Indonesia
Economy
One World Bank official
described the catastrophic breakdown of the Indonesian economy
in 1997 as ‘The most dramatic economic collapse anywhere
in the past five decades’. By 1998, economic output
in Indonesia had declined by more than 12 % and the national currency,
the Rupiah, lost over 80 % of its value. The financial
crash occurred after more than 10 years of uninterrupted growth
at between 8 and 10 % annually. In January 1998, the International
Monetary Fund was forced into providing its largest-ever
financial rescue package, US$ 43 billion, in order to avoid total
economic collapse.
Since 2000 Indonesia has experienced a steady annual growth of around
4 %. Inflation hovers at around 7 %, and
unemployment remains high at 11 % of the
workforce. Only limited measures have been taken to deal with the
structural problems which previously plagued the economy. The Suharto
old system of ‘crony capitalism’
still is present, and reforms to the country’s financial system
have yet to be effected.
Thirty years earlier, as economic expansion began in earnest after
the upheavals of the mid-1960's, Indonesia was far less developed
than several of its neighbours. However, it was able to exploit
its large mineral resources as a foundation on which to build an
industrial economy. Natural gas
and oil are the most significant raw materials
produced by Indonesia; it is 1 of the largest exporters of liquefied
natural gas. It is also the 2nd largest producer of tin
and extracts huge quantities of other metals and
metal ores (bauxite, gold, copper, silver, and nickel) as well as
coal and rubber. Much of the processing of these products is done
within Indonesia.
The agricultural sector (including forestry
and fishing) is significant but more as a source of employment
rather than for its contribution to the economy, it accounts for
half the work force. The service sector has grown rapidly from the
beginning of the 1980's and tourism has become a major industry
and an important source of foreign exchange.
Communications,
transport, financial services and international
freight traffic also made significant contributions. The
manufacturing industry, which developed from non-existence in 1965
to its mid-1990's position of providing 1 quarter of economic output.
This sector received most of the attention from the Government
(as well as outsiders) and announced the country's arrival as a
fully fledged ‘Asian Tiger’ economy.
Despite the high profile of the aerospace, vehicle and electronics
industries, Indonesia’s manufacturing success is rooted in
less glamorous areas such as food processing, textiles, tobacco
and timber products.
The majority of Indonesia’s trade is conducted within the
region, especially with Japan (which accounts for
approximately 1 quarter of total trade), Korea, Singapore,
Australia and China (including
Hong Kong). Outside the region, Germany and the
United States of America are its major trading
partners.
Business
Business should be conducted through a local agent and tends to
be slow. Visiting business cards are widely used. It is customary
to shake hands and give a slight bow with the head on meeting and
taking leave. Printed materials should be in English, and prices
should be quoted in US Dollars as well as Pounds Sterling.
Private office hours: Monday-Friday 08:00-16:00
or 09:00-17:00.
Government office hours:
Monday-Thursday 08:00-14:30, Fridays 08:00-12:00.
Commercial
Information
The following organisation can offer information and advice:
Kamar Dagang dan Industri Indonesia (KADIN)
(Indonesian Chamber of Commerce and Industry)
Address: 3rd-5th Floors, Chandra Building, Jalan M H Thamrin 20,
Jakarta 10350
Telephone: (21) 324 000
Facsimile: (21) 315 0241).
Conferences
and Conventions
The Balai Sidang Jakarta
Convention Centre can hold up to 5,000 people. For assistance
in organising a conference or convention in Indonesia, contact the
Directorate-General of Tourism or the Indonesia
Tourism Promotion Board or a representative IPTO
office (see Contact section).
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