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flag Indonesia Indonesia: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

The Indonesian economy has been experiencing a slight slowing down since 2012, especially due to the reduction in global demand (especially from China), however, the country still has the best economic results among the ASEAN-6 countries. The key driver of the economy remains private domestic consumptions. After reaching 5.8% in 2013, growth should slow down further in 2014 (5.4%) and remain dependent on the Chinese economic recovery and the stability of the prices of raw materials.

Despite the good results from the main economic indicators, structural reforms are needed. The drop in the value of the local currency has negatively affected public finances, although the level of debt reamins stable. The government has decided to maintain a policy of fiscal caution in order to prevent the deficit from deepening. Despite the planned election, the budget for 2014 remains conservative and puts more emphasis on economic stability than on stimulating growth. Inflation should reach 5.5%, expenditure growth should be limited to 6.7% and cuts have been planned in the area of subsidy programmes nad social welfare. The 2014 budget, which was revised in February, aims to contain the current account deficit to no more than 2.5% of the GDP through restrictive fiscal and monetary posicy. The fight against corruption, which increases production costs and acts as an impediment to FDI, as well as the protection of the mining sector are among the priorities. The protection of the environment is a major challenge in Indonesia.

Although it has been decreasing since 2008, the unemployment rate remains high (6%) and many people work in vulnerable conditions. A large part of the population lives below the poverty line and the gap between the very rich and the very poor does not seem to be diminishing.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 845.57877.80870.28856.07914.97
GDP (Constant Prices, Annual % Change) 6.56.35.8e5.2e5.5
GDP per Capita (USD) 3,5083,5913e3,404e3,587
General Government Balance (in % of GDP) -0.6-1.7-2.2-2.4-2.2
General Government Gross Debt (in % of GDP) 24.424.026.126.226.0
Inflation Rate (%) 5.34.06.46.0e6.7
Unemployment Rate (% of the Labor Force) 6.66.16.36.15.8
Current Account (billions USD) 1.75-24.38-29.10e-27.64e-26.54
Current Account (in % of GDP) 0.2-2.8-3.3e-3.2e-2.9

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector contributes to nearly 15% of the country’s GDP and employs nearly 40% of the active population. Indonesia is one of the largest rubber producers in the world. Other major crops are rice, sugar cane, coffee, tea, tobacco, palm oil, coconuts and spices. Indonesia is the only Asian country to be a member of the OPEC and contributes to 5% of its production. However, it is still a net importer of oil. The country has great exploitable timber lands and mainly exports timber. 

Industries contribute to around half of the GDP. The industrial sector includes manufacturing of textiles, cement, chemical fertilizers, electronic products, rubber tires, clothing and shoes (most of these are for the American market). Wood processing is also a major activity.

The tertiary sector (financial institutions, transportation and communications) contributes to around a third of the GDP. The banking sector is well-developed. The Islamic bank Syaria has expanded rapidly during these recent years. Tourism is a major source of revenue, however, the sector has suffered from terrorist threats and natural catastrophes.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 35.1 21.7 43.2
Value Added (in % of GDP) 14.4 45.7 39.9
Value Added (Annual % Change) 3.5 5.0 7.1

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Indonesian Rupiah (IDR) - Average Annual Exchange Rate For 1 USD 10,389.949,090.438,770.439,386.6310,461.24

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Indonesia on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
58.5/100
Position:
Mostly Unfree
World Rank:
100/178
Regional Rank:
20/25

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.09
World Rank:
56/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Indonesia's economy is very open to foreign trade, which represents 48% of its GDP (WTO, 2010-2012).

The country's positive trade balance diminished in 2009 under the effect of the global recession and the fall of the price in raw materials. In 2012, Indonesia registered a trade deficit for the very first time and this trend has now lasted for three years. Despite the trade surplus obtained during the last quarter of 2013, the overall trade balance for 2013 was negative, with a deficit of more than 4 billion USD. The improvement of the trade balance at the end of the year was largely connected to a rise in exports before the expected coming into force of the export ban on non-processed minerals. The negative trend should continue in 2014. 

