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Politics of Indonesia

The politics of Indonesia take place in the framework of a presidential representative democratic republic whereby the President of Indonesia is both head of state and head of government and of a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the bicameral People's Consultative Assembly. The judiciary is independent of the executive and the legislature.

The 1945 constitution provided for a limited separation of executive, legislative and judicial power. The governmental system has been described as "presidential with parliamentary characteristics". Following the Indonesian riots of May 1998 and the resignation of President Suharto, Indonesia's long-standing dictator, several political reforms were implemented via amendments to the Constitution of Indonesia, which resulted in changes to all branches of government and restored democracy in Indonesia.

According to the V-Dem Democracy indices Indonesia was 2023 the 11th most electoral democratic country in Asia. Indonesia's political parties have been characterized as cartel parties with extensive power-sharing among parties and limited accountability to voters.

Indonesia fails to meet many of the civil requirements for a consolidated, or maximalist, democracy. Individuals in Indonesia are generally not free to practice and express their religious faith. Atheists and those who practice one of the unofficial religions in Indonesia can be penalized and face discrimination. The court system often has many instances of corruption, and there is no due process in civil and criminal matters.

Old Order: Liberal Democracy and Guided Democracy
The "Old Order" (1950-1965) in Indonesia has long been understood to be a period of turmoil and crisis, characterized by rebellions and political unrest. The weakness of Indonesia's democracy and its gradual transition to authoritarianism during the Old Order can be attributed to conventional modernization theory, which suggests that without strong socioeconomic structures, successful transitions to democracy are unlikely. Indeed, it was not until the late 1960s when urbanization took place that the Indonesian government began to build a stronger democracy.

During the "Liberal Democracy" period (1950-1957), Indonesia aspired to renew its global status and achieve modernity as a newly-independent country. In line with this vision, it sought to establish a democratic parliamentary system, bringing forth a "multi-party system, cabinet government under a prime minister, and a ceremonial president". However, the economic instability inherited from colonial rule significantly hindered their democratic nation-building vision: the Indonesian economy struggled to recover from the hardships of colonial occupation, with economic growth being stagnant and inflation reaching over 600% between the 1950s-1960s. Indonesia's economy heavily relied on the agricultural sector, but without diversification and industrialization, the government became vulnerable to polarization and instability.

Moreover, Indonesia's abundance of natural resources, such as coffee, rubber, and cocoa, made it susceptible to the political resource curse: Indonesia's resource wealth led to corruption, inequality, and political instability, hindering economic and social progress; the concentration of wealth and power in the hands of a few elites with a monopoly over these resources worsened the country's economic and political problems. This ultimately led to rising political tensions and the government's loss of control.

"Guided Democracy", which was in place from 1957 to 1966, aimed to bring about political stability, modernization, and development under the leadership of President Sukarno. Initially, Sukarno sought to build political institutions to bolster representation and resolve conflicts of regionalism, social class, and religion that plagued the Parliament during the Liberal Democracy era. However, power became increasingly centralized to the executive branch in the latter half of Guided Democracy, with Sukarno assuming a dictator-like role in the government. Indonesia's gradual transition to authoritarianism during the Guided Democracy period exemplifies the failure of the democratic project in the country due to weak socio-economic structures and the political resource curse that undermined its democratic development.

Transition to the New Order
The transition to the "New Order" in the mid-1960s, ousted Sukarno after 22 years in the position. One of the most tumultuous periods in the country's modern history, it was the commencement of Suharto's three-decade presidency. Described as the great dhalang ("puppet master"), Sukarno drew power from balancing the opposing and increasingly antagonistic forces of the army and the Communist Party of Indonesia (PKI).

By 1965, the PKI extensively penetrated all levels of government and gained influence at the expense of the army. On 30 September 1965, six of the military's most senior officers were killed in an action (generally labelled an "attempted coup") by the so-called 30 September Movement, a group from within the armed forces. Within a few hours, Major General Suharto mobilised forces under his command and took control of Jakarta. Anti-communists, initially following the army's lead, went on a violent purge of communists throughout the country, killing an estimated half million people and destroying the PKI, which was officially blamed for the crisis.

The politically weakened Sukarno was forced to transfer key political and military powers to General Suharto, who had become head of the armed forces. In March 1967, the Provisional People's Consultative Assembly (MPRS) named General Suharto acting president. He was formally appointed president one year later. Sukarno lived under virtual house arrest until his death in 1970. In contrast to the stormy nationalism, revolutionary rhetoric, and economic failure that characterised the early 1960s under the left-leaning Sukarno, Suharto's pro-Western "New Order" stabilised the economy but continued the official state philosophy of Pancasila.

New Order
Sukarno-Indonesia's first national figure and president-dissolved the elected assembly, introduced a concept known as Guided Democracy, and reinstated the 1945 constitution in 1959. The period of Guided Democracy was marked by the creation of a plethora of ministries, by the rise of the Indonesia Communist Party (Partai Komunis Indonesia; PKI) to a position of political dominance, and by the emergence of the army as a major anticommunist political force. The structure collapsed with an attempted coup d'etat in 1965, which led to the downfall of Sukarno. Under Suharto, Sukarno's successor, Indonesia entered a new political era, officially called the New Order

The New Order (Orde Baru) is the term coined by President Suharto to characterise his regime as he came to power in 1966. He used this term to contrast his rule with that of his predecessor, Sukarno (dubbed the "Old Order," or Orde Lama). The term "New Order" in more recent times has become synonymous with the Suharto years (1966–1998).

Immediately following the attempted coup in 1965, the political situation was uncertain, but the New Order found much popular support from groups wanting a separation from Indonesia's problems since its independence. The 'generation of 66' (Angkatan 66) epitomised talk of a new group of young leaders and new intellectual thought. Following communal and political conflicts, and economic collapse and social breakdown of the late 1950s through to the mid-1960s, the New Order was committed to achieving and maintaining political order, economic development, and the removal of mass participation in the political process. The features of the New Order established from the late 1960s were thus a strong political role for the military, the bureaucratisation and corporatisation of political and societal organisations, and selective but effective repression of opponents. Strident anti-communism remained a hallmark of the regime for its subsequent 32 years.

Within a few years, however, many of its original allies had become indifferent or averse to the New Order, which comprised a military faction supported by a narrow civilian group. Among much of the pro-democracy movement which forced Suharto to resign in 1998 and then gained power, the term "New Order" has come to be used pejoratively. It is frequently employed to describe figures who were either tied to the New Order, or who upheld the practises of his authoritarian regime, such as corruption, collusion and nepotism (widely known by the acronym KKN: korupsi, kolusi, nepotisme).

Reform era
The Post-Suharto era began with the fall of Suharto in 1998 during which Indonesia has been in a period of transition, an era known as Reformasi (English: Reform  ). This period has seen a more open and liberal political-social environment.

Indonesia’s transition to democracy was a key part of the broader reform era. Democratic transitions tend to be grouped into two categories: bottom-up transitions where people rise up and overthrow an existing regime, and top-down transitions where an authoritarian ruler introduces liberalizing reforms leading to democratic transition. Indonesia experienced a transition toward democratic rule that involved both bottom-up and top-down forces after the fall of the authoritarian regime in 1998, thus altering the political structure of the country. Differences in democratization across developing countries, including Indonesia, is common and may be explained by different theoretical models. While Indonesia has been considered a democracy since the fall of the authoritarian regime in 1998, democratic consolidation has not completely been achieved.

A process of constitutional reform lasted from 1999 to 2002, with four amendments producing major changes. Among these were term limits of up to two five-year terms for the president and vice president and measures to institute checks and balances. The highest state institution is the People's Consultative Assembly (Majelis Permusyawaratan Rakyat, MPR), whose functions previously included electing the president and vice-president (since 2004 the president has been elected directly by the people), establishing broad guidelines of state policy, and amending the constitution. The 695-member MPR includes all 550 members of the House of Representatives (Dewan Perwakilan Rakyat, DPR) plus 130 members of Regional Representative Council (Dewan Perwakilan Daerah, DPD) elected by the 26 provincial parliaments and 65 appointed members from societal groups.

The DPR, which is the premier legislative institution, originally included 462 members elected through a mixed proportional/district representational system and thirty-eight appointed members of the Indonesian Armed Forces (TNI) and police (POLRI). TNI/POLRI representation in the DPR and MPR ended in 2004. Societal group representation in the MPR was eliminated in 2004 through further constitutional change. 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. Under constitutional changes in 2004, the MPR became a bicameral legislature, with the creation of the DPD, in which each province is represented by four members, although its legislative powers are more limited than those of the DPR. Through his/her appointed cabinet, the president retains the authority to conduct the administration of the government.

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, as the country's fourth president, and Megawati Sukarnoputri—a daughter of Sukarno—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 New Order, came in second (22%). Several other, mostly Islamic parties won shares large enough to be seated in the DPR. Other nationwide democratic elections took place in 2004, 2009, 2014, and 2019.

In Indonesia, while free and fair elections have been held and a constitution guaranteeing certain rights and freedoms exists, corruption and involvement of money in politics persists. Corruption in regional government is often revenue-related, involving bribery and theft of public goods for personal gain, and identifies political corruption, such as fraudulent behavior and deviant lobbying techniques, as the type committed by government officials. Additionally, one of the primary reasons Indonesia may not be considered a consolidated democracy is due to their lack of “civilian control over the military”. Indonesia has created democratic institutions, but there is still progress that must be made to address the challenges the country currently faces in order to consolidate democracy.

After the Reformasi, Indonesia became a patronage democracy, where state resources are distributed among political parties. While patronage weakens democratic institutions and accountability, it serves as a powerful incentive for compromise and cooperation. Parties get into governing coalitions regardless of ideology to access state resources. This cut across identity-based cleavages. President Susilo Bambang Yudhoyono's leadership contained social conflict by mediating between conflicting forces and accommodating potential opposition. Yudhoyono's presidency was a period of democratic stagnation but also of peace, stability, and absence of political polarization. The 2014 Indonesian presidential election marked a rise of polarization, with an Islamist-pluralist divide, which continued in the 2017 Jakarta gubernatorial election and the 2019 Indonesian presidential election.

