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Background Notes: Indonesia, October 1998 Released by the Bureau of East Asian and Pacific Affairs U.S. Department of State

Official Name: Republic of Indonesia

PROFILE

Geography

Area: 2 million sq. km. (736,000 sq. mi.), about three times the size of Texas; maritime area: 7,900,000 sq. km.
Cities: Capital--Jakarta (est. 8.8 million). Other cities--Surabaya 3.0 million, Medan 2.5 million, Bandung 2.5 million plus an additional 3 million in the surrounding area.
Terrain: More than 17,000 islands; 6,000 are inhabited; 1,000 of which are permanently settled. Large islands consist of coastal plains with mountainous interiors.
Climate: Equatorial but cooler in the highlands.

People

Nationality: Noun and adjective--Indonesian(s).
Population: (1997) 201 million.
Annual growth rate: 1.5%.
Ethnic groups: Javanese 45%, Sundanese 14%, Madurese 7.5%, coastal Malays 7.5%, others 26%.
Religions: Islam 87%, Protestant 6%, Catholic 3%, Hindu 2%, Buddhist and other 1%.
Languages: Indonesian (official), local languages, the most important of which is Javanese.
Education: Years compulsory--9. Enrollment--92% of eligible primary school-age children. Literacy--85%.
Health: Infant mortality rate--63/1000 live births. Life expectancy at birth--men 60 years, women 64 years.
Work force: 90 million. Agriculture--50.1.5%, trade and restaurants--15.0, public services--13.7%, manufacturing--11.6%.

Government

Type: Independent republic.
Independence: August 17, 1945 proclaimed.
Constitution: 1945. Embodies five principals of the state philosophy, called Pancasila, namely monotheism, humanitarianism, national unity, representative democracy by consensus, and social justice.
Branches of government: Executive--president (head of government and chief of state) chosen for a 5-year term by the 750-member People's Consultative Assembly (MPR). Legislature--500-member House of Representatives (DPR) elected for a 5-year term. Judicial--Supreme Court.
Suffrage: 17 years of age universal and married persons regardless of age.

Economy (1997)

GDP: $211 billion; 1998 GDP (est.): $90 billion.
Annual growth rate: 5.0%; 1998 (est.): -15%.
Per capita income: $1,070; 1998 (est.): $448.
Natural resources (8.4% of GDP): Oil and gas, bauxite, silver, tin, copper, gold, coal.
Agriculture (17.2% of GDP): Products--timber, rubber, rice, palm oil, coffee. Land--17% cultivated.
Manufacturing (24.3% of GDP): Garments, footwear, electronic goods, furniture, paper products.
Trade: Exports--$56.3 billion including oil, natural gas, plywood, manufactured goods; 1998 (est.): $12.5 billion. Major markets--Japan, Singapore, Taiwan. Korea, EU, U.S. Imports: $46.2 billion including food, chemicals, capital goods, consumer goods; 1998 (est.): $7.2 billion. Major suppliers--Japan, U.S., Thailand.

PEOPLE

Indonesia's 201 million people make it the world's fourth-most populous nation. The island of Java is one of the most densely populated areas in the world, with more than 107 million people living in an area the size of New York State. Indonesia includes numerous related but distinct cultural and linguistic groups, many of which are ethnically Malay. Since independence, Bahasa Indonesian (the national language, a form of Malay) has spread throughout the archipelago and has become the language of most written communication, education, government, and business. Many local languages are still important in many areas, however. English is the most widely spoken foreign language.

Education is free and compulsory for children between ages 6 and 12. Although about 92% of eligible children are enrolled in primary school, a much smaller percentage attend full time. About 44% of secondary school-age children attend junior high school, and some others of this age group attend vocational schools.

Constitutional guarantees of religious freedom apply to the five religions recognized by the state, namely Islam (87%), Protestantism (6%), Catholicism (3%), Buddhism (2%), and Hinduism (1%). In some remote areas, animism is still practiced.

