communication (15%), agriculture and irrigation (14%), mining and energy (13%), education (10%), and regional and local development (10%). The 1984–89 five-year plan, called Repelita IV, emphasized industry (9.5% growth rate), agriculture (3%), petroleum and mining (2.5%), transportation and communications (5.2%), and construction (5%). However, low oil prices caused the government to reduce its goals and to promote private and foreign investment. Repelita V, 1989–94 emphasized industry (8.5% growth rate), agriculture (3.6%), petroleum and mining (4.2%), trade (6%), transportation and communications (6.4%), and construction (6%). The development of mining and energy were prioritized, as well as certain areas of manufacturing, forestry, agriculture, transportation, communications, and tourism. The sixth five-year development plan (1994–99), Repelita VI, forecast an annual average GDP growth rate of 6.2% and focused on the privatization of industry and the gradual opening up of foreign investment. These goals were met by 1997, but the 1998 breakdown of the economy prompted international aid agencies to step in.

The 1988 Guidelines of State Policy introduced transmigration development, a policy aimed at overcoming uneven population distribution in Indonesia. The policy had multiple objectives: to ease the burden of densely populated regions, to upgrade regional development, to expand job opportunities, to support national unity, and to strengthen national defense. Transmigration in densely populated areas such as Java, Bali and West Tenggara aimed to increase population productivity and decrease environmental hazards. Transmigration in sparsely populated regions such as Sumatra, Kalimantan, Sulawesi, Maluku, Irian Jaya, and East Timor, aimed to increase productivity of natural resources, as well as increase employment and job opportunities. Agriculture was an important sector for development in the transmigration policy. Some 64,211 families (91.7%) were resettled, consisting of 25,720 families of public transmigration and 38,491 families of self-initiated transmigration.

Bilateral and multinational assistance has played a major role in Indonesia's development. Before 1965, Indonesia received substantial aid from the USSR and other communist states. After 1966, the foreign-aid pattern turned dramatically toward the West. A group of nations (including the United States, Netherlands, Japan, Belgium, France, Germany, Italy, United Kingdom, Switzerland, Canada, and New Zealand) and organizations (including the IBRD and Asian Development Bank) joined to form the Inter-Governmental Group on Indonesia (IGGI) as a major funnel for aid.

In November 1991—in reaction to the Indonesian army's shootings of demonstrators in Dili, East Timor—the Netherlands, Denmark, and Canada suspended aid to Indonesia. In a blanket refusal to link foreign assistance to human rights issues, the government announced it would decline all future aid from the Netherlands. The government also requested that the IGGI be disbanded and replaced by the Consultative Group of Indonesia (CGI) formed by the World Bank and comprised of 18 donor countries (Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, New Zealand, Norway, South Korea, Spain, Sweden, Switzerland, the United Kingdom, and the United States) and 12 multilateral agencies.

When President Susilo Bambang Yudhoyono took office in October 2004, the government launched an aggressive program of economic reforms aimed at improving the business and investment climate. The government began a "100 Day" program of legal reform and energy initiatives. In January 2005, transportation, water and sanitation, power, and other projects were announced. The government launched a vigorous anticorruption campaign, and Yudhoyono stressed the need for economic transparency and efficiency. Revisions of the tax, investment, and labor laws were in the works in 2005. Yudhoyono's initiatives were also geared toward helping poor Indonesians, first by directing government spending toward targeted development programs, especially in rural areas; and second by creating jobs, which would be accomplished through the reduction in corruption and increase in investment. The earthquake and tsunami disasters that struck Sumatra on 26 December 2004 resulted in the deaths of an estimated 131,000 Indonesians (exact figures by 2006 had not been calculated), with 37,000 missing and another 570,000 displaced. An estimated $4.5 billion in damages and losses was calculated. Nevertheless, the impact on the Indonesian economy by 2006 was decidedly less dire than expected: aid and assistance from international donors and the need for infrastructure rebuilding contributed to GDP growth rates of more than 5%.