Currently, scholars are conflicted about the strength and durability of Indonesia’s democracy. Indonesia scores well on certain characteristics of democracy, such as political rights, classifying it as a democracy in the minimalist interpretation of the word. However, the country lacks other aspects of democracy that are usually required for a regime to reach democratic consolidation, such as adequate civil rights protections.

A minimalist view of democracy classifies political regimes purely in terms of their institutions and procedures rather than the outcomes they produce. Specifically, a regime must implement free and fair elections. In Indonesia, the president is directly elected and can serve up to two five-year terms. There are limited voting irregularities, and international election monitors consider the elections free and fair. Additionally, in 2019, the Constitutional Court rejected claims of widespread voter fraud. The right to organize competing political parties is respected, and the system allows for the competition of several political parties. Thus, according to the minimalist definition, Indonesia is a democracy.

However, a maximalist approach to democracy claims that free and fair elections are insufficient to consider a regime a democracy. Maximalists argue that these countries must also guarantee other social, political, and economic rights, often those found in consolidated democracies. These include human rights protections, civil rights, egalitarianism, judicial independence, and more.

Civil society in Indonesia
Civil society is a term that has been coined by both sides of the political spectrum for their respective interests. It is defined broadly by David Rieff as the wide range of organizations operating outside the governmental and business sectors. It has taken on ambiguous connotations as Robert Putnam has associated it with the strengthening of Democratic government while Sheri Berman has demonstrated how civil associations helped to collapse Weimar Germany. As with any other country, Indonesian civil society spans an array of organizations including professional, religious, intermediary, and mass-based. Under Suharto, civil society organizations (CSOs) often fought for democracy and human rights.

Under Suharto, civil society in Indonesia was massively contained. The mass murders of the left limited CSOs to advocacy relating to human rights and democracy. After his fall, civil society established itself in the reformed era. CSOs in Indonesia are reflective of the unique politics of the country. They exist on a spectrum of opinion on Islam’s proper role in the government. For example, in 2017, the Indonesian government prohibited the Indonesian Chapter of Hizb ut-Tahrir. Using the Law on Mass-Based Organizations (ORMAS). Some CSOs condemned the action as a violation of human rights while others saw the move as a necessity in curbing extremist ideology. ORMAS  represents new bureaucratic regulations and restrictions on CSOs. The passage of this law has been associated with the Indonesian government’s continued crackdown on free speech and expression.

Humanprogress.org provides a Civil Society Participation Index which measures whether “major CSOs routinely consulted by policymakers; how large is the involvement of people in CSOs; are women prevented from participating;” among a variety of other factors. Indonesia’s Civil Society Index has fluctuated throughout the 20th century. During the period of liberal democracy before Sukarno, Indonesia reached a Civil Society Participation score of 0.74. During the presidencies of Sukarno and Suharto, the score plunged to 0.12. As Indonesia entered its Reform Era, the score climbed to 0.95; however in recent years Indonesia’s Civil Society Participation Index has declined to 0.82. Compared to its neighbors in Southeast Asia, Indonesia has been hailed as a champion for free expression in the region. Other tools to measure civil society are the CSO Sustainability Index Explorer by csosi.org and the Civil Society Index provided by the United Nations Development Programme.

Executive branch
The executive branch of Indonesia is headed by a president, who is head of government and head of state. The president is elected by general election and can serve up to two five-year terms if re-elected. The executive branch also includes a vice-president and a cabinet. All bills need joint approval between the executive and the legislature to become law, meaning the president has veto power over all legislation. The president also has the power to issue presidential decrees that have policy effects, and is also in charge of Indonesia's foreign relations, although treaties require legislative approval. Prior to 2004, the president was selected by the MPR, but following the third amendment to the constitution, enacted in 2001, the president is now directly elected.The last election was held in April 2019, and incumbent Joko Widodo was re-elected.
 * President
 * Joko Widodo
 * Indonesian Democratic Party-Struggle
 * 20 October 2014
 * Vice-President
 * Ma'ruf Amin
 * Independent
 * 20 October 2019
 * }
 * }

Legislative branch
The MPR is the legislative branch of Indonesia's political system. The MPR is composed of two houses: the DPR, which is commonly called the House of Representatives, and the DPD, which is called the Regional Representative Council. The 575 DPR members are elected through multi-member electoral districts, whereas 4 DPD senators are elected in each of Indonesia's 34 provinces. The DPR holds most of the legislative power because it has the sole power to pass laws. The DPD acts as a supplementary body to the DPR; it can propose bills, offer its opinion and participate in discussions, but it has no legal power. The MPR itself has power outside of those given to the individual houses. It can amend the constitution, inaugurate the president and conduct impeachment procedures. When the MPR acts in this function, it does so by simply combining the members of the two houses.

Political parties and elections
The General Elections Commission (Komisi Pemilihan Umum, KPU) is the body that is responsible for running both parliamentary and presidential elections. Article 22E(5) of the Constitution rules that the KPU is national, permanent, and independent. Prior to the 2004 elections, the KPU was made up of members who were also members of political parties. However, members of KPU must now be non-partisan.

Judicial branch
Both the Supreme Court of Indonesia (Mahkamah Agung) and the Constitutional Court (Mahkamah Konstitusi) are the highest level of the judicial branch. The Constitutional Court listens to disputes concerning legality of law, general elections, dissolution of political parties, and the scope of authority of state institution. It has 9 judges appointed by the DPR, the President and the Supreme Court. The Supreme Court of Indonesia hears final cessation appeals and conducts case reviews. It has 51 judges divided into 8 chambers. Its judges are nominated by the Judicial Commission of Indonesia and appointed by the President. Most civil disputes appear before the State Court (Pengadilan Negeri); appeals are heard before the High Court (Pengadilan Tinggi). Other courts include the Commercial Court, which handles bankruptcy and insolvency; the State Administrative Court (Pengadilan Tata Usaha Negara) to hear administrative law cases against the government; and the Religious Court (Pengadilan Agama) to deal with codified Islamic personal law (sharia) cases. Additionally, the Judicial Commission (Komisi Yudisial) monitors the performance of judges.

Foreign relations
During the regime of president Suharto, Indonesia built strong relations with the United States and had difficult relations with the People's Republic of China owing to Indonesia's anti-communist policies and domestic tensions with the Chinese community. It received international denunciation for its annexation of East Timor and the related genocide against the East Timorese in 1978. Indonesia is a founding member of the Association of South East Asian Nations, and thereby a member of both ASEAN+3 and the East Asia Summit.

Since the 1980s, Indonesia has worked to develop close political and economic ties between Southeast Asian countries, and is also influential in the Organisation of Islamic Cooperation. Indonesia was heavily criticised between 1975 and 1999 for allegedly suppressing human rights in East Timor, and for supporting violence against the East Timorese following the latter's secession and independence in 1999. Since 2001, the government of Indonesia has co-operated with the US in cracking down on Islamic fundamentalism and terrorist groups.

title: Politics of Indonesia


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Economy of Indonesia

The economy of Indonesia is a mixed economy with dirigiste characteristics, and it is one of the emerging market economies in the world and the largest in Southeast Asia. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialized country. Estimated at over 21 quadrillion rupiah in 2023, it is the 16th largest economy in the world by nominal GDP and the 7th largest in terms of GDP (PPP). Indonesia's internet economy reached US$77 billion in 2022, and is expected to cross the US$130 billion mark by 2025. Indonesia depends on the domestic market and government budget spending and its ownership of state-owned enterprises (the central government owns 141 enterprises). The administration of prices of a range of basic goods (including rice and electricity) also plays a significant role in Indonesia's market economy. However, since the 1990s, the majority of the economy has been controlled by individual Indonesians and foreign companies.

In the aftermath of the 1997 Asian financial crisis, the government took custody of a significant portion of private sector assets through the acquisition of nonperforming bank loans and corporate assets through the debt restructuring process, and the companies in custody were sold for privatization several years later. Since 1999, the economy has recovered, and growth accelerated to over 4–6% in the early 2000s. In 2012, Indonesia was the second fastest-growing G-20 economy, behind China, and the annual growth rate  fluctuated around 5% in the following years. Indonesia faced a recession in 2020 when the economic growth collapsed to −2.07% due to the COVID-19 pandemic, its worst economic performance since the 1997 crisis.

In 2022, gross domestic product expanded by 5.31%, due to the removal of COVID-19 restrictions as well as record-high exports driven by stronger commodity prices.

Indonesia is predicted to be the 4th largest economy in the world by 2045. Joko Widodo has stated that his cabinet's calculations showed that by 2045, Indonesia will have a population of 309 million people. By Widodo's estimate, there would be economic growth of 5−6% and GDP of US$9.1 trillion. Indonesia's income per capita is expected to reach US$29,000.

Sukarno era
In the years immediately following the proclamation of Indonesian independence, both the Japanese occupation and the conflict between Dutch and Republican forces had crippled the country's production, with exports of commodities such as rubber and oil being reduced to 12 and 5% of their pre-WW2 levels, respectively. The first Republican government-controlled bank, the Indonesian State Bank (Bank Negara Indonesia, BNI) was founded on 5 July 1946. It initially acted as the manufacturer and distributor of ORI (Oeang Republik Indonesia/Money of the Republic of Indonesia), a currency issued by the Republican Government which was the predecessor of Rupiah. Despite this, currency issued during the Japanese occupation and by Dutch authorities was still in circulation, and the simplicity of the ORI made its counterfeiting relatively easy, worsening matters. Between 1949 and 1960, Indonesia experienced several economic disruptions. The country's independence recognized by the Netherlands, the dissolution of the United States of Indonesia in 1950, the subsequent liberal democracy period, the nationalization of De Javasche Bank into the modern Bank Indonesia, and the takeover of Dutch corporate assets following the West New Guinea dispute, which all resulted in the devaluation of Dutch banknotes into half their value.