The three main export partners of Indonesia are Japan, the United States and Southeast Asia. The commodities that are mainly exported are mineral fuels and hydrocarbons, electrical equipment, animal and vegetable fats & oils, nuclear reactors & boilers, and rubber. Its main import partners are Southeast Asia, Japan and China. The commodities that are mainly imported are mineral fuels & oils, nuclear reactors & boilers, iron & steel, electric & electronic equipment, and organic chemicals.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 89,964135,323176,201190,383187,369
Exports of Goods (million USD) 119,646158,074200,788188,496183,548
Imports of Services (million USD) 27,62525,59930,78833,30233,842
Exports of Services (million USD) 13,23816,21120,11822,52321,948
Imports of Goods and Services (Annual % Change) -15.017.313.36.71.2
Exports of Goods and Services (Annual % Change) -9.715.313.62.05.3
Imports of Goods and Services (in % of GDP) 21.422.924.925.925.7
Exports of Goods and Services (in % of GDP) 24.224.626.424.323.7
Trade Balance (million USD) 32,28731,00333,8258,6805,833
Trade Balance (Including Service) (million USD) 21,19121,21224,022-1,885-6,239
Foreign Trade (in % of GDP) 45.547.551.350.149.5

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
Japan 14.8%
China 12.4%
Singapore 9.1%
United States 8.6%
India 7.1%
See More Countries 47.9%
Main Suppliers
(% of Imports)
2013
China 16.0%
Singapore 13.7%
Japan 10.3%
Malaysia 7.1%
South Korea 6.2%
See More Countries 46.6%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Coal; briquettes, ovoids and similar solid fuels...Coal; briquettes, ovoids and similar solid fuels manufactured from coal 12.5%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 9.9%
Palm oil and its fractions, whether or not refined...Palm oil and its fractions, whether or not refined (excl. chemically modified) 8.7%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 5.6%
Natural rubber, balata, gutta-percha, guayule,...Natural rubber, balata, gutta-percha, guayule, chicle and similar natural gums, in primary forms or in plates, sheets or strip 3.8%
See More Products 59.5%
- bn USD of products imported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 14.9%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 7.3%
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 1.7%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 1.7%
Transmission apparatus for radio-telephony,...Transmission apparatus for radio-telephony, radio-telegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras; still image video cameras and other video camera recorders; digital cameras 1.6%
See More Products 72.8%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Industry and Trade
Ministry of Commerce
Statistical Office
Statistical Office
Central Bank
Central Bank of Indonesia
Stock Exchange

Jakarta Stock Exchange


Search Engines
Indo
Google
Economic Portals
Economic, commercial and sectoral information about Indonesia and Asia in general

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Political Outline

Executive Power
The President is both the head of the State and the head of the government. The President enjoys the executive powers and appoints the cabinet. Both the President and the Vice-President are elected through direct universal suffrage for five-year terms. The President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
Legislative Power
The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of People’s Representatives – lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. The President cannot dissolve the parliament but the President has the power to veto bills, and in turn a supermajority of legislators may act to override the veto. The people of Indonesia have limited political rights.
Main Political Parties
Indonesia has a multi-party system where a single party does not often have a chance of gaining power alone. Thus parties need to work together to form coalition governments. The major political parties in Indonesia are:
- PD (Democratic Party) - advocates ‘Pancasila’ – the 5 principles the Constitution is based on;
- Golkar (Functional Groups Party) – initially an alliance of NGOs opposing communism, now advocates democratic and liberal values;
- PBB (Crescent Moon and Star Party) – a moderate Islamist party;
- PDI-P (Indonesian Party for the Democratic Fight) – based on ‘Pancasila’ ideology, a split-away group from the PD led by ex-President Megawati Sukarnoputri.
Current Political Leaders
President: Joko "Jokowi" WIDODO (since 20October 2014) - PDIP
Vice-President: Yusuf KALLA (since 20 October 2014) - Golkar
Next Election Dates
Presidential: July 2019
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
132/180
Evolution:
7 places up compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
2/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: February 2015