HISTORY

By the time of the Renaissance, the islands of Java and Sumatra had already enjoyed a 1,000-year heritage of advanced civilization spanning two major empires. During the 7th-14th centuries, the Buddhist kingdom of Srivijaya flourished on Sumatra. At its peak, the Srivijaya Empire reached as far as West Java and the Malay Peninsula. Also by the 14th century, the Hindu Kingdom of Majapahit had risen in eastern Java. Gadjah Mada, the empire's chief minister from 1331 to 1364, succeeded in gaining allegiance from most of what is now modern Indonesia and much of the Malay archipelago as well. Legacies from Gadjah Mada's time include a codification of law and an epic poem.

Islam arrived in Indonesia sometime during the 12th century and, through assimilation, supplanted Hinduism by the end of the 16th century in Java and Sumatra. Bali, however, remains overwhelmingly Hindu. In the eastern archipelago, both Christian and Islamic proselytizing took place in the 16th and 17th centuries and, currently, there are large communities of both religions on these islands.

Beginning in 1602, the Dutch slowly established themselves as rulers of present-day Indonesia, exploiting the weakness of the small kingdoms that had replaced that of Majapahit. The only exception was East Timor which remained under Portugal until 1975. During 300 years of Dutch rule, the Dutch developed the Netherlands East Indies into one of the world's richest colonial possessions.

During the first decade of this century, an Indonesian independence movement began and expanded rapidly, particularly between the two World Wars. Its leaders came from a small group of young professionals and students, some of whom had been educated in the Netherlands. Many, including Indonesia's first president, Sukarno, were imprisoned for political activities.

The Japanese occupied Indonesia for 3 years during World War II and, for their own purposes, encouraged the nationalist movement. Many Indonesians took up positions in the civil administration that had been closed to all but token rulers under the Dutch. On August 17, 1945, 3 days after the Japanese surrender to the Allies, a small group of Indonesians, led by Sukarno -- the country's first truly national figure and first president (1945-1967) -- proclaimed independence and established the Republic of Indonesia. Dutch efforts to reestablish complete control met strong resistance. After 4 years of warfare and negotiations, the Dutch transferred sovereignty to a federal Indonesian Government. In 1950, Indonesia became the 60th member of the United Nations.

Shortly after hostilities with the Dutch ended in 1949, Indonesia adopted a new constitution providing for a parliamentary system of government in which the executive was chosen by and made responsible to parliament. Parliament was divided among many political parties before and after the country's first nationwide election in 1955, and stable governmental coalitions were difficult to achieve.

At the time of independence, the Dutch retained control over the western half of New Guinea, known as Irian Jaya. Negotiations with the Dutch on the incorporation of West Irian into Indonesia failed, and armed clashes broke out between Indonesian and Dutch troops in 1961. In August 1962, the two sides reached an agreement, and Indonesia assumed administrative responsibility for Irian Jaya on May 1, 1963. An Act of Free Choice, held in Irian Jaya under UN supervision in 1969, confirmed the transfer of sovereignty to Indonesia.

From 1524 to 1975, East Timor was a Portuguese colony on the island of Timor, separated from Australia's north coast by the Timor Sea. As a result of political events in Portugal, Portuguese authorities abruptly withdrew from Timor in 1975, exacerbating power struggles among several Timorese political factions. An avowedly Marxist faction called "Fretilin" achieved military superiority. Fretilin's ascent in an area contiguous to Indonesian territory alarmed the Indonesian Government, which regarded it as a threatening movement. Following appeals from some of Fretilin's Timorese opponents, Indonesian military forces intervened in East Timor and overcame Fretilin's regular forces in 1975-1976. Small-scale guerrilla activity persists to this day. Indonesia declared East Timor its 27th province in 1976.

Unsuccessful rebellions on Sumatra, Sulawesi, and other islands beginning in 1958 plus a long succession of short-lived national governments weakened the parliamentary system. Consequently, in 1959, when President Sukarno revived the 1945 constitution, which gave broad presidential powers, he met little resistance.

From 1956 to 1965, President Sukarno imposed an authoritarian regime under the label of "Guided Democracy." He also moved Indonesia's foreign policy toward nonalignment. Advocated by the leaders of other former colonies, these nonaligned countries were founders of what became known as the Non-Aligned Movement. President Sukarno closely worked with Asian communist states and increasingly tilted toward the Indonesian Communist Party (PKI) in domestic affairs.

By 1965, the PKI controlled many of the mass organizations that Sukarno had established to mobilize support for his regime and, with Sukarno's acquiescence, embarked on a campaign to establish a "fifth armed force" by arming its supporters. Army leaders resisted this campaign. On October 1, 1965, PKI sympathizers within the military, including elements from Sukarno's palace guards, occupied key locations in Jakarta and kidnapped and murdered six senior generals.

The army executed the coup plotters within a few days, but unsettled conditions persisted through 1966. Violence swept throughout Indonesia. Rightist gangs killed tens of thousands of alleged communists in rural areas. Estimates of the number of deaths range between 160,000 and 500,000. The violence was especially brutal in Java and Bali. The emotions and fears of instability created by this crisis persist.

In the aftermath, President Sukarno vainly attempted to restore his political position and shift the country back to its pre-October 1965 position. Although he remained president, in March 1966, Sukarno had to transfer key political and military powers to General Soeharto, the general who rallied the military to defeat the coup attempt. In March 1967, the People's Consultative Assembly (MPR) named General Soeharto acting president. Sukarno ceased to be a political force and lived quietly until his death in 1970.

President Soeharto proclaimed a "New Order" in Indonesian politics and dramatically shifted foreign and domestic policies away from the course set in Sukarno's final years. The New Order established economic rehabilitation and development as its primary goals and pursued its policies through an administrative structure dominated by the military but with advice from Western-educated economic experts.

In 1968, the MPR formally selected Soeharto to a full 5-year term as President, and he was reelected to additional 5-year terms in 1973, 1978, 1983, 1988, and 1993. In the midst of a severe drought, dropping world petroleum prices, regional financial instability and increasing social unrest, Soeharto was again re-elected as President in March 1998.

A plummeting rupiah, soaring inflation, massive capital flight, widespread corruption and nepotism continued to exacerbate Indonesia's economic and political turmoil. In a series of demonstrations led first by students, the Indonesian people called for President Soeharto's resignation. Widespread civil unrest, rioting and public pressure led Soeharto to resign in May 1998. Upon his resignation, Soeharto handed power to his handpicked Vice President, B.J. Habibie.

President Habibie quickly distanced himself from his predecessor's authoritarian "New Order" regime. He moved quickly to assemble a cabinet with a strong economic team; released a number of prominent political dissidents; initiated an investigation into those responsible for the rioting and looting; and lifted controls on the press, political parties, and labor unions. Habibie pledged to rewrite the political laws and hold elections. A preliminary timeline calls for parliamentary elections in mid-1999 followed by Parliament's selection of a President in December 1999.

GOVERNMENT AND POLITICAL CONDITIONS

Indonesia is a republic based on the 1945 constitution providing for a limited separation of executive, legislative, and judicial power. The Habibie government has been fashioning political reform legislation that -- without changing the 1945 Indonesian Constitution -- will formally set up new rules for the electoral system, the House of Representatives (DPR), the People's Consultative Assembly (MPR), and political parties. A separate law redefining the term limits for the presidency is also on the drawing board. Substantial restructuring has occurred since President Soeharto's resignation.

The president, elected for a 5-year term, is still the dominant government and political figure. He is selected along with the vice president (a position left vacant by the ascension of Habibie to the presidency) by the MPR. The president has the authority to conduct the administration of the government and is accountable only to the MPR. The president appoints a 41-member Cabinet to assist him.

A new mixed district/proportional system is expected to result in a more representative House of Representatives (DPR), which might more effectively serve as a balance to the presidency. Under the government proposal, the House of Representatives will increase in size (by 50) to 550 members. 420 members are to be elected on a "first past the post" basis from districts, 210 located in Java and Bali, and 210 more in other islands. Another 75 seats will be allotted proportionally to parties on the basis of nation-wide showings, a mechanism to provide for some minority representation. Fifty-five legislative slots will be reserved for the military (ABRI). ABRI members will not be permitted to vote in the general election.

The MPR will still select the president and vice president of Indonesia. Its members traditionally had been appointees hand picked by President Soeharto. Under current proposals, the new MPR will be reduced from 1000 to 700 members, with no presidential appointees. It will consist of the 550 members of the DPR, plus 81 members elected from provincial parliaments, and 69 appointed by social and community groups.

Under the Soeharto regime, the ruling "functional group" (not party) GOLKAR dominated, and the United Development Party (PPP), and the Indonesian Democratic Party (PDI) were the main opposition parties. In the new system there is theoretically to be no limit on competitive political parties. Since May 1998, some 80 parties have emerged. Most new parties, however, are small and local, and probably will fail to satisfy party registration criteria. These criteria include a requirement to have party branch offices in at least 14 of Indonesia's 27 provinces or to demonstrate support by collecting a million signatures.

The armed forces have shaped and staffed Soeharto's New Order since it came to power in the wake of the abortive 1965 uprising. Military officers, especially from the army, have been key advisers to Soeharto and have great influence on policy. Under the dual function concept, military officers serve in the civilian bureaucracy at all government levels, although there has been a recent tendency to somewhat reduce the military's direct involvement in the civilian bureaucracies. Public calls for an end to the military's dual role have increased since Soeharto's resignation.

Principal Government Officials

President--Bacharuddin Jusef Habibie
Vice President--vacant
Minister of Foreign Affairs--Ali Alatas
Ambassador to the United States--Dorodjatun Kuntoro-Jakti
Ambassador to the United Nations--Makarim Wibisono

The embassy of Indonesia is at 2020 Massachusetts Avenue NW., Washington, DC 20036 (tel. 202-775-5200-5207; FAX: 202-775-5365). Consulates General are in New York (5 East 68th Street, New York, NY 10021, tel. 212-879-0600/0615; FAX: 212-570-6206); Los Angeles(3457 Wilshire Blvd., Los Angeles, CA 90010; tel. 213-383-5126; FAX: 213-487-3971); Houston (10900 Richmond Ave., Houston, TX 77042; tel. 713-785-1691; FAX: 713-780-9644). Consulates are in San Francisco (1111 Columbus Avenue, San Francisco, CA 94133; tel. 415-474-9571; FAX: 415-441-4320); and Chicago (2 Illinois Center, Suite 1422233 N. Michigan Avenue, Chicago, IL 60601; tel. 312-938-0101/4; 312-938-0311/0312; FAX: 312-938-3148).

ECONOMY

Indonesia has a free-market economy that is dominated by the private sector. The government still plays a significant role in the economy, however, through state-owned firms and the imposition of price controls in selected industries.

During the 30 years of President Soeharto's rule, Indonesia's economy grew steadily, from a per capita GNP of $70 to a per capita GNP of about $1000. It was recognized as a newly industrializing economy. Annual real GDP growth averaged close to 7% from 1987-1997. By employing a restrictive monetary policy and a conservative fiscal stance, the government held inflation in the 5%-10% range. With strong export performance and manageable import growth, Indonesia saw a trade surplus of about $3 billion in 1995.

Indonesia has been hit hard by the Asian financial crisis. A year after its onset, the Government of Indonesia is working to prevent economic collapse. Analysts fear that economic deterioration could undermine Habibie's fragile Presidency. President Habibie's economic team has declared the government's commitment to work with the IMF in moving forward with economic reforms, including increased transparency and open markets.

The effects of the financial crisis have been severe. The economy is projected to contract by over 15% in 1998; unemployment could reach 35% and will worsen as the real economy feels the financial crisis. Indonesia's 1998 rate of inflation is expected to near 100%. The destruction of banks and small shops in wake of the May 1998 riots and flight of ethnic Chinese businessmen added to significant capital flight.

Petroleum remains one of Indonesia's major exports; thus, Indonesia has been hit especially hard by both the financial crisis and by the recent drop in world oil prices. However, following a fall in oil prices in the 1980s, Indonesia successfully managed to diversify its economy and to attract manufacturing to create a more diverse and stable economic climate.

In the mid-1980s, the government began eliminating regulatory obstacles to economic activity. These steps primarily have been directed at the external and financial sectors and were designed to stimulate growth in non-oil exports and revenues and to strip away import substitution barriers. The May 1994 and May 1995 deregulation packages helped level the playing field for competition. The January 1996 package helped cut tariffs. The most important, unfinished deregulation steps are removal of non-tariff barriers, the privatization of key industries, and the removal of domestic subsidies and export restrictions.

In late 1997, Indonesia agreed to a 3-year stabilization/structural adjustment program with the international financial institutions. This program is designed to stabilize the rupiah in foreign exchange markets by the government's adoption of tight fiscal and monetary policies. Non-viable banks have been closed, and a broad range of structural reforms have been implemented including liberalization of foreign trade and investment; dismantling of domestic monopolies; allowing greater private sector participation in provision of infrastructure; and expanding the privatization program.

Indonesia's public sector debt presently stands at $65.6 billion dollars, comprising $54.4 billion in governmental debt and $11.2 billion in state enterprises' debt. Indonesia currently is saddled with approximately $80 billion in private debt. Sovereign debt is expected to rise with the infusion of international funds into the economy. The World Bank, the Asian Development Bank, the International Monetary Fund, and other bilateral and multilateral development agencies have also contributed their technical expertise and approximately $118 billion dollars in the hopes of maintaining political and economic stability for Indonesia. However, with an estimated 80% depreciation in the value of the rupiah since July 1997, loan repayment has become even more burdensome.

Oil and Minerals Sector

By FY 1996/97 the oil and gas sector, including refining, contributed approximately 8% to GDP and 18% to government revenues. Although the sector's share of export earnings and government revenue has since dropped to about 10%, it remains an important part of the economy in which many U.S. companies have heavily invested. Crude and condensate output averaged 1.5 million barrels per day (bpd) in 1996. With domestic demand for petroleum fuels expanding, Indonesia will become a net importer of oil by the next decade unless new reserves are found. In 1996, Indonesian imports of crude oil and petroleum products totaled $1.5 billion dollars while Indonesian exports of crude oil and oil products totaled $12.5 billion dollars. The Asian financial crisis has taken a tremendous toll on the Indonesian economy's terms of trade. Not only have Indonesia's oil prices tumbled by 30%, but its markets in East Asia are themselves experiencing a sharp slowdown, affecting demand.

The state owns all oil and mineral rights. Foreign firms participate through production sharing and work contracts. Contractors are required to finance all exploration, production, and development costs in their contract areas; they are entitled to recover operating, exploration, and development costs out of the oil and gas produced.

Although production traditionally centered on bauxite, silver, and tin production, Indonesia is expanding its copper, nickel, gold, and coal output for export markets. Total coal production reached 41 million tons in 1996, including exports of 27 million tons. In mid-1993, the Department of Mines and Energy reopened the coal sector to foreign investment. Indonesian coal production in the range of 70-80 million tons by the end of the decade is possible.

Investment

The Indonesian economy is in dire straits; thus the major push by the Indonesian Government to actively encourage foreign investment. In 1996, Indonesia's Capital Investment Coordinating Board (Badan Koordinasi Pernanaman Modal or BKPM) gave domestic investment approval for the initiation or expansion of 810 projects representing a total investment of approximately $41 billion dollars. This compares with 775 projects and $28 billion respectively in 1995. As of May 15th, approvals for the calendar year 1997 covered 269 projects totaling $19 billion. Most approved investment during the last 5 years has been in manufacturing, especially in the textile, pulp and paper, and chemical industries. While the United States is by far the largest participant in the oil and gas sector, Japan has traditionally been the leader in terms of value of BKPM-approved investment. In 1997, the BKPM approved approximately $33.8 billion dollars in foreign investment. While Japan remains the biggest foreign investor in Indonesia, other major foreign investors include the United Kingdom, Singapore, the Netherlands, Hong Kong, Taiwan and South Korea.

In the years prior to the financial crisis, Indonesia made numerous changes in its regulatory framework to improve the business climate and encourage foreign investment. The passage of intellectual property protection laws in addition to already-implemented deregulation measures and a movement to privatize previously restricted sectors such as tollroads, electric power, and telecommunications have improved the investment climate in Indonesia.

The devastating effects of the Asian financial and environmental crisis have highlighted the areas in which major reform is needed. More openness, transparency, adherence to competitive processes, international accounting standards and disclosure are all key issues that Habibie's economic team is attempting to address. Despite the Government's encouragement of foreign investment, a lack of confidence in domestic economic and political stability has kept foreign investors from investing in Indonesia.

FOREIGN RELATIONS

Since independence, Indonesia has espoused a "free and active" foreign policy, seeking to play a role