During the guided democracy era in the 1960s, the economy deteriorated drastically as a result of political instability. The government was inexperienced in implementing macroeconomic policies, which resulted in severe poverty and hunger. By the time of Sukarno's downfall in the mid-1960s, the economy was in chaos with 1,000% annual inflation, shrinking export revenues, crumbling infrastructure, factories operating at minimal capacity, and negligible investment. Nevertheless, Indonesia's post-1960 economic improvement was considered remarkable when taking into consideration how few indigenous Indonesians in the 1950s had received a formal education under Dutch colonial policies.

New Order
Following President Sukarno's downfall, the New Order administration brought a degree of discipline to economic policy that quickly brought inflation down, stabilized the currency, rescheduled foreign debt, and attracted foreign aid and investment. (See Inter-Governmental Group on Indonesia and Berkeley Mafia). Indonesia was until recently Southeast Asia's only member of OPEC, and the 1970s oil price rise provided an export revenue windfall that contributed to sustained high economic growth rates, averaging over 7% from 1968 to 1981.

With high levels of regulation and dependence on declining oil prices, growth slowed to an average of 4.5% per annum between 1981 and 1988. A range of economic reforms was introduced in the late 1980s, including a managed devaluation of the rupiah to improve export competitiveness, and deregulation of the financial sector. Foreign investment flowed into Indonesia, particularly into the rapidly developing export-oriented manufacturing sector, and from 1989 to 1997, the Indonesian economy grew by an average of over 7%. GDP per capita grew 545% from 1970 to 1980 as a result of the sudden increase in oil export revenues from 1973 to 1979. High levels of economic growth masked several structural weaknesses in the economy. It came at a high cost in terms of weak and corrupt governmental institutions, severe public indebtedness through mismanagement of the financial sector, rapid depletion of natural resources, and culture of favors and corruption in the business elite.

Corruption particularly gained momentum in the 1990s, reaching to the highest levels of the political hierarchy as Suharto became the most corrupt leader according to Transparency International. As a result, the legal system was weak, and there was 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 1997 Asian financial crisis that began to affect Indonesia became an economic and political crisis. The 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 an agreement on an economic reform program aimed at macroeconomic stabilization and the elimination of some of the country's most damaging economic policies, such as the National Car Program and the clove monopoly, both involving family members of Suharto. The rupiah remained weak, however, and Suharto was forced to resign in May 1998 after massive riots erupted. In August 1998, Indonesia and the IMF agreed on an Extended Fund Facility (EFF) under President B. J. 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 crisis were severe. By November 1997, rapid currency depreciation had seen public debt reach US$60 billion, imposing severe strains on the government's budget. In 1998, real GDP contracted by 13.1%, and the economy reached its low point in mid-1999 with 0.8% real GDP growth. Inflation reached 72% in 1998 but slowed to 2% in 1999. The rupiah, which had been in the RP 2,600/USD1 range at the start of August 1997 fell to 11,000/USD1 by January 1998, with spot rates around 15,000 for brief periods during the first half of 1998. It returned to the 8,000/USD1 range at the end of 1998 and has generally traded in the Rp 8,000–10,000/USD1 range ever since, with fluctuations that are relatively predictable and gradual. However, the rupiah began devaluing past 11,000 in 2013, and as of November 2016 is around 13,000 Rp/USD1.

Reform era
Since an inflation target was introduced in 2000, the GDP deflator and the CPI have grown at an average annual pace of 10¾% and 9%, respectively, similar to the pace recorded in the two decades prior to the 1997 crisis, but well below the pace in the 1960s and 1970s. Inflation has also generally trended lower through the 2000s, with some of the fluctuations in inflation reflecting government policy initiatives such as the changes in fiscal subsidies in 2005 and 2008, which caused large temporary spikes in CPI growth.

In late 2004, Indonesia faced a 'mini-crisis' due to international oil prices rises and imports. The currency exchange rate reached Rp 12,000/USD1 before stabilizing. Under President Susilo Bambang Yudhoyono (SBY), the government was forced to cut its massive fuel subsidies, which were planned to cost $14 billion in October 2005. This led to a more than doubling in the price of consumer fuels, resulting in double-digit inflation. The situation had stabilized but the economy continued to struggle with inflation at 17% in late 2005. Economic outlook became more positive as the 2000s progressed. Growth accelerated to 5.1% in 2004 and reached 5.6% in 2005. Real per capita income has reached fiscal levels in 1996–1997. Growth was driven primarily by domestic consumption, which accounts for roughly three-fourths of Indonesia's gross domestic product (GDP). The Jakarta Stock Exchange was the best performing market in Asia in 2004, up by 42%. Problems that continue to put a drag on growth include low foreign investment levels, bureaucratic red tape, and widespread corruption which costs RP. 51.4 trillion (US$5.6 billion) or approximately 1.4% of GDP annually. However, there is a robust economic optimism due to the conclusion of the peaceful 2004 elections.

As of February 2007, the unemployment rate was 9.75%. Despite a slowing global economy, Indonesia's economic growth accelerated to a ten-year high of 6.3% in 2007. This growth rate was sufficient to reduce poverty from 17.8% to 16.6% based on the government's poverty line and reversed the recent trend towards jobless growth, with unemployment falling to 8.46% in February 2008. Unlike many of its more export-dependent neighbors, Indonesia has managed to skirt the recession helped by strong domestic demand (which makes up about two-thirds of the economy) and a government fiscal stimulus package of about 1.4% of GDP. After India and China, Indonesia was the third-fastest growing economy in the G20. With the $512 billion economy expanded 4.4% in the first quarter from a year earlier and last month, the IMF revised its 2009 Indonesia forecast to 3–4% from 2.5%. Indonesia enjoyed stronger fundamentals with the authorities implemented wide-ranging economic and financial reforms, including a rapid reduction in public and external debt, strengthening of corporate and banking sector balance sheets and reducing bank vulnerabilities through higher capitalization and better supervision.

In 2012, Indonesia's real GDP growth reached 6%, then it steadily decreased below 5% until 2015. After Joko Widodo succeeded SBY, the government took measures to ease regulations for foreign direct investments to stimulate the economy. Indonesia managed to increase their GDP growth slightly above 5% in 2016–2017. However, the government is currently still facing problems such as currency weakening, decreasing exports and stagnating consumer spending. The current unemployment rate for 2019 is at 5.3%.

Reform happened in Indonesia around the 1980s, when the Indonesian government states it will be attempting to economically integrate with global economies. They stated in 2017 that "Globalisation has made it difficult for the Indonesian economy to balance all other factors of the economy".

Data
The following table shows the main economic indicators in 1980–2022 (with IMF staff estimates in 2023–2028). Inflation under 5% is in green.
 * Grey colors are estimations

Structure
Indonesia’s economy in 2023, as measured by Gross Domestic Product (GDP) at current market prices, reached IDR 20,892.4 trillion. The highest growth on the production side was Transportation and Storage at 13.96%. During 2023, the Indonesian economy continued to grow spatially. The group of provinces according to the islands, the provinces with the highest growth were Maluku and Papua, Sulawesi, and Kalimantan with growth (c-to-c) of 6.94%, 6.37% and 5.43%. Meanwhile, the group of provinces on Jawa Island which contributed 57.05% to the national economy recorded a growth of 4.96% (c-to-c).

Composition

Agriculture
Agriculture is a key sector which contributed to 14.43% of GDP. Currently, there are around 30% of the land area used for agriculture and employed about 49 million people (41% of the total workforce). Primary agriculture commodities include rice, cassava (tapioca), peanuts, natural rubber, cocoa, coffee, palm oil, copra; poultry, beef, pork, and eggs. Palm oil production is vital to the economy as Indonesia is the world's biggest producer and consumer of the commodity, providing about half of the world's supply. Plantations in the country stretch across 6 million hectares as of 2007, with a replanting plan set for an additional 4.7 million to boost productivity in 2017. There are a number of negative social and environmental impacts of palm oil production in Southeast Asia.

Seafood
In 2015, the total production of seafood reached about 22.31 million metric tons, valued at around 18.10 billion US dollars. For capture of wild fish (both inland and marine), the production trend was steady in 2011–2015, while there was a steep increase in the production from aquaculture during the same period.

Oil and mining
Indonesia was the only South East Asian member of the Organization of Petroleum Exporting Countries (OPEC) until its suspension in 2009. The country currently remains a net oil importer despite its large petroleum production industry. In 1999, crude and condensate output averaged 1.5 Moilbbl per day, and in 1998, the oil and gas sector including refining, contributed approximately 9% to GDP. As of 2005, crude oil and condensate output were 1.07 Moilbbl per day. It indicates a substantial decline from the 1990s, due primarily to ageing oil fields and a lack of investment in oil production equipment. This decline in production has been accompanied by a substantial increase in domestic consumption, about 5.4% per year, leading to an estimated US$1.2 billion cost for importing oil in 2005. The state owns all petroleum and mineral rights. Foreign firms participate through production-sharing and work contracts. Oil and gas contractors are required to finance all exploration, production, and development costs in their contract areas and are entitled to recover operating, exploration, and development costs out of the oil and gas produced. Indonesia had previously subsidized fuel prices to keep prices low, costing US$7 billion in 2004. SBY has mandated a significant reduction of government subsidy of fuel prices in several stages. The government has stated that cuts in subsidies are aimed at reducing the budget deficit to 1% of GDP in 2005, down from around 1.6% last year. At the same time, the government has offered one-time subsidies for qualified citizens, to alleviate hardships.