SOCIAL DEVELOPMENT

The constitution enjoins the government to protect the family and to provide for the needs of the "poor and the waifs," but implementation of these principles has proceeded slowly because of the cost and the lack of professional personnel to put into effect a broad welfare program. Some social security provisions exist. Firms with 10 or more employees or a payroll of Rp1 million or more a month paid 3.7% of their payroll (and employees paid 2% of earnings) for retirement, disability, and survivor benefits, and coverage is gradually being extended to smaller companies and casual workers. Employers pay 6% of payroll for married employees (3% for single employees) to provide sickness and maternity benefits, and both employers and employees fund a workers' compensation program. In addition, many orphanages, homes for the aged, youth activities, and private volunteer organizations meet special needs, in some cases receiving government subsidies.

Women enjoy a more favorable position in Indonesia than is customary in Muslim societies. This situation is largely the result of the work of Princess Raden Ajeng Kartini at the turn of the century in promoting the development of Javanese women. The movement for the emancipation of women preceded the nationalist movement by at least 10 years. Improvement of the status of women was specifically included in the guidelines for the 1979–84 national economic plan. A Ministry of Women's Affairs was created to promote the economic and social welfare of women.

A Domestic Violence Act was passed in 2004 that criminalizes domestic violence. Nationwide figures on sexual assault are not available, but local papers reported an increase in violence against women. In spite of women's official equality, in practice they often find it hard to exercise their legal rights. Although they constitute roughly one-quarter of the civil service, they occupy very few of its top posts. Marriage laws define the husband as the head of the family, and divorce procedures are much more diffi cult for a woman. Citizenship for a child is derived solely from the father. Female workers generally receive lower pay than that for men. Although maternity leave is mandated by law, many women lose their jobs as a result of pregnancy. Traffi cking in women and children remain a problem.

Gross violations of human rights occurred in East Timor before the province became an independent state in 2002, especially following the referendum on autonomy held in 1999. With the liberalization of Indonesia's government, human rights abuses decreased overall, although serious problems remained as of 2006.

HEALTH

The Ministry of Health places emphasis on preventive medicine. Only 1% of the GDP goes to public health expenditures. National health programs, of which family planning is an important part, stress the building of small and healthy families. Eradication of contagious diseases focuses on malaria, rabies, elephantiasis, tuberculosis, cholera, and leprosy. Filariasis, a tropical disease that is endemic in remote rural areas, was still widespread as of 2006. The World Health Organization reported cholera active in Indonesia. Malaria is also endemic to the country. The incidence of the disease was more than 700 per 100,000 population in 2000. In that year there were an estimated 282 cases of tuberculosis per 100,000 people. Overcrowded cities, poor sanitation, impure water supplies, substandard urban housing, and dietary deficiencies are contributing factors to health problems. Approximately 76% of the population had access to safe drinking water and 56% had adequate sanitation.

Average life expectancy in 2005 was 69.57 years. The 2005 infant mortality rate was 35.6 per 1,000 live births. The overall death rate was estimated at 6.3 per 1,000 in 2002. The maternal mortality rate was 450 deaths per 100,000 live births in 1998. Malnutrition was present in 42% of all children under five years of age as of 2000. As of September 1995, the World Health Organization (WHO) reported 130,988 deaths of children under five from diarrheal diseases. The estimated goiter rate was 27.7 per 100 school-age children in 1996.

Indonesia has received much help from the UN, particularly through WHO and UNICEF, in solving health problems. The Ministry of Health is seeking to build up a health service, starting at the village level with a hygiene officer, who is an official of the village, and working up through groups of villages, with more facilities and better trained personnel, to the regional doctor, who directs the curative and preventive work.

In 2004, there were an estimated 16 physicians, 44 nurses, and 5 midwives per 100,000 people. More than one-third of the country's doctors practice in Jakarta and other big cities. Approximately 80% of the population had access to health care services. Total health care expenditure was estimated at 1.6% of GDP.

Tobacco consumption increased from 1.4 kg (3.1 lbs) in 1984–86 to 1.6 kg (3.5 lbs) a year per adult in 1995. A survey in 2004 indicated that 22.8% of school-age students used tobacco products regularly, with the rate significantly higher for boys (40.5%) than girls (8.1%).

