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INDONESIA
Government
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Republic
of Indonesia
National
name: Republik Indonesia
Type
of Government: Indonesia is a unitary multiparty republic.
Gained independence from the Netherlands in 1949.
Constitution:
1945. Embodies five principles of the state philosophy, called Pancasila,
namely monotheism, humanitarianism, national unity, representative democracy
by consensus, and social justice.
Head
of State and Government: President Abdurrahman Wahid since 1999.
The president
is both head of state and head of the government.
Branches:
Executive:
President (head of government and chief of state) chosen for a 5-year term
by the 700-member People's Consultative Assembly (MPR).
Legislature:
500-member
House of Representatives (DPR) elected for a 5-year term.
Judicial:
Supreme Court.
Suffrage:
17 years of age universal and married persons regardless of age.
Indonesia
is a republic based on the 1945 constitution providing for a limited separation
of executive, legislative, and judicial power. Executive power is
in the hands of the President, who is chosen by an electoral college, composed
of the two houses of the Indonesian parliament, and serves a five-year
term.
A constitutional
reform process has been underway since 1999, and has already produced several
important changes. Among these are two 5-year term limits for the
President and Vice President and measures to institute checks and balances.
The highest state institution is the People's Consultative Assembly (MPR),
whose functions include electing the president and vice president, establishing
broad guidelines of state policy, and amending the constitution. The 695-member
MPR includes all 500 members of the House of Representatives (Dewan Perwakilan
Rakyat (DPR)), plus 130 "regional representatives" elected by the 26 provincial
parliaments and 65 appointed members representing trades and professions.
The DPR, which is the premier legislative institution, includes 462 members
elected through a mixed proportional/district representational system and
38 appointed members of the armed forces (TNI) and police (POLRI).
A general
election in June 1999 produced the first freely elected national, provincial,
and regional parliaments in over 40 years. In October 1999 the MPR
elected a compromise candidate, Abdurrahman Wahid (a.k.a Gus Dur), as the
country's fourth president, and Megawati Sukarnoputri, a daughter of the
country's first president, as the vice president. Megawati's PDI-P party
had won the largest share of the vote (34%) in the general election, while
Golkar, the dominant party during the Soeharto era, came in second (22%).
Several other, mostly Islamic parties won shares large enough to be seated
in the DPR.
Having
served as rubberstamp bodies in the past, the DPR and MPR have gained considerable
power and are increasingly assertive in oversight of the executive branch.
In part, this reflects a desire to prevent the presidential excesses of
the past and, in part, to restrain Wahid, who is seen as at times dangerously
unpredictable. Through his appointed cabinet, the president retains
the authority to conduct the administration of the government, but some
observers believe the balance of power has shifted too far in the direction
of the legislature. Trade and professional group representation
in the MPR is expected to be eliminated in 2004 through further constitutional
change. Military domination of regional administration is gradually
breaking down, with new regulations prohibiting active-duty officers from
holding political office.
Principal
Government Officials
President--Abdurrahman
Wahid (a.k.a. Gus Dur)
Vice
President--Megawati Sukarnoputri
Foreign
Affairs--Alwi Shihab
Ambassador
to the United States--Dorodjatun Kuntoro-Jakti
Ambassador
to the United Nations--Makarim Wibisono
The embassy
of Indonesia is at 2020 Massachusetts Avenue NW., Washington, DC 20036
(tel. 202-775-5200-5207; FAX: 202-775-5365). Consulates General
are in New York (5 East 68th Street, New York, NY 10021, tel. 212-879-0600/0615;
FAX: 212-570-6206); Los Angeles(3457 Wilshire Blvd., Los Angeles,
CA 90010; tel. 213-383-5126; FAX: 213-487-3971); Houston (10900 Richmond
Ave., Houston, TX 77042; tel. 713-785-1691; FAX: 713-780-9644).
Consulates are in San Francisco (1111 Columbus Avenue, San Francisco, CA
94133; tel. 415-474-9571; FAX: 415-441-4320); and Chicago (2
Illinois Center, Suite 1422233 N. Michigan Avenue, Chicago, IL 60601; tel.
312-938-0101/4; 312-938-0311/0312; FAX: 312-938-3148).
Economy
Indonesia
has a market-based economy in which the government plays a significant
role. It owns more than 164 state-owned enterprises and administers prices
on several basic goods, including fuel, rice, and electricity. In
the aftermath of the financial and economic crisis that began in mid-1997,
the government took custody of a significant portion of private sector
assets through acquisition of nonperforming bank loans and corporate assets
through the debt restructuring process.
During
the 30 years of Soeharto's "New Order" government, Indonesia's economy
grew from a per capita GDP of $70 to more than $1,000 by 1996. Through
prudent monetary and fiscal policies, inflation was held in the 5%-10%
range, the rupiah was stable and predictable, and the government avoided
domestic financing of budget deficits. Much of the development budget
was financed by concessional foreign aid.