Indonesia is the world's largest tin market. Although mineral production traditionally centered on bauxite, silver, and tin, it is expanding its copper, nickel, gold, and coal output for export markets. In mid-1993, the Department of Mines and Energy reopened the coal sector to foreign investment, resulting in a joint venture between Indonesian coal producer and BP and Rio Tinto Group. Total coal production reached 74 million metric tons in 1999, including exports of 55 million tons, and in 2011, production was 353 million. As of 2014, Indonesia is the third-largest producer with a total output of 458 Mt and export of 382 Mt. At this rate, the reserves will be used up in 61 years until 2075. Not all of the productions can be exported due to Domestic Market Obligation (DMO) regulation, which should fulfill the domestic market. In 2012, the DMO was 24.72%. Starting from 2014, no low-grade coal exports are allowed, so the upgraded brown coal process that cranks up the calorie value of coal from 4,500 to 6,100 kcal/kg will be built in South Kalimantan and South Sumatra. Indonesia is also the world's largest producer of nickel, and the second-largest producer of cobalt in 2022.

Two US firms operate three copper/gold mines in Indonesia, with a Canadian and British firm holding significant other investments in nickel and gold, respectively. India's fortune groups like Vedanta Resources and Tata Group also have substantial mining operations in Indonesia. In 1998, the value of Indonesian gold and copper production was $1 billion and $843 million respectively. Receipts from gold, copper, and coal accounted for 84% of the $3 billion earned in 1998 by the mineral mining sector. With the addition of Alumina project that produces 5% of the world's alumina production, Indonesia would be the world's second-largest Alumina producer. The project will not make the ores to become aluminum, as there are 100 types of Alumina derivatives that can be developed further by other companies in Indonesia.

Joko Widodo's administration continued the resource nationalism policy of SBY, nationalizing some assets controlled by multinational companies such as Freeport McMoRan, TotalEnergies and Chevron. In 2018, in a move aimed to cut imports, oil companies operating in Indonesia were ordered to sell their crude oil to state-owned Pertamina.

Manufacturing
Indonesia's manufacturing sector has historically played a key role in the country's economic development and now contributes to 20 percent of GDP. The government has ambitious plans to propel the country into the top ten biggest economies in the world by 2030, with manufacturing at the heart of this goal. The main areas of production include textiles and garments, food and beverages (F&B), electronics, automotive, and chemicals, with the majority of manufacturers in this sector consisting of micro, small, or medium-sized enterprises. The sector has posted a consistent four percent growth year-on-year since 2016 and registered 147 trillion rupiah (US$8.9 billion) in investments from January to September 2019.

Indonesia recently became the 10th-largest manufacturing nation in the world. Its large manufacturing sector accounts for almost a quarter of the nation's total GDP and employs over a fifth of Indonesia's working age population (around 25 million workers). Put into perspective, Indonesia's manufacturing sector is now larger than the manufacturing sectors of the United Kingdom, Russia and Mexico. Industry sector (including manufacturing) which accounts for 21% of local workers (having become more prominent in recent years). Indonesia's labour pool is estimated at 120 million people, and is growing annually by approximately 2.4 million. As the economy has progressed beyond its predominantly agricultural base to a mixed composition, more workers – particularly women – are now employed in manufacturing and service-related professional industries.

With its rapidly growing middle class and competitive workforce, more foreign investors than ever before are taking advantage of Indonesia's strong manufacturing sector. However, the sector has significant challenges, including intense international competition, particularly from China, increasing labour costs, high transportation and logistics costs, difficulties getting credit, and varying levels of transparency and clarity in regulations.

Renewable energy
Indonesia has significant potential for developing renewable energy, however, the country continues to rely heavily on the use of fossil fuels in domestic electricity production. Continued investment in and reliance on fossil fuels, such as coal, may result in fossil fuels becoming stranded assets, leading to significant investments lost that the country could have received from renewable energy investors.

Automotive industry
In 2010, Indonesia sold 7.6 million motorcycles, which were mainly produced in the country with almost 100% local components. Honda led the market with a 50.95% market share, followed by Yamaha with 41.37%. In 2011, the retail car sales total was 888,335 units, a 19.26% increase from last year. Toyota dominated the domestic car market (35.34%), followed by Daihatsu and Mitsubishi with 15.44% and 14.56%, respectively. Since 2011, some local carmakers have introduced some Indonesian national cars which can be categorized as Low-Cost Green Car (LCGC). In 2012, sales increased significantly by 24%, making it the first time that there were more than one million units in automobile sales.

In August 2014, Indonesia exported 126,935 Completely Build Up (CBU) vehicle units and 71,000 Completely Knock Down (CKD) vehicle units, while total production reached 878,000 vehicle units, constituting 22.5% of total output. Automotive export is more than double of its import. By 2020, it is predicted that the automotive exports will be the third after CPO and shoe export. In August 2015, Indonesia exported 123,790 motorcycles. In the same year, Yamaha Motor Company, which exported 82,641, announced to make Indonesia as a base of exporting of its products.

In 2017, the country produced almost 1.2 million motor vehicles, ranking it as the 18th largest producer in the world. Nowadays, Indonesian automotive companies can produce cars with a high ratio of local content (80%–90%).

In 2018, the country produced 1.34 million cars and exported 346,000 cars, mainly to the Philippines and Vietnam.

Finance, real estate and business
There are 50 million small businesses in Indonesia, with online usage growth of 48% in 2010. Google announced that it would open a local office in Indonesia before 2012. According to Deloitte in 2011, Internet-related activities have generated 1.6% of the GDP. It is bigger than electronic and electrical equipment exports and liquefied natural gas at 1.51% and 1.45% respectively.

Up to the end of June 2011, the fixed state assets were Rp 1,265 trillion ($128 billion). The value of state stocks was Rp 50 trillion ($5 billion) while other state assets were Rp 24 trillion ($2.4 billion).

In 2015, financial services covered Rp 7,2 trillion. Fifty domestic and foreign conglomerations held around 70.5%. Fourteen of it were vertical conglomerations, 28 were horizontal, and eight are mixed. Thirty-five entities are mainly in the bank industries, 13 were in non-bank industries and one each in special financial industries and capital market industries.

Others
The Indonesian Textile Association has reported that in 2013, the textile sector is likely to attract investment of around $175 million. In 2012, the investment in this sector was $247 million, of which only $51 million was for new textile machinery. Exports from the textile sector in 2012 were $13.7 billion.

In 2011, Indonesia released 55,010 working visas for foreigners, an increase of 10% compared to 2010, while the number of foreign residents in Indonesia, excluding tourists and foreign emissaries was 111,752, rose by 6% compared to last year. Those who received visas for six months to one year were mostly Chinese, Japanese, South Koreans, Indians, Americans and Australians. A few of them were entrepreneurs who made new businesses. Malaysia is the most common destination of Indonesian migrant workers (including illegal workers). In 2010, according to a World Bank report, Indonesia was among the world's top ten remittance-receiving countries with a value totaling $7 billion. In May 2011, six million Indonesian citizens were working overseas, 2.2 million of whom reside in Malaysia and another 1.5 million in Saudi Arabia.

GDP by provinces
There are 34 provinces in Indonesia. Below are the top 15 provinces in Indonesia ranked by GDP in 2019:

ASEAN
Until the end of 2010, intra-ASEAN trade was still low as trade involved mainly exports to countries outside the region, with the exception of Laos and Myanmar, whose foreign trade was ASEAN-oriented. In 2009, realised foreign direct investment (FDI) was US$37.9 billion and increased two-fold in 2010 to US$75.8 billion.

The ASEAN Framework Agreement on Trade in Services (AFAS) was adopted at the ASEAN Summit in Bangkok in December 1995. Under the agreement, member states enter into successive rounds of negotiations to liberalise trade in services with the aim of submitting increasingly higher levels of commitment. ASEAN has concluded seven packages of commitments under AFAS.

Mutual Recognition Agreements (MRAs) have been agreed upon by ASEAN for eight professions: physicians, dentists, nurses, architects, engineers, accountants, surveyors, and tourism professionals. Individuals in these professions will be free to work in any ASEAN states effective 31 December 2015.

In addition, six member states (Malaysia, Vietnam (2 exchanges), Indonesia, Philippines, Thailand, and Singapore) have collaborated on integrating their stock exchanges, which includes 70% of its transaction values with the goal to compete with international exchanges.

Single market will also include the ASEAN Single Aviation Market (ASEAN-SAM), the region's aviation policy geared towards the development of a unified and single aviation market in Southeast Asia. It was proposed by the ASEAN Air Transport Working Group, supported by the ASEAN Senior Transport Officials Meeting, and endorsed by the ASEAN Transport Ministers. It is expected to liberalise air travel between member states allowing ASEAN airlines to benefit directly from the growth in air travel, and also free up tourism, trade, investment, and service flows. This policy supersedes existing unilateral, bilateral, and multilateral air services agreements among member states which are inconsistent with its provisions.

Japan
Indonesia and Japan signed the Indonesia–Japan Economic Partnership Agreement (IJEPA), which had come into effect on 1 July 2008. The agreement was Indonesia's first bilateral free-trade agreement to ease the cross-border flow of goods and people as well as investment between both countries. In 2012, there were between 1,200 and 1,300 Japanese corporates operating in Indonesia, with some 12,000 Japanese nationals living in Indonesia. Japan has been investing in Indonesia for decades, particularly in the automotive, electronic goods, energy, and mining sectors. Prior to the formation of the Indonesian Republic, the Japanese had viewed Indonesia as an important source of natural resources. The Japanese need of natural resources was among the reasons that led the nation to advance further to the south in their military conquests during World War II. Today Indonesia is Japan's major supplier for natural rubber, liquefied natural gas, coal, minerals, paper pulp, seafood such as shrimp and tuna, and coffee. Traditionally Indonesia has been regarded as a major market of Japanese automotive and electronic goods. For Japanese businesses, Indonesia has been a location for low-cost manufacturing operations as well as being the source of various natural resources required by those operations. Approximately 1,000 Japanese companies operate in Indonesia which employ approximately 300,000 people. Major Japanese factories are concentrated east of Jakarta with high concentrations in Bekasi, Cikarang and Karawang, West Java.

