Indonesia: Limping Along?

Do repeated terrorist attacks reflect Indonesia’s economic and social problems?

January 10, 2000

Do repeated terrorist attacks reflect Indonesia's economic and social problems?

Indonesia was one of the countries which suffered the most during the 1998 Asian economic crisis. The resulting political and economic changes have left a tremendous impact on Indonesia's structure. Now, a terrorist attack on Bali — the country's tourism mecca — has flattened hopes further. Our Globalist Factsheet examines the challenges faced Indonesia.

How big is Indonesia?

The 17,000 islands of Indonesia span almost 5000 km — 600 km longer than the distance across the continent of the United States from Seattle, Washington to Miami, Florida. However, its land area is only one-third the size of Texas.

(The Globalist)

How uncertain is Indonesia's political situation?

In July 2001, Megawati Sukarnoputri became Indonesia’s fourth president in four years — following Adburrahman Wahid (whose term ended in 2001), Bucharuddin Jusuf Habibi (1999) — and Mohamed Suharto (1998).

(The Economist)

But holds the keys to power?

As of 2003, Golkar, the party built by former Indonesian dictator Suharto, remains the most potent power broker in parliament, with 6 out of every 10 of its members tracing their roots back to the old regime.

(Far Eastern Economic Review)

What is positive about Indonesia's politics?

Indonesia — along with Turkey and Malaysia — is one of just three democracies in the Muslim world.

(Zurich Financial Services)

How important is the tourism industry to Indonesia?

As of early 2002, in Indonesia annual revenues from tourism were worth more than $5 billion, which accounts for 2%-3% of the country’s 2002 GDP.

(Far Easter Economic Review)

How is one of the country's other large industries doing?

At its peak in 1996, Indonesia exported 250 million pairs of shoes — worth nearly $2.2 billion. In 2001, that was down to $1.5 billion and falling.

(Far Eastern Economic Review)

How confident were Indonesians in their own economy after the 1998 crisis?

Between 1998 and 2002, about $10 billion in private capital left Indonesia each year. This compares with an inflow of just $11.5 billion in 1996, the year before a regional financial crisis.

(International Finance Cooperation)

Is that optimism justified?

At the end of 2002, bad loans accounted for 20% in Indonesia.

(Standard’s & Poor)

How did U.S. investors react?

Bilateral trade between the United States and Indonesia is about $12 billion annually, while U.S. business investment dropped to a mere $73 million in 2001 — down from $1.18 billion in 1997.

(Barron’s)

How much did Indonesia end up borrowing from the IMF?

As 2002, Indnesia's $8.8 billion balance at the IMF is the fourth-largest of any country.
(IMF)

Why did the 1998 economic crisis increase ethnic tensions?

About 60% of Indonesia’s wealth is controlled by a minority of ethnic Chinese that makes up only 4% of the total population.
(New York Times)

What makes Bali exceptional in Indonesia?

As of 2002, almost all of Indonesia’s Hindu population which is estimated to be 2% of its 230 million people live on the island Bali.

(Central Intelligence Agency)

And what sets the island apart from the whole region?

The Indonesian island Bali is the only Hindu province in South East Asia.

(Central Intelligence Agency)

Why is piracy still a big issue in South East Asia?

During the first six months of 2003, the number of reported ship attacks in Indonesian waters rose 37% to 234 — compared with 171 in the corresponding period in 2002.

(International Maritime Bureau)

What view do Indonesians have of the United States?

Back in 2000, 75% of Indonesians said they had a favorable opinion of the United States. In 2003, 83% said they had an unfavorable opinion.

(New York Times)

How did Indonesians view the September 11 terror attacks?

As of 2002, asked whether they believed that Arabs carried out the September 11 attacks, well over 70% of those polled in Indonesia, Kuwait and Pakistan said, “No, not true.”

(Gallup Organization)

What else hampers the fight against terrorism in Indonesia?

As of 2003, under the Indonesian law, the terrorist group Jemaah Islamiah does not exist because it is not legally registered.

(Far Eastern Ecnomic Review)

How wired is Indonesia?

As of July 2001, Indonesia — with a population of 230 million — has only 6.5 million fixed phone line subscribers.

(International Herald Tribune)

Why are environmental issues so important for Indonesia?

Indonesia has the world’s third-largest expanse of tropical forest — after Brazil and Congo.

(United Nations)

Which nations around the world are still larger in terms of population?

China, India and Indonesia — three of the four largest countries in Asia — comprise 40% of the world’s population.

(Foreign Affairs)