Indonesia's birth rate was an estimated 21.9 per 1,000 people as of 2002. About 57% of married women (ages 15 to 49) were using contraception. A total of 40% of all Indonesian children under five were underweight. Immunization rates for children up to one year of age were as follows: tuberculosis, 100%; diphtheria, pertussis, and tetanus, 91%; polio, 90%; and measles, 92%. In 1995 the government paid 100% of the entire vaccine bill.

The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 110,000 people living with HIV/AIDS in the country. There were an estimated 2,400 deaths from AIDS in 2003.

HOUSING

Housing is an acute problem in both urban and rural areas. In the rural areas, housing generally falls below even the most modest standards. National statistics from 1998 indicate that only about 20% of all residences had access to piped water. In 2000, only about 66% of the population had access to improved sanitation systems. The total number of dwellings stood at 44,855,000 in the mid-1990s. It has been estimated that there are 735,000 new households per year in need of housing. Housing construction has not been able to keep pace with this number, so that a substantial backlog has accumulated, translating into overcrowding and substandard living conditions for many. Floods, earthquakes, drought, forest fires, and local communal conflicts continue to result in shelter problems for over one million displaced and homeless residents.

Since 1974, the government has sponsored a series of four major programs to build new housing and provide repair and maintenance for the large number of low-income housing units and slum areas. From 1974–93, the government adopted the Kampong Improvement Program, which was designed to upgrade slum settlements and thus provide more adequate housing for more than 36 million people. As of 2006, the program was part of the Urban Environment Upgrading Program, which relied on community initiatives rather than government intervention. In 1990, an estimated 210,000 new housing units were completed. In 2003, the government announced the One Million Houses Development Program (Satu Juta Rumah) as a plan to inspire local governments, private businesses, and community initiatives to finance and build new housing. The government has also made up several plans to improve substandard housing and slum areas. For the period of 2005–09, the government planned to build 1.367 million subsidized housing units.

EDUCATION

Vigorous efforts have been made to advance education and reduce illiteracy. In 1971, overall literacy was estimated to be about 58%, ranging from 77% in the cities to only 52% in rural areas. The adult literacy rate for 2004 was estimated at about 87.9%, with 92.5% for men and 83.4% for women.

Under the constitution, education must be nondiscriminatory, and nine years of basic education are free and compulsory (ages 7–15). In practice, however, the supply of schools and teachers is inadequate to meet the needs of the fast-growing under-15 age group. Primary school covers six years of study, followed by three years of junior secondary school. Students may then choose to continue in three years of secondary studies in general studies (natural sciences, social sciences, and languages), Islamic studies, or vocational studies. Schools are coeducational, except for certain vocational and religious schools. Private (mostly Islamic religious) schools receive government subsidies if they maintain government standards. Bahasa Indonesia is the language of instruction, but local dialects may be used until the third level.

In 2001, about 20% of children between the ages of five and six were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 92% of age-eligible students. The same year, secondary school enrollment was about 54% of age-eligible students. It is estimated that about 94% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 20:1 in 2003; the ratio for secondary school was about 14:1. In 2003, private schools accounted for about 16% of primary school enrollment and 42.9% of secondary enrollment.

There are 51 universities, the largest of which are the University of Indonesia (in Jakarta) and the University of Gajah Mada (in Yogyakarta). Most of the universities are new, having been established since the mid-1950s. There are also several polytechnical and vocational schools offering diploma or certificate programs. In 2003, about 16% of the tertiary age population were enrolled in some type of higher education program.

As of 2003, public expenditure on education was estimated at 1.2% of GDP, or 9% of total government expenditures.

LIBRARIES AND MUSEUMS

Indonesia's largest library, Perbustakaan National Library of Indonesia, was created in 1980 with the merger of four libraries. Located in Jakarta, it has a collection of over 1.15 million volumes. Th is library includes the large National Museum collection, which was established in 1778. Another well-established library is the Bibliotheca Bogoriensis, also called the Central Library for Biological Sciences and Agriculture; founded in 1814 as a library associated with the botanical gardens in Bogor, on Java, it holds more than 400,000 volumes. Another national library is the National Scientific and Technical Documentation Center, founded in 1965 in Jakarta, with a collection of more than 150,000 volumes. The Library of the Indonesian Parliament, also in Jakarta, has 150,000 volumes. There is little coordination of public libraries, but there are state libraries and local reading rooms in almost every province. University libraries tend to be autonomous faculty or departmental libraries lacking central coordination. The University of Indonesia in Jakarta has just over 200,000 volumes.