China
Trade with China has increased since the 1990s, and in 2014, China became Indonesia's second-largest export destination after Japan. Trade between China and Indonesia is on the rise, especially after the implementation of ACFTA since early 2010. Indeed, while in 2003 trade between Indonesia and China reached only US$3.8 billion, in 2010 it multiplied almost 10 times and reached US$36.1 billion. China's transformation into Fastest growing country in the 21st century has led to an increase of foreign investments in the bamboo network, a network of overseas Chinese businesses operating in the markets of Southeast Asia that share common family and cultural ties. However the free trade with China has caused much anxiety in Indonesia, since inflows of cheap products from China could harm Indonesian industry. Indonesian private sector and civil society organizations vigorously lobbied the Indonesian government and members of parliament, insisting that Indonesia should either pull out of the agreement or renegotiate its terms with Beijing.

China has remained on top of Indonesia's key major trading partners, serving as the country's largest export and import market. China serves as Indonesia's largest export destination after overtaking Japan and United States, reaching US$16.8 billion. China is also Indonesia's most important source of imports, reaching US$30.8 billion, or 22.7% of Indonesian imports in 2016. The balance however was in favour of China as Indonesia booked a trade deficit of US$14 billion in 2016.

From China's perspective, since 2010 ASEAN as a whole has become its fourth-largest trading partner after the European Union, Japan and the United States. Among ASEAN member countries, Indonesia was China's fourth-largest trading partner, which, according to data as of May 2010 from the Ministry of Commerce of the People's Republic of China, amounted to US$12.4 billion, after Malaysia (US$22.2 billion), Singapore (US$17.9 billion) and Thailand (US$15.7 billion). With China's economic rise, Indonesia has been intensifying its trade relationship with China to counterbalance its ties with the West. By 2020, China had become Indonesia's largest export destination.

South Korea
In the past, the relations were only developed around trade and investments, such as the forestry and garment sectors. Today the cooperation has been expanded to a number of mega projects and advanced industries. With US$27 billion in bilateral trade, South Korea became the fourth biggest trading partner of Indonesia in 2012. It became the third-biggest foreign investor in Indonesia, with US$1.94 billion in investment.

There are large numbers of South Korean companies that have been investing and operating in Indonesia, such as Miwon (Daesang Corporation), Lotte, Yong Ma, Hankook Tire, Samsung, LG, Kia Motors, and Hyundai. In 2011, Hankook announced a US$353 million investment into a production plant located in Bekasi, West Java, Indonesia.

In 2019, trade between Indonesia and South Korea was worth $15.65 billion, and between 2015 and 2019 South Korean companies invested nearly $7 billion in Indonesia. In December 2020, Indonesia and South Korea signed a comprehensive economic partnership. It is equivalent to a free trade agreement, though focuses on a broader scope of economic cooperation. Under the deal, Indonesia will scrap 94.8% of tariffs on South Korean products while South Korea will scrap 95.8% of tariffs on Indonesian products.

United States
At the beginning of the post-Suharto era, US exports to Indonesia in 1999 totaled $2 billion, down significantly from $4.5 billion in 1997. The main exports were construction equipment, machinery, aviation parts, chemicals, and agricultural products. US imports from Indonesia in 1999 totaled $9.5 billion and consisted primarily of clothing, machinery and transportation equipment, petroleum, natural rubber, and footwear. Financial assistance to Indonesia is coordinated through the Consultative Group on Indonesia (CGI) formed in 1989. It includes 19 donor countries and 13 international organizations that meet annually to coordinate donor assistance. In 2019, as Indonesia's share of global trade exceeded 0.5 percent, the United States Trade Representatives decided not to classify Indonesia as a "developing country." Despite a revocation of this status, the Indonesian government has assured that this would not change the current Generalized System of Preferences facilities that Indonesia had enjoyed from the United States.

European Union
The EU and Indonesia have built robust commercial relations, with bilateral trade amounting to approximately €25 billion in 2012 resulting in a sizeable €5.7 billion trade surplus for Indonesia with the EU. In the past few years trade between EU and Indonesia has been marked by an upward trend. Whereas total trade was worth almost €16 billion in 2009, by 2011 it had already reached €23.5 billion. For the EU, Indonesia is the 24th largest import source (share 0.9%) and the 30th largest export destination (share 0.6%). Inside the ASEAN-region, Indonesia ranks fourth in terms of total trade. The EU is Indonesia's 4th largest trading partner after Japan, China and Singapore, representing almost 10% of its total external trade. The EU is the second largest investor in the Indonesian economy. Indonesia mostly exports to the EU agricultural products and processed resources, mainly palm oil, fuels and mining products, textiles and furniture. EU exports to Indonesia consist mainly of high-tech machinery and transport equipment, chemicals and various manufactured goods. Essentially, trade flows between Indonesia and the EU complement each other. After negotiations on a free trade agreement with ASEAN got increasingly difficult, the EU began pursuing negotiations with individual ASEAN states. The EU and Indonesia are currently working towards an ambitious Comprehensive Economic Partnership Agreement covering trade, investment and services.

India
On 25 January 2011, after talks by Indian Prime Minister Manmohan Singh and visiting President of Indonesia Susilo Bambang Yudhoyono, India and Indonesia had signed business deals worth billions of dollars and set an ambitious target of doubling trade over the next five years. India also has further economic ties with Indonesia through its free trade agreement with ASEAN, of which Indonesia is a member. The two countries target to achieve bilateral trade of $25 billion by 2015, with cumulative Indian investments of $20 billion in Indonesia.

Trade agreements under negotiation

 * Indonesia-Pakistan Free Trade Agreement (🇮🇩 Indonesia-🇵🇰 Pakistan FTA); Negotiations launched: January 2019
 * Indonesia-Canada Comprehensive Economic Partnership Agreement (🇮🇩 Indonesia-🇨🇦 Canada CEPA); Negotiations launched: 20 June 2020
 * Indonesia-European Union Comprehensive Economic Partnership Agreement (🇮🇩 Indonesia-🇪🇺 EU CEPA); Negotiations launched: 18 July 2016
 * Indonesia-Tunisia Preferential Trade Agreement (🇮🇩 Indonesia-🇹🇳 Tunisia PTA); Negotiations launched: 25 June 2018
 * Indonesia-Morocco Preferential Trade Agreement (🇮🇩 Indonesia-🇲🇦 Morocco FTA); Negotiations Launched: 23 January 2019
 * Indonesia-Eurasian Economic Union (🇮🇩 Indonesia- Eurasian Economic Union); Negotiations Launched: 3 April 2023
 * Indonesia-Peru Comprehensive Economic Partnership Agreement (🇮🇩 Indonesia-🇵🇪 Peru IP-CEPA); Negotiations Launched: 15 August 2023
 * Indonesia-Türkiye Comprehensive Economic Partnership Agreement (🇮🇩 Indonesia-🇹🇷 Turkey IT-CEPA); Negotiations Launched: 6 July 2017
 * Indonesia-India Comprehensive Economic Cooperation Arrangement (🇮🇩 Indonesia-🇮🇳 India CECA); Negotiations Launched: 4 October 2011
 * ASEAN-Canada FTA ( ASEAN-🇨🇦 Canada FTA); Negotiations Launched: 17 November 2021

Macro-economic trend
This is a chart of trend of Indonesia's GDP at market prices by the IMF with figures in millions of rupiah.

For purchasing power parity comparisons, the exchange rate for 1 US dollar is set at 3,094.57 rupiah.

Average net wage in Indonesia varies by sector. In February 2017 the electricity, gas, and water sector has the highest average net wage, while the agriculture sector has the lowest.

Investment
Since the late 1980s, Indonesia has made significant changes to its regulatory framework to encourage economic growth. This growth was financed mostly from private investment, both foreign and domestic. US investors dominated the oil and gas sector and undertook some of Indonesia's largest mining projects. In addition, the presence of US banks, manufacturers, and service providers expanded, especially after the industrial and financial sector reforms of the 1980s. Other major foreign investors included India, Japan, the UK, Singapore, the Netherlands, Qatar, Hong Kong, Taiwan and South Korea.

The 1997 crisis made continued private financing imperative but problematic. New foreign investment approvals fell by almost two-thirds between 1997 and 1999. The crisis further highlighted areas where additional reform was needed. Frequently cited areas for improving the investment climate were the establishment of a functioning legal and judicial system, adherence to competitive processes, and adoption of internationally acceptable accounting and disclosure standards. Despite improvements of laws in recent years, Indonesia's intellectual property rights regime remains weak, and lack of effective enforcement is a significant concern. Under Suharto, Indonesia had moved towards the private provision of public infrastructure, including electric power, toll roads, and telecommunications. The 1997 crisis brought to light a severe weakness in the process of dispute resolution, however, particularly in the area of private infrastructure projects. Although Indonesia continued to have the advantages of a large labour force, abundant natural resources and modern infrastructure, private investment in new projects largely ceased during the crisis.

As of 28 June 2010, the Indonesia Stock Exchange had 341 listed companies with a combined market capitalization of $269.9 billion. As of November 2010, two-thirds of the market capitalization was in the form of foreign funds, and only around 1% of the population have stock investments. Efforts are further being made to improve the business and investment environment. Within the World Bank's Doing Business Survey, Indonesia rose to 122 out of 178 countries in 2010, from 129 in the previous year. Despite these efforts, the rank is still below regional peers, and an unfavorable investment climate persists. For example, potential foreign investors and their executive staff cannot maintain their own bank accounts in Indonesia, unless they are tax-paying local residents (paying tax in Indonesia for their worldwide income).