In the
mid-1980s, the government began eliminating regulatory obstacles to economic
activity. The steps were aimed primarily at the external and financial
sectors and were designed to stimulate employment and growth in the non-oil
export sector. Annual real GDP growth averaged nearly 7% from 1987-97,
and most analysts recognized Indonesia as a newly industrializing economy
and emerging major market.
High levels
of economic growth from 1987-97 masked a number of structural weaknesses
in Indonesia's economy. The legal system was very weak, and there
was and is no effective way to enforce contracts, collect debts, or sue
for bankruptcy. Banking practices were very unsophisticated, with
collateral-based lending the norm and widespread violation of prudential
regulations, including limits on connected lending. Non-tariff barriers,
rent-seeking by state-owned enterprises, domestic subsidies, barriers to
domestic trade, and export restrictions all created economic distortions.
The regional
financial problems that swept into Indonesia in late 1997 quickly became
an economic and political crisis. Indonesia's initial response was
to float the rupiah, raise key domestic interest rates, and tighten fiscal
policy. In October 1997, Indonesia and the International Monetary
fund (IMF) reached agreement on an economic reform program aimed at macroeconomic
stabilization and elimination of some of the country's most damaging economic
policies, several of which involved family members of President Soeharto.
The rupiah failed to stabilize for any significant period of time, however,
and President Soeharto was forced to resign in May 1998. In August
1998, Indonesia and the IMF agreed on an Extended Fund Facility (EFF) under
President Habibie that included significant structural reform targets.
President Abdurrahman Wahid took office in October 1999, and Indonesia
and the IMF signed another EFF in January 2000. The new program also
has a range of economic, structural reform, and governance targets.
The effects
of the financial and economic crisis were severe. In 1998, real GDP
contracted by an estimated 13.7%. The economy bottomed out in mid-1999,
and real GDP growth for the year was an anemic 0.3%. Inflation reached
77%in 1998 but slowed to 2% in 1999. Although a severe drought
in 1997-98 forced Indonesia to import record amounts of rice, overall imports
dropped precipitously in the early stage of the crisis in response to the
unfavorable exchange rate, reduced domestic demand, and absence of new
investment. Although reliable unemployment data are not available,
formal sector employment contracted significantly.
As of
September 2000, Indonesia's economic outlook is mixed. Recently released
economic data provide evidence that the economic turnaround that began
in the second quarter of 1999 has continued and accelerated. According
to the Central Bureau of Statistics (BPS), year-on-year real GDP growth
reached 4.13% in August 2000. Driving this higher than expected GDP
growth are record exports, solid manufacturing growth, and continued strong
levels of household consumption. At the same time, high petroleum
prices are increasing the value of Indonesia's oil exports. As the
economy has picked up, there has been a significant increase in corporate
debt restructuring, although questions remain about the viability of some
deals.
Less positively,
foreign investment still lags far below its pre-crisis levels; the rupiah
has lost more than 22% of its value since President Wahid was elected,
and the stock market is in record low territory. Indonesia's banking
and corporate sectors are still extremely weak. Asset sales by the
Indonesian Bank Restructuring Agency have slowed amidst turmoil in the
agency's senior leadership. Banking sector reform has stalled.
Progress on corruption cases against is excruciatingly slow and capricious.
These developments have shaken most analysts' faith in the reform credentials
of the Wahid administration.
Indonesia's
public sector external debt rose from $54.2 billion in March 1998 to about
$80 billion by mid-2000. Private sector external debt stood at approximately
$82 billion.
GDP:
1999 $142 billion.
Annual
growth rate: 1999 0.2%.
Per capita
income: 1999 $684.
Natural
resources (8.4% of GDP): Oil and gas, bauxite, silver, tin, copper,
gold, coal.
Agriculture
(17.2% of GDP): Products--timber, rubber, rice, palm oil, coffee;
land is17% cultivated.
Manufacturing
(25.3% of GDP): Garments, footwear, electronic goods, furniture,
paper products.
Trade:
Exports
(1999) $48.7 billion including oil, natural gas, plywood, manufactured
goods. Major markets: Japan, Singapore, Taiwan. Korea, EU, U.S.
Imports
(1999) $24 billion including food, chemicals, capital goods, consumer goods.
Major
suppliers: Japan, U.S., Thailand.
TRAVEL
WARNING (Issued on February 21, 2001)
The Department
of State urges American citizens to defer nonessential travel to Indonesia
and all travel to Aceh, Maluku, Papua, West Timor and Central Sulawesi.
Those who must travel to Indonesia, or who are resident there, should exercise
extreme caution. Indonesia is experiencing a major political transition,
and unrest and violence can erupt with little forewarning anywhere in the
country. Bombings of religious, political and business targets have
occurred throughout the country. In addition, events in the Middle
East have sparked anti-American protests in the past.
All travel
by U.S. and other foreign government officials to Aceh, Papua and the Moluccas
(provinces of North Maluku and Maluku) has been restricted by the Indonesian
government because of security concerns. Private Americans should
adhere to these same restrictions.
Links
for More Information CIA
World Factbook: Indonesia Government The
Library of Congress Country Studies
.
Sources:
The
Library of Congress Country Studies
Government
Travel Information
Central
Intelligence Agency |
