Economic overview
In 2009, GDP growth reached 4.5% while GDP per capita was US$ 3,900. Private and public consumption were the main contributors, whilst investment showed signs of slowing.
Indonesia is undoubtedly better prepared to cope with the global downturn than at the time of the Asian Financial Crisis in 1997/98. The economy is, however, expected to slow considerably in 2009-10 due to reduced exports and capital inflows. GDP growth was 6.1% yoy in 2008 and 4.5% yoy in 2009, among the highest in G20. The government is forecasting growth of 5.5% in 2010. Inflation fell from a high of 12.1% y-o-y in September ’08 to 2.8% y-o-y in December ’09. However, it is rising again and Bank of Indonesia expects inflation to reach 4-5% by end of 2010. FOREX reserves were US$ 69 billion on 29 January 2010.
In January 2009, the Government announced an economic stimulus package of IDR 73 trillion (approximately US$ 6.4 billion) to help maintain positive economic growth, control rising unemployment and support exports. The package includes tax saving, lower import duties, subsidies and additional government spending on infrastructure development.
Opportunities for trade should be viewed as medium to long-term. UK Trade & Investment has identified four sectors that offer particularly good opportunities : Environment, Ports, Advanced Engineering and Power. Opportunities also exist in other sectors including Oil and Gas, Financial Services, ICT, Retail, Healthcare, Agribusiness and Infrastructure.
Imports to the UK from Indonesia were worth £ 1,144 million in 2008. Indonesia's main exports to the UK include textile products, clothing & accessories (including shoes) and wood products. Total imports in 2009 were £ 1,166 million.
Bilateral trade relations between the UK and Indonesia are substantial, with the balance historically in Indonesia's favour. In 2009, the UK exported over £ 350 million worth of goods (a 10% fall over 2008). However, the actual total is much higher as many goods are transhipped via Singapore and not registered as exports to Indonesia. The provision of services - including financial services as well as other ‘invisibles’ - remain a particular UK strength, but our top 10 exports in 2008 included a wide range of goods, including transport equipment and pulp & waste paper.
Main UK exports are:
- Pulp and waste paper
- Road vehicles
- Manufactures of metal
- Transport equipment
- Machinery specialized for particular industry
- Power generating machinery & equipment
- General industrial machinery & equipment
- Organic chemicals
- Metalliferous ores & metal scrap
- Essential oils and perfume materials
|
2005 £ million |
2006 £ million |
2007 £ million |
2008 £ million |
2009 £ million |
|
|
Exports |
374.3 |
318.2 |
288.6 |
391 |
350 |
|
Imports |
911.9 |
1,021.6 |
992.3 |
1,144 |
1,166 |
Export partners: Japan 22.3%, US 12.3%, Singapore 8.4%, South Korea 6.8%, China 6.4%, Malaysia 4.2%
Import partners: Singapore 13.1%, Japan 13.1%, China 8.8%, US 7%, Thailand 6%, Australia 4.8%, Saudi Arabia 4.2%, South Korea 4.2%
UK relations and investment
Political figures from the UK have made concentrated efforts to make frequent visits to Indonesia, these visits help to strengthen the international relations between the two countries. The British Foreign secretary, Jack Straw, attended a conference to address the effects of the Tsunami showing the UK’s commitment to their relationship. Whilst he was there he also met President Yudhoyono, Vice President Kalla and other members of the Indonesian government. The UK wishes to see the Indonesian economy maintain a stronger and stable democracy in order to strengthen the ASEAN, which will provide stability throughout Southeast Asia and a firmer foundation for trade.
The presence of UK diplomatic representation is important when trying to keep more live connections. The UK established the initial diplomatic relationship in 1949 and there is now an Embassy in Jakarta.
International Trade relations
Indonesia values the relationships it has with its neighbours in Southeast Asia and as a founding member of ASEAN takes great step to maintain them. Main concerns that Indonesia utilises the co-operation of the ASEAN countries for is the combating of regional issues, such as piracy and smuggling; the connections between the ASEAN countries facilitates good communication and unity concerning these issues. Relations between Indonesia and East Timor have deteriorated in recent years after violence between the two countries, leading to Indonesia’s withdrawal from the country. President Megawati then proceeded to strengthen the improving relationship by attended East Timor’s Independence Day celebrations in 2002. Further progressive steps have been taken to stabilise relations, Indonesia and East Timor have established a Truth and Friendship Commission to discuss human rights violations.