From 1990 to 2010, Indonesian companies have been involved in 3,757 mergers and acquisitions as either acquirer or target with a total known value of $137 billion. In 2010, 609 transactions were announced, which is a new record. Numbers had increased by 19% compared to 2009. The value of deals in 2010 was US$17 billion, which is the second-highest number ever. In 2012, Indonesia realized total investments of $32.5 billion, surpassing its annual target $25 billion, as reported by Investment Coordinating Board (BKPM) on 22 January. The primary investments were in the mining, transport and chemicals sectors. In 2011, the Indonesian government announced a new Masterplan (known as the MP3EI, or Masterplan Percepatan dan Perluasan Pembangunan Ekonomi Indonesia, the Masterplan to Accelerate and Expand Economic Development in Indonesia). The aim was to encourage increased investment, particularly in infrastructure projects across Indonesia.

Indonesia regained its investment grade rating from Fitch Rating in late 2011, and from Moody's Rating in early 2012, after losing it in the 1997 crisis, during which Indonesia spent more than Rp. 450 trillion ($50 billion) to bail out lenders from banks. Fitch raised Indonesia's long-term and local currency debt rating to BBB− from BB+ with both ratings is stable. Fitch also predicted that the economy would grow at least 6% on average per year through 2013, despite a less conducive global economic climate. Moody's raised Indonesia's foreign and local currency bond ratings to Baa3 from Ba1 with a stable outlook. In May 2017, S&P Global raised Indonesia's investment grade from BB+ to BBB− with a stable outlook, due to the economy experiencing a rebound in exports and strong consumer spending during early 2017.

Foreign Direct Investment (FDI)
Indonesia's foreign direct investment surged 44.2% on a yearly basis in 2022, with the base metals sector drawing in the biggest inflows. Indonesia's received 654.4 trillion rupiah worth of FDI last year, or equivalent to $45.6 billion in the investment ministry's official calculation, which assumes an exchange rate of 14,350 to the dollar. The data excludes investment in the banking and oil and gas sectors. Foreign direct investment in base metals and mining reached $11 billion and $5.1 billion, respectively, last year, the biggest recipients of FDI. The biggest sources were Singapore, China and Hong Kong. Total investment, including from domestic sources, reached 1,207.2 trillion rupiah ($81.02 billion), roughly in line with the government's target. FDI in the final quarter of last year was up 43.3% on an annual basis, amounting to 175.2 trillion rupiah in rupiah terms, or $12.2 billion in the official U.S. dollar equivalent.

List of the 10 largest foreign investment origin countries in Indonesia in 2022: 1. Singapore: $10.54 billion 2. China: $5.18 billion 3. Hong Kong, PRC: $3.91 billion 4. Japan: $2.76 billion 5. Malaysia: $2.21 billion 6. United States: $2.12 billion 7. South Korea: $1.66 billion 8. Netherlands: $1.09 billion 9. Bermuda: $0.76 billion 10. UK: $0.51 billion

Foreign direct investment into Indonesia (excluding investment in banking and the oil and gas sectors) increased 20.2 percent year-on-year to a new record peak of IDR 177 trillion (US$11.96 billion) in the Q1 of 2023, amid efforts by the government to ease business and licensing rules. Singapore (US$4.3 billion) was the biggest source of investment, followed by Hong Kong (US$1.5 billion), China (US$1.2 billion), and Japan (US$1 billion) while base metals were the biggest recipient amid efforts to boost investment in processed minerals. In total, Indonesia recorded IDR 328.9 trillion of foreign and domestic investment during the first quarter, up 16.5 percent from a year earlier, boosted by a rise in investment in base metals, transportation, and the mining sector. For 2023, the government has set a target to draw IDR 1,400 trillion (US$95.5 billion) of investment from domestic and foreign sources.

Fortune Global 500
Indonesia has 1 company that rank in the Fortune Global 500 ranking for 2023.

Forbes Global 2000
Indonesia has 9 companies that rank in the Forbes Global 2000 ranking for 2024.

Public expenditure
In 2015, total public spending was Rp 1,806 trillion (US$130.88 billion, 15.7% of GDP). Government revenues, including those from state-owned enterprises (BUMN), totaled Rp 1,508 trillion (US$109.28 billion, 13.1% of GDP) resulting in a deficit of 2.6%. Since the 1997 crisis that caused an increase in debt and public subsidies and a decrease in development spending, Indonesia's public finances have undergone a major transformation. As a result of a series macroeconomic policies, including a low budget deficit, Indonesia is considered to have moved into a situation of financial resources sufficiency to address development needs. Decentralization, enacted during the Habibie administration, has changed the manner of government spending, which has resulted in around 40% of public funds being transferred to regional governments by 2006.

In 2005, rising international oil prices led to the government's decision of slashing fuel subsidies. It led to an extra US$10 billion for government spending on development, and by 2006, there were an additional 5 billion due to steady growth, and declining debt service payments. It was the country's first "fiscal space" since the revenue windfall during the 1970s oil boom. Due to decentralization and fiscal space, Indonesia has the potential to improve the quality of its public services. Such potential also enables the country to focus on further reforms, such as the provision of targeted infrastructure. Careful management of allocated funds has been described as Indonesia's main issue in public expenditure.

In 2018, President Joko Widodo substantially increased the amount of debt by taking foreign loans. Indonesia has increased the debt by Rp 1,815 trillion compared to his predecessor, SBY. He has insisted that the loan is used for productive long-term projects such as building roads, bridges, and airports. Finance Minister Sri Mulyani also stated that despite an increase of foreign loans and debt, the government has also increased the budget for infrastructure development, healthcare, education, and budget given to regencies and villages. The government is insisting that foreign debt is still under control, and complying with relevant laws that limit debt to be under 60% of GDP.

Regional performance
Based on the regional administration implementation performance evaluation of 2009, by order, the best performance were:
 * 3 provinces: North Sulawesi, South Sulawesi, and Central Java;
 * 10 regencies: Jombang, Bojonegoro and Pacitan in East Java Province, Sragen in Central Java, Boalemo in Gorontalo, Enrekang in South Sulawesi, Buleleng in Bali, Luwu Utara in South Sulawesi, Karanganyar in Central Java, and Kulon Progo in Yogyakarta;
 * 10 cities: Surakarta and Semarang in Central Java, Banjar in West Java, Yogyakarta city in Yogyakarta, Cimahi in West Java, Sawahlunto in West Sumatra, Probolinggo and Mojokerto in East Java, and Sukabumi and Bogor in West Java.

Based on JBIC Fiscal Year 2010 survey (22nd Annual Survey Report) found that in 2009, Indonesia has the highest satisfaction level in net sales and profits for Japanese companies.

National net wealth
National net wealth, also known as national net worth, is the total sum of the value of a nation's assets minus its liabilities. It refers to the total value of net wealth possessed by the citizens of a nation at a set point in time. This figure is an important indicator of a nation's ability to take on debt and sustain spending and is influenced not only by real estate prices, equity market prices, exchange rates, liabilities and incidence in a country of the adult population but also by human resources, natural resources and capital and technological advancements, which may create new assets or render others worthless in the future. According to Credit Suisse, Indonesia has national net wealth of approximately $3.199 trillion, or about 0.765% of world net wealth, placing Indonesia at 17th, above Russia, Brazil, and Sweden.

High-net-worth individuals
According to Asia Wealth Report, Indonesia has the highest growth rate of high-net-worth individuals (HNWI) predicted among the 10 largest Asian economies. The 2015 Knight Frank Wealth Report reported that in 2014 there were 24 individuals with a net worth above US$1 billion. 18 of them lived in Jakarta while the others were spread among other large cities in Indonesia. 192 persons can be categorized as centamillionaires with over US$100 million of wealth and 650 persons as high-net-worth individuals whose wealth exceeded US$30 million.

Embezzlement and corrupt bureaucracy
Corruption is pervasive in the Indonesian government, affecting many fields that are central to barrier the country's economic development from local governments, the police, the private sector even various ministerial institutions which are close to the president. It is related to problems of human capacities and technical resources remains a major challenge in merging effectiveness and integrity in public administration, especially in regencies and cities. A 2018 World Economic Forum survey reports that corruption is the most problematic issue regarding doing business in Indonesia, as well as inefficient government bureaucracy policies. The survey also showed that 70% of entrepreneurs believe that corruption has grown in Indonesia, while low trust in the private sector is a major obstacle to foreign investment in the country.

In 2019, a controversial bill regarding the anti-corruption body (Corruption Eradication Commission (KPK)) reduced the commission's effectiveness in tackling widespread corruption problems and stripped its independence was passed despite massive protests across the country. There were 26 points in the revised law that crippled the commission and might further undermine efforts to eradicate corruption in Indonesia.

Labour unrest
As of 2011, labour militancy was growing with a major strike at the Grasberg mine, the world's largest gold mine as well as the second-largest copper mine, and numerous strikes elsewhere. A common issue was the attempts by foreign-owned enterprises to evade Indonesia's strict labour laws by calling their employees' contract workers. The New York Times expressed concern that Indonesia's cheap labor advantage might be lost. However, a large pool of the unemployed who will accept substandard wages and conditions remains available. One factor in the increase of militancy is increased awareness via the Internet of prevailing wages in other countries, and the generous profits foreign companies are making in Indonesia.

On 1 September 2015, thousands of workers in Indonesia staged large demonstrations across the country in pursuit of higher wages and improved labour laws. Approximately 35,000 people rallied in total. They demanded a 22% to 25% increase in the minimum wage by 2016 and lower prices on essential goods, including fuel. The unions also want the government to ensure job security and ensure the fundamental rights of the workers.