Two outstanding museums in Indonesia are the National Museum in Jakarta, which is a general museum of Indonesian history and culture, and the Zoological Museum in Bogor, on Java. There is also a Bali Museum at Denpassar, and there are several regional historical museums throughout the provinces. Jakarta also houses a museum of crime, a large military museum, a museum chronicling the country's fight for independence, and several decorative arts museums. The Agung Rai Museum of Art in Bali holds a notable private collection of works by Balinese, Javanese, and foreign artists.

MEDIA

The government owns and operates postal services and telecommunications facilities through Perumtel, a state enterprise. The Indonesian-owned telecommunications satellite Palapa B was launched in 1983. In 2003, there were an estimated 39 mainline telephones for every 1,000 people. The same year, there were approximately 87 mobile phones in use for every 1,000 people.

As of 1998, there were 678 AM and 43 FM radio stations and 41 television stations (18 government-owned and 23 commercial). Programs originating in Jakarta are in Bahasa Indonesia; programs from regional stations are usually in local languages or dialects. The overseas service (Voice of Indonesia) broadcasts 11 hours daily in Arabic, Chinese, English, French, German, Japanese, Malay, and Thai. Television service was inaugurated in 1962. Televisi Republik Indonesia (TVRI) is the public television network. There are an additional 10 commercial TV networks. In 2003, there were an estimated 159 radios and 153 television sets for every 1,000 people. The same year, there were 11.9 personal computers for every 1,000 people and 38 of every 1,000 people had access to the Internet. There were 85 secure Internet servers in the country in 2004.

Most newspapers are published in Bahasa Indonesia, with a small number appearing in local dialects, English, and Chinese. The leading dailies published in Bahasa Indonesia (with their estimated 2002 circulations) include: Kompas (523,450), Pos Kota (500,000), Suara Pembaruan (250,000), Berita Buana (150,000), Merdeka (130,000), Pikiran Rakyat (in Bandungm 150,000), Suara Merdeka (in Semarang, 200,000), Jawa Pos (in Surabaya, 120,000), Surabaya Post (in Surabaya, 115,000), Harian Pagi Memorandum (in Surabaya, 190,000), and Analisa (in Medan, 75,000).The Jakarta Post is a leading English-language daily that had a circulation of 50,000 in 2002.

The constitution declares that everyone has the "right to freedom of opinion and expression." Journalistic activities of foreigners, however, are limited in accordance with the policy that "freedom of expression" does not permit interference in domestic affairs or dissemination of "foreign ideologies" detrimental to the Indonesian system of government. The government has also arrested individuals for insulting the president or the government. The government censors foreign films and publications, and Indonesian newspapers have been temporarily closed down for violating news guidelines.

ORGANIZATIONS

Village unit cooperatives were established to meet the small farmer's need for credit and aid in marketing cash crops. The cooperatives have also been instrumental in distributing improved rice, fertilizers, pesticides, and superior cattle breeds, and also in instructing farmers in their handling. Village unit cooperatives also exist for such cottage industries as batik (a method of hand-painting textiles), textiles, and garment production, which are important forms of employment in rural areas.

Many trade and business promotional organizations are concerned with individual sectors of the business world—exporters' organizations, sugar traders' associations, and so on. An Indonesian chamber of commerce and industries has connections with leading business organizations in the country. United Kingdom, Chinese, Indian, and Pakistani business people have national associations. The Indonesian Consumers Association is active. ASEAN Council on Petroleum, ASEAN Occupational Safety and Health Network, and ASEAN Regional Forum all have offices in Jakarta. The International Labour Organization also has an office in Jakarta.

Among social welfare and women's organizations are the Indonesian Women's Congress, a federation founded in 1928; the National Council on Social Welfare; the Indonesian Planned Parenthood Association; the Council of Muslim Women's Organizations; GOPTKI, a federation of organizations that run kindergartens; Association of Women of the Republic of Indonesia; and the Indonesian National Commission on the Status of Women. International organizations with chapters in Indonesia include Habitat for Humanity, the Red Cross, Caritas, and the Kiwanis and Lion's clubs.

