Indonesia-ECONOMY

Salient Features: Economy transformed from virtually no industry in 1965 to production of steel, aluminum, and cement by late 1970s. Indonesia exporter of oil; responsible for about 6 percent of total Organization of the Petroleum Exporting Countries (OPEC--see Glossary) production in 1991. Emphasis in early 1990s on less government interference in private business and greater technology inputs. Agriculture predominates and benefits from infusion of modern technology by government. Indonesia major aid recipient. Major trade partners Japan and United States; trade with ASEAN fellow members increasing.

Gross Domestic Product (GDP): Rp166.3 trillion in 1989 (estimated; for value of the rupiah--Rp--see Glossary). GDP (see Glossary) annual average growth rate 6 percent in 1985-91.

Agriculture: Declining share (20.6 percent) of GDP but employed majority of workers (55 percent of total labor force) in 1989. Only 10 percent of total land cultivated, another 20 percent potentially cultivable. Farming by smallholders and on large plantations (estates); cropland watered by flooding, and slash-and- burn farming used. Rice dominates production but cassava, corn, sweet potatoes, vegetables, and fruits important; estate crops-- sugar, coffee, peanuts, soybeans, rubber, oil palm, and coconuts-- also important. Green Revolution technological advances and increased irrigation improved production in 1970s and 1980s. Poverty in rural areas of Java, Bali, and Madura partially ameliorated with government-sponsored Transmigration Program (see Glossary) that moved people to more plentiful farmland in Outer Islands. Animal husbandry, fishing, and forestry smaller but valuable parts of agricultural sector.

Industry: Increasing share (37 percent in 1989) of GDP, but employed only about 9 percent of the work force in 1989. Basic industries: oil and natural gas processing, cigarette production, forestry products, food processing, metal manufactures, textiles, automotive and transportation manufactures, and various light industries. Nearly 50 percent of production in Java, 32 percent in Sumatra.

Minerals: Crude petroleum and natural gas predominant. About 70 percent (about 500 million barrels valued at US$6 billion in 1989) of petroleum exported. World's largest exporter of liquefied natural gas (20.6 million tons valued at US$3.7 billion in 1990). Also significant reserves of coal, tin, nickel, copper, gold, and bauxite.

Services: Some 29 percent of GDP projected for 1991, employing about 35 percent of work force in 1989. Government service one of fastest growing sources of employment and with most educated personnel. Mix of modern government-operated utilities, stable private services, and numerous self-employed operators in informal, personal services sector. Interisland maritime transportation crucial; supported by large fleet of traditional and modern boats and ships.

Foreign Trade: Principal export trade with Japan, the United States, Republic of Korea (South Korea), and Taiwan. Most important commodities crude petroleum and petroleum products; natural gas (mostly to Japan), natural rubber, clothing, and plywood also important. About 25 percent of GDP exported in 1980s. Major imports (37 percent of total) from Japan and the United States, primarily manufactured products. Growth in trade with other ASEAN members in 1980s and early 1990s.

Balance of Payments: Positive trade balance throughout 1980s despite oil market collapse. 1990 exports US$26.8 billion versus US$20.7 billion imports. Foreign debt increasing quickly (US$1.1 billion in 1989; US$2.4 billion one year later) in late 1980s and early 1990s.

Foreign Aid: Traditionally important part of central government budget. From 1967 to 1991, most coordinated through Inter-Governmental Group on Indonesia (IGGI--see Glossary) founded and chaired by the Netherlands; since 1992 without Netherlands through Consultative Group on Indonesia (CGI--see Glossary). Major CGI aid donors (80 percent) Japan, World Bank (see Glossary), and Asian Development Bank (see Glossary).

Exchange Rate: Rupiah (Rp). US$1 = Rp2,060 (January 1993), Rp1,998 (January 1992), Rp1,907 (January 1991).

Fiscal Year: April 1-March 31.

Data as of November 1992