In 2020, thousands of workers across the country held a massive march to protest against the Omnibus Law on Job Creation that included several controversial rules, which revised minimum wages, lowered severance pay, relaxed firing rules, among other disadvantaging regulations for labors and factory workers.

Inequality
Economic disparity and the flow of natural resource profits to Jakarta has led to discontent and contributed to separatist movements in areas such as Aceh and Papua. Geographically, the poorest fifth regions account for just 8% of consumption, while the wealthiest fifth account for 45%. While there are new laws on decentralization that may address the problem of uneven growth and satisfaction partially, there are many hindrances in putting this new policy into practice. At a 2011 Makassar Indonesian Chamber of Commerce and Industry (Kadin) meeting, Disadvantaged Regions Minister said there are 184 regencies classified as disadvantaged areas, with around 120 in eastern Indonesia. 1% of Indonesia's population has 49.3% of the country's $1.8 trillion wealth, down from 53.5%. However, it is ranked fourth after Russia (74.5%), India (58.4%) and Thailand (58%).

Inflation
Inflation has long been a problem in Indonesia. Because of political turmoil, the country once suffered hyperinflation, with 1,000% annual inflation between 1964 and 1967, resulting in severe poverty and hunger. Even though the economy recovered quickly during the first decade of the New Order administration (1970–1981), never once was the inflation less than 10% annually. The inflation slowed during the mid-1980s; however, the economy was also languid due to the decrease in oil price that reduced its export revenue dramatically. The economy was again experiencing rapid growth between 1989 and 1997 due to the improving export-oriented manufacturing sector. Still, the inflation rate was higher than economic growth, and this caused a widening gap among Indonesians. Inflation peaked in 1998 during the 1997 crisis at over 58%, causing poverty to rise to the levels of the 1960s. During the economic recovery and growth in recent years, the government has been trying to lower the inflation rate. However, it seems that inflation has been affected by global fluctuation and domestic market competition. As of 2010, the inflation rate was approximately 7%, when its economic growth was 6%. To date, inflation is affecting the Indonesian lower middle class, especially those who are not able to afford food after price hikes. At the end of 2017, Indonesia's inflation rate was 3.61%, or higher than the government-set forecast of 3.0–3.5%.

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/

title: Economy of Indonesia


text:
Communications in Indonesia

Communications in Indonesia has a complex history due to the need to reach an extended archipelago of over 17,500 islands. The once important non-electronic communication methods of the past have given way to a considerable telecommunications infrastructure in contemporary Indonesia.

History
Indonesia has long been using traditional forms of communications between various islands and villages. It was not until the sixteenth century when the Dutch colonised Indonesia, constructing a more elaborate communication system, both within Indonesia and to other countries. The first connection to Australia was an undersea telegraph cable that was completed on 18 November 1871, connecting Java to Darwin, and eventually to the Australian Overland Telegraph Line across Australia.

After gaining Independence, Indonesia started to develop its own communication systems, generally following the rest of the world. The construction of communication towers and launch of the Palapa series of communication satellites was done during the New Order period.

Infrastructure
A number of lines connect Indonesia to international communication routes. For example, the SEA-ME-WE 3 optical submarine telecommunications cable lands at both Medan and Jakarta connecting Europe with South eastern Asia (several countries up to Japan) and Australia (Perth).

Domestically, Indonesia has good coverage for media across most major islands, although smaller and less populated Islands do not always receive attention from media companies, and rely on satellite communication.

Print
Indonesia has a long list of print media, in the form of newspapers and magazines. Some, such as Kompas, Media Indonesia, Koran Sindo and Koran Tempo are circulated daily and are relatively simple to obtain. Others are island- or city-specific, and are usually not distributed to other regions.

Telephone

 * Telephones - main lines in use: 9.99 million (2004)
 * Telephones - mobile cellular: At the end of 2010, the mobile cellular penetration rate was 67 percent (22 percent at end of 2006). CDMA use is declining in favour of GSM.
 * Telephone system: domestic service fair, international service good
 * domestic: interisland microwave system and HF radio police net; domestic satellite communications system
 * international: satellite earth stations - 2 Intelsat (1 Indian Ocean and 1 Pacific Ocean)

Radio

 * Radio broadcast stations: AM 678, FM 43, shortwave 82 (1998)
 * Radios: 31.5 million (1997)

Television

 * Television broadcast stations: 11 national TV, 60 local TV (From AC Nielsen Report - first Semester 2005):
 * Televisions: 13.75 million (1997)

Internet

 * Internet Service Providers (ISPs): 24 (1999)
 * Country code (Top-level domain): .id

By June 2011, all sub-districts in Indonesia will be connected to the Internet.

Regulatory environment in Indonesia
The media in Indonesia is regulated by the Ministry of Communications and Informatics.

LIRNEasia's Telecommunications Regulatory Environment (TRE) index, which summarises stakeholders' perception on certain TRE dimensions, provides insight into how conducive the environment is for further development and progress. The most recent survey was conducted in July 2008 in eight Asian countries, including Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines. The tool measured seven dimensions: i) market entry; ii) access to scarce resources; iii) interconnection; iv) tariff regulation; v) anti-competitive practices; and vi) universal services; vii) quality of service, for the fixed, mobile and broadband sectors.

Below-average scores received in all sectors and across dimensions reflect general dissatisfaction of the TRE in Indonesia. However, this does not mean that respondents have ignored recent developments. The relatively healthy growth in mobile sector is reflected in the higher TRE scores received by the sector for most dimensions, when compared to the fixed sector. On average, the mobile sector scores best, with fixed and broadband following.

title: Communications in Indonesia


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Transport in Indonesia

Indonesia's transport system has been shaped over time by the economic resource base of an archipelago with thousands of islands, and the distribution of its more than 200 million people concentrated mainly on a single island, Java.

All modes of transport play a role in the country's transport system and are generally complementary rather than competitive. Road transport is predominant, with a total system length of 548366 km in 2020. The railway system has five unconnected networks in Java and Sumatra primarily dedicated to transport bulk commodities and long-distance passenger traffic.

Sea transport is extremely important for economic integration, as well as for domestic and foreign trade. It is well developed, with each of the major islands having at least one significant port city. The role of inland waterways is relatively minor and is limited to certain areas of Eastern Sumatra and Kalimantan.

The function of air transport is significant, particularly where land or water transport is deficient or non-existent. It is based on an extensive domestic airline network in which all major cities can be reached by passenger plane.

Merchant marine vessels
Because Indonesia encompasses a sprawling archipelago, maritime shipping provides essential links between different parts of the country. Boats in common use include large container ships, a variety of ferries, passenger ships, sailing ships, and smaller motorised vessels. The traditional wooden pinisi vessel is still widely used as the inter-island freight service within Indonesian archipelago. Main pinisi traditional harbours are Sunda Kelapa in Jakarta and Paotere harbour in Makassar.

Frequent ferry services cross the straits between nearby islands, especially in the chain of islands stretching from Sumatra through Java to the Lesser Sunda Islands. On the busy crossings between Sumatra, Java, and Bali, multiple car ferries run frequently twenty-four hours per day. There are also international ferry services between across the Straits of Malacca between Sumatra and Malaysia, and between Singapore and nearby Indonesian islands, such as Batam. Ferry services are operated by state-owned ASDP Indonesia Ferry and several private operators.

A network of passenger ships makes longer connections to more remote islands, especially in the eastern part of the archipelago. The national shipping line, Pelni, provides passenger service to ports throughout the country on a two to four week schedule. These ships generally provide the least expensive way to cover long distances between islands. Smaller privately run boats provide service between islands.

On some islands, major rivers provide a key transportation link in the absence of good roads. On Kalimantan, longboats running on the rivers are the only way to reach many inland areas.

Waterways
Indonesia has 21579 km of navigable waterways, of which about one half are on Kalimantan, and a quarter each on Sumatra and Papua. Waterways are highly needed because the rivers on these islands are not wide enough to hold medium-sized ships. In addition to this, roads and railways are not good options since Kalimantan and Papua are not like Java, which is a highly developed island. With the current length of waterways, Indonesia ranked seventh on the countries with longest waterways.

Ports and harbours
Major ports and harbours include Bitung, Cilacap, Cirebon, Jakarta, Kupang, Palembang, Semarang, Surabaya, and Makassar. Ports are managed by the various Indonesia Port Corporations, of which there are four, numbered I through IV. Each has jurisdiction over various regions of the country, with I in the west and IV in the east. Port of Tanjung Priok in Jakarta is the Indonesia's busiest port, handling over 5.20 million TEUs.

A two-phase "New Tanjung Priok" extension project is currently underway, which will triple the existing annual capacity when fully operational in 2023. In 2015, ground breaking of the strategic North Sumatra's Kuala Tanjung Port has been completed. It is expected to accommodate 500,000 TEUs per year, overtaking Johor's Tanjung Pelepas Port and could even compete with the port of Singapore.

Roads and highways
A wide variety of vehicles are used for transportation on Indonesia's roads. Bus services are available in most areas connected to the road network. Between major cities, especially on Sumatra, Java, and Bali, services are frequent and direct; many express services are available with no stops until the final destination.

Intercity bus
The intercity bus service has become the major provider of land transportation service connecting Indonesian cities, either within an island or inter-island connected through ferry crossings. The intercity bus operator companies are called P.O. (perusahaan otobus in Indonesian) with several major companies operating mainly in Java and Sumatra. The longest intercity bus service in Indonesia is a route operated by P.O. Antar Lintas Sumatera (ALS) connecting Medan in North Sumatra and Jember in East Java. It is a week long bus travel covering a distance of 2,920 kilometers.

The surge of intercity bus travel in Indonesia took place after the completion of Trans-Java highway section connecting Jakarta and Surabaya in 2018. During this time, some intercity bus services began operating fleet of double decker busses.