Following the Tsunami disaster the international community has come to Indonesia’s aid. Indonesia has been working closely with global organisations, such as the UN, foreign military and international NGO’s, to reconstruct damaged areas.
Assistance
The DFID assists Indonesia with many development programmes in the country; £19 million is being channelled into the country through the World Bank and the Asian Development Bank to help understand and address the causes of poverty in the country. Disease is also a problem in Indonesia, Aids and HIV are the main focus of aid. The United Nation Development Bank is implementing an AIDS programme contributing £25 million. The main current area of required aid is to help reconstruct area’s hit by the tsunami. The DFID has so far contributed £5 million that will go to help Aceh and Nias, the two worst hit provinces. Housing, community and provincial infrastructure and transport are among many rebuilding projects the aid will be used for.
Political History
Presidential elections took place on 20 September 2004 when retired General Susilo Bambang Yudhoyono (popularly called SBY) was sworn-in as the country's sixth President for a five-year term. He enjoyed popular domestic support. During The Presidential elections on 8 July, SBY was re-elected for another five-year term and was sworn-in on 20 October 2009.
Timeline
1670-1900 The whole of Indonesia is bought under one government as the Dutch East Indies by Dutch colonists.
1942 Japan invades Dutch East Indies
1945 The Japanese help independence leader Sukarno return from internal exile and declare independence
1949 The Dutch recognise Indonesia as independent after four years of guerrilla warfare
1962 The Dutch agree to transfer West Papua to Indonesia
1966 Sukarno hands over emergency powers to General Suharto, who becomes president in March 1967
1969 West Papua now formerly becomes Irian Jaya Province
1975 Portugal grants East Timor independence and in 1976 it is incorporated as an Indonesian province after invasion.
1997 Asian financial crisis
1998 Rioting ousts Suharto and B J Habibie becomes president
1999 Ethnic violence breaks out in Maluku. Abdurrahman Wahid becomes president
2001 Parliament dismisses President Wahid over allegations of corruption. Vice President Megawati Sukarnoputri is sworn in as his replacement
2002 Indonesia inaugurates human rights court. Irian Jaya province is granted greater autonomy by Jakarta and is allowed to adopt locally preferred name of Papua
2002 East Timor becomes independent
2002 Constitutional changes are a move towards democracy as for the first time voters will be able to elect a president and vice president
2002 Bomb attack on Bali’s Kuta Beach nightclub district kills 202 people, mostly tourists.
2002 Peace deal is signed between the government and Free Aceh Movement (Gam) in Geneva. This deal is hoped to end 26 years of violence. The agreement of the deal will result in autonomy and free elections for Aceh but in return Gam must disarm.
2003 Martial law is imposed as peace deal between the government and Gam breakdown, military mounts an offensive against Gam rebels.
2003 Car bomb explodes outside the Marriott Hotel in Jakarta, killing 14 people
2004 Parliamentary and local elections, Golkar party of former President Suharto wins greatest share of vote
2004 First ever direct presidential elections, the candidates are narrowed down to Susilio Bambang Yudhoyono and Megawati Sukarnoputri
2004 Former general Susilio Bambang Yudhoyono wins the second round of presidential elections
2004 More than 220,000 people are pronounced dead or missing in Indonesia after the ocean earthquake causes a tsunami. Thailand, India, Sri Lanka and Somalia are also devastated by the tsunami
2005 Muslim cleric, Abu Bakar Ba’asyir, is found guilty of conspiracy over 2002 Bali bombings. He is sentenced to two and a half years in jail; he is freed in June 2006.
2005 Government and Free Aceh movement separatists sign a peace deal; the agreement details are rebel disarmament and the withdrawal of government soldiers. Rebels begin handing over weapons in September and government completes troop pull out in December
2005 three suicide bombings in Bali cause 23 deaths including the bombers
2006 in May a powerful earthquake kills thousands of people on Java and then a tsunami hits the island in July killing more than 500 people.
