Indonesia Economy Overview


During the last decade of the twentieth century, as a country located in Asia according to Topschoolsoflaw, Indonesia developed a development strategy that made it possible to relaunch the economy and make important progress in all the main sectors. The five-year development plans have remained the instrument of the government’s economic policy, intended to establish the priorities and levels of growth, without however specifying in detail the executive procedures of particular programs and projects. In addition to interventions aimed at enhancing the agricultural sector, through the creation of infrastructures and the granting of subsidies to farmers, the objective of productive diversification was pursued, reducing dependence on oil exports. Significant changes were also recorded in industrial production which doubled compared to that recorded in the 1980s. The results that have been obtained have been encouraging, especially in terms of economic growth. At the end of the decade, Indonesia, like all of Southeast Asia, was the victim of a serious economic crisis that left heavy signs (increase in unemployment, inflation and foreign debt) only partially mitigated by the resilience of hydrocarbon exports and the mining sector. The first years of the 2000s, however, saw a constant growth of GDP and a continuation of economic policies based on the liberalization and privatization of some sectors (for example for water resources), the reform of the banking system, the revision of the financing system for entrepreneurial activities. Although a large part of the strategic industry is still in public hands, the good holding of small business, widespread in the various islands of the archipelago, should be noted. The fundamental question for the Indonesian economy remains, however, the ability to attract foreign capital, as too many uncertainties still condition international investors in the choice of operating in this country: from the constantly changing political situation that is never really under control, to bureaucratic and administrative practices, too often permeated with opacity and illegality, to the shortcomings in communication and information networks. The direction taken by the government, International Monetary Fund, are often perceived as unpopular measures and help fuel social unrest.


Domestic trade, once in the hands of the Chinese, although suffering from the lack of a dynamic merchant class, is still quite lively: the main route of flows radiates from Java to the other islands. As for international trade, the trade balance is in surplus, with a trend towards an increase in exports (oil, natural gas, clothing, fish, rubber, wood, coffee, especially following the increase in prices) and a simultaneous growth of imports (with a rate which in 2005 registered a third more than the previous year). Imports essentially concern manufacturing (machinery, plants, means of transport, chemical products) but also certain petroleum products and foodstuffs. Main trading partners are Japan, the European Union, United States, Singapore, South Korea and China. Tourism is on the rise (approx. 5 million visitors per year); the movement mainly affects the islands of Java and Bali, but Indonesia has an immense landscape, artistic and folkloric heritage still to be adequately exploited. From the point of view of infrastructures, given the particular morphological structure of the country, the creation of a rational transport system is one of the most serious problems. The sea, which has always been the natural connection route, has favored and oriented the urbanism that has developed around the ports destined for large international traffic. Only after 1967, with the government of Suharto, measures were taken to upgrade roads, railways, port facilities, etc.; but the situation, except in Java, it is still clearly deficient. The development of railways (6458 km in 2004), present only in Java (where two railway lines, built by the Dutch at the end of the 19th century, cross the island longitudinally, connecting the main cities), is completely negligible. Madura and, with small trunks, to Sumatra. More developed is the existing road network, however, especially in Java and limited only to the connecting roads of the port centers in Sumatra, Celebes, Timor: of approx. 368,000 km of roads, approx. two thirds are asphalted; on the other islands the communication routes are largely represented by paths in the forest or by waterways; motorization, scarcely widespread until the 1960s, underwent a considerable increase in the following decades, increasing the presence of cars in urban areas and motor vehicles in rural areas, with serious repercussions on metropolitan traffic and suburban transport. center. Given the difficulties and inadequacy of internal means of transport, praho, the typical Malaysian boats in use since very ancient times. From the 1950s onwards, the sea transport sector was able to make use of public investments, also due to the growing importance of transnational transport. Nodal points of international traffic are the ports of Tanjung Priok, near Jakarta, of Tanjung Perak, near Surabaya, and of Semarang, all on Java, followed by those of Padang (Sumatra); however, 41 million tonnes of goods pass through the oil port of Dumai, on the northern coast of Sumatra. However, recourse to air services is increasingly widespread, carried out by numerous foreign companies, by the national company Garuda Indonesian Airways and by some minor Indonesian private companies; the main airports are those of the capital (Halim and Kemayoran), of Surabaya, Mean and Bali (Denpasar).

Indonesia Economy Overview

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