National youth organizations include the Indonesian Hindu Youth Association, Indonesian Muslim Youth, Islamic Association of University Students, National Board of IMKA/YMCA Indonesia, Students Solidarity for Democracy in India, Junior Chamber, and Young Generation of Islam of Indonesia. There is also a national association for Boy Scouts and Girl Scouts (Indonesia Geraken Pramuka). There are many sports associations promoting both youth and adult participation in amateur competitions.

There are a number of organizations promoting education and research into various arts and sciences, including the Indonesian Institute of Sciences and the Indonesian Medical Association.

TOURISM, TRAVEL, AND RECREATION

Among the most popular tourist destinations are Bali, the restored Borobudur Buddhist temple in Java, and historic Yogyakarta. Cultural attractions include traditional Balinese dancing, the percussive sounds of the Indonesian orchestra (gamelan ), the shadow puppet (wayang kulit ) theater, and the famous Indonesian rijsttafel, a banquet of rice and savories. Tourism, as a means of affording wider employment, is strongly promoted by the government, which has supported the development of resorts in Sumatra, Kalimantan, Nusa Tenggara, Maluku Province, and Irian Jaya, as well as surfing, skindiving, and other marine sports in the reefs and tropical seas of the archipelago. Gambling has been prohibited since 1981. Popular sports are badminton, football (soccer), and Sepak Takraw, a game where players volley a woven ball over a net using any part of their body except their hands or arms. A devastating tsunami, triggered by an underwater earthquake, struck tourism facilities in the northwest Aceh province in December 2004. Terrorist bombings of nightclubs frequented by tourists on Bali in 2002 and 2005 also had a negative impact on tourism.

A passport, valid for at least six months from the date of arrival, and an entry visa are required of most foreigners entering Indonesia, along with an onward/return ticket. Precautions against malaria, hepatitis, typhoid, and rabies are recommended.

Approximately 4,467,021 tourists visited Indonesia in 2003, almost 78% of whom came from East Asia. There were 263,014 hotel rooms with 428,813 beds and an occupancy rate of 45%. Tourism expenditures totaled $4.4 billion.

The cost of traveling in Indonesia varies from city to city. According to 2004 US Department of State estimates, the cost of staying in Jakarta was approximately $216 per day. Daily expenses were an estimated $140 for Surabaya and $234 for Bali. Elsewhere the estimated daily cost was $113.

FAMOUS INDONESIANS

Gajah Mada, prime minister under King Hayam Wuruk (r.1350–89), brought many of the islands under one rule, the Majapahit Empire. Princess Raden Ajeng Kartini (1879–1904), founder of a school for girls, led the movement for the emancipation of women. Her posthumously published letters, Door duisternis tot licht, occasioned considerable interest in the Western world. Many creative and performing artists have attained local prominence, but Indonesia's only internationally known artist is the painter Affandi (1910–90). Contemporary novelists of considerable local importance include Mochtar Lubis (b.1922). H. B. Jassin (1917–2000) was an influential literary critic and translater known locally as "the Pope of Indonesian literature." Sukarno (1901–70), a founder and leader of the nationalist movement, is the best-known figure of modern Indonesia; Mohammad Hatta (1902–80), one of the architects of Indonesian independence, served as Sukarno's vice president and concurrently as prime minister. President Suharto (b.1921), leader of Indonesia after Sukarno's overthrow, dominated Indonesia's political and economic life for three decades (1968–98). Adam Malik (1917–84) established an international reputation as a negotiator in restoring and improving relations with Malaysia, the Philippines, the United States, the United Kingdom, and the UN; formerly a foreign minister (1966–77), he became vice president (1978–83). Umar Wirahadikusumah (1924–2003), a retired army general, became vice president in 1983. He was succeeded by Sudharmono (1927–2006) and Try Sutrisno (b.1935). B. J. Habibie (b.1936) became president in 1998, followed by Abdurrahman Wahid (b.1940), Megawati Sukarnoputri (b.1947, the country's first female president), and Susilo Bambang Yudhoyono (b.1949), who began his term in 2004.

DEPENDENCIES

Indonesia has no territories or colonies.

BIBLIOGRAPHY

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