City bus
Some major cities has urban transit bus service, or a more sophisticated form of bus rapid transit (BRT). There are usually also bus services of various kinds such as the Kopaja in Jakarta. The largest one, Transjakarta system in Jakarta, is the longest bus rapid transit system in the world that boasts some 230.9 km in 13 corridors and 10 cross-corridor routes and carrying 430,000 passengers daily in 2016. Other cities such as Yogyakarta (Trans Jogja), Surabaya (Suroboyo Bus & Trans Semanggi Suroboyo), Palembang, Bandung (Trans Metro Pasundan), Surakarta (Batik Solo Trans), Denpasar, Pekanbaru, Semarang (Trans Semarang), Makassar, Bogor, and Padang also have BRT systems in place without segregated lanes.

Taxis and autorickshaws
Many cities and towns have some form of transportation for hire available as well such as taxis. Many cities also have motorised autorickshaws (bajaj) of various kinds. Cycle rickshaws, called becak in Indonesia, are a regular sight on city roads and provide inexpensive transportation. They have been blamed for causing traffic congestion and, consequently, banned from most parts of Jakarta in 1972. Horse-drawn carts are found in some cities and towns.

Ridesharing companies have become serious competition to both taxicabs and motorcycle taxis (ojek), with the four providers being Gojek, Maxim, Anterin, Grab and others.

Minibus
In more remote areas, and between smaller towns, most services are provided with minibuses or minivans (angkot). Buses and vans are also the primary form of transportation within cities. Often, these are operated as share taxis, running semi-fixed routes.

Private cars
Due to the increasing purchasing power of Indonesians, private cars are becoming more common especially in major cities. However the growth of the number of cars increasingly outpaces the construction of new roads, resulting in frequently crippling traffic jams in large parts in major cities especially in Jakarta, which often also happen on highways. Jakarta also has one of the worst traffic jams in the world.

Indonesia has been gradually introducing an Intelligent Transportation System (ITS) since 2012. ITS Indonesia was formed on 26 April 2011.

National routes
Indonesia has about 283102 km of paved highways and 213505 km of unpaved highways ( estimate). Four of Indonesia's main highways are classified as parts of Asian Highway Network: AH2 section in Java and Bali, AH25 and AH151 in Sumatra, AH152 in Java and AH150 section in Kalimantan. Some of them has been numbered, currently only in Java and (partially) Sumatera.

National routes of Indonesia pass through the hearts of most main cities, and are designed to connect between city centres. They act as main inter-city route outside the tollways. A national route has to be passable by logistic trucks, while simultaneously handling the common traffic. National routes in Java are numbered, while those outside Java aren't. In some cities, even in crowded districts, national routes often form bypasses or ring roads (Indonesian: jalan lingkar) around the city to prevent inter-city traffic entering the city center.

Ministry of Public Works and People's Housing is responsible to these networks, except DKI Jakarta part from Jakarta Inner Ring Road to Jakarta Outer Ring Road. A national route can be revised if it serves unable to handle the traffic. It would usually be handled by the province/regional government.

Below were lists of some national routes in Indonesia:
 * Sumatra: Trans-Sumatra Highway
 * Java: North Coast, South Coast
 * Kalimantan: Trans-Kalimantan Highway (Northern, Central, Southern)
 * Sulawesi: Trans-Sulawesi Highway
 * Papua: Trans-Papua Highway

Toll roads
All expressways in Indonesia are toll roads, known locally as jalan tol (lit. toll road). The first expressway in Indonesia is the Jagorawi Toll Road, opened in 1978. 2,386 kilometers of expressways are operating as of 2021. Over 568 km of expressways opened during the first term of President Joko Widodo, surpassing previous administrations. Since 2018, all expressways do not accept any cash tolls; all tolls must be paid with certain contactless money cards.

The high cost of building and maintaining a national highway system means that Indonesia has to outsource the construction and maintenance to private and state-owned companies. Indonesia has an extensive system of highways consisting of:

Sulawesi

 * Makassar-Sultan Hasanuddin International Airport Toll Road
 * Manado-Bitung Toll Road

Lesser Sunda Islands
Serangan-Tanjung Benoa Toll Road: The toll road between Tanjung Benoa to Airport and from Airport to Serangan, all in direct line (not curve) is 12.7 kilometres and is equipped also with motorcycle lanes. The toll road is formally opened on 23 September 2013, about a week before APEC Summit in Bali is opened.

Kalimantan

 * Samarinda-Balikpapan Toll Road

Railways
Indonesia's main railways, operated by Kereta Api Indonesia and its subsidiaries, is used for both passenger and freight transport.

The majority of railways is located on Java. There are four separate railway networks on Sumatra: one in Aceh, one in North Sumatra (Aceh connection proposed to be finished in 2020s), another in West Sumatra, and the final one in South Sumatra and Lampung. South Sulawesi has railway network in Barru Regency as the impact of Trans-Sulawesi Railway construction, the first phase includes 146 kilometers route from Makassar to Parepare, which was completed in November 2022 and has been operating ever since. There are no railways in other parts of Indonesia, although new networks are being developed on islands such as Kalimantan and Papua.

The inter-city rail network is complemented by local commuter rail services, particularly in Jakarta metropolitan area and Surabaya. In Jakarta, the KRL Commuterline service carries more than a million passengers a day. Urban rail networks are also exists in few cities. Palembang LRT began operations in 2018, the first of such kind. The Jakarta MRT and Jakarta LRT began operations in 2019, with the Greater Jakarta LRT system being constructed and it commenced official commercial operations on 28 August 2023, after 11 days of Indonesian Independence Day.

The government's plan to build a high-speed rail (HSR) was announced in 2015, the first in Indonesia and Southeast Asia. It is expected to connect the capital Jakarta with Bandung, covering a distance of around 140 km. Plans were also mentioned for its possible extension to Surabaya, the country's second largest city. In 2023, the Jakarta-Bandung High-Speed Rail construction partially finished and is set to start commercial operation starting October 2023. The Jakarta-Bandung HSR began trial operation with passengers on 7 September 2023 and commercial operations on 2 October 2023.

Pipelines
As of 2013, Indonesia has pipelines for condensate 1,064 km, condensate/gas 150 km, gas 11,702 km, liquid petroleum gas 119 km, oil 7,767 km, oil/gas/water 77 km, refined products 728 km, and water 44 km.

Air transport
Air transport in Indonesia serves as a critical means of connecting the thousands of islands throughout the archipelago. Indonesia is the largest archipelagic country in the world, extending 5,120 km from east to west and 1,760 km from north to south, comprising 13,466 islands, with 922 of those permanently inhabited. With an estimated population of over 255 million people – making it the world's fourth-most-populous country – and also due to the growth of the middle-class, the boom of low-cost carriers in the recent decade, and overall economic growth, many domestic travellers shifted from land and sea transport to faster and more comfortable air travel. Indonesia is widely regarded as an emerging market for air travel in the region. Between 2009 and 2014, the number of Indonesian air passengers increased from 27,421,235 to 94,504,086, an increase of over threefold.

However, safety issues continue to be a persistent problem in Indonesian aviation. Several accidents have given Indonesia's air transport system the reputation of the least safe in the world. Indonesian aviation faces numerous challenges, including poorly maintained, outdated, and often overwhelmed infrastructure, the factor of human error, bad weather, haze problems caused by plantation fires, and volcanic ash spewed by numerous volcanoes that disrupts air transportation.

The Indonesian Air Force has 34,930 personnel equipped with 224 aircraft, among them 110 combat aircraft. The Indonesian Air Force possesses and operates numerous military air bases and military airstrips across the archipelago.

The International Air Transport Association (IATA) has predicted that Indonesia will become the world's sixth largest air travel market by 2034. Around 270 million passengers are predicted to fly from and within Indonesia by 2034.

Airports
As of 2013, there are 673 airports in Indonesia, 186 of those have paved runways, and 487 have unpaved runways. As of 2013, there are 76 heliports in Indonesia. Jakarta's Soekarno–Hatta International Airport serves as the country's main air transportation hub as well as the nation's busiest. Since 2010, it has become the busiest airport in Southeast Asia, surpassing Suvarnabhumi and Changi airports. In 2017, it became the 17th busiest airport in the world with 62.1 million passengers.

Airlines
In Indonesia, there are 22 commercial scheduled airlines that carry more than 30 passengers, and 32 commercial scheduled airlines that transport 30 or less passengers, as well as chartered airlines. Some notable Indonesian airlines, among others, include Garuda Indonesia, the government-owned flag carrier of Indonesia, Lion Air, currently the largest private low-cost carrier airline in Indonesia, Sriwijaya Air, currently the largest medium service regional carrier in Indonesia, also the country's third largest carrier, and Indonesia AirAsia, the Indonesian branch of Malaysian-based AirAsia.

Mudik
Mudik, or Pulang Kampung, is an Indonesian term for the activity where migrants or migrant workers return to their hometown or village during or before major holidays, especially Lebaran (Eid al-Fitr). Although the mudik homecoming travel before Lebaran takes place in most Indonesian urban centers, the highlight is on the nation's largest urban agglomeration; Greater Jakarta, as millions of Jakartans exit the city by various means of transportation, overwhelming train stations and airports and also clogging highways, especially the Trans-Java toll road and Java's Northern Coast Road.

In 2023 it was estimated that the people that took annual mudik travel reached 123 million people. The demand for train and airplane tickets usually spikes a month or two prior to Lebaran, prompting an unusually higher cost for tickets for highly sought days of departure. Some airlines might add extra flights or operate larger airplanes to deal with the surge in demand.

Indonesian train operator Kereta Api Indonesia usually offers additional train trips or introduces longer trains with more cars in order to meet the demand. The private operators of intercity and interprovince buses usually charge higher ticket costs during this period. The impact is indeed tremendous as millions of buses, cars and motorcycles jam the roads and highways, causing kilometres of traffic jams each year.

title: Transport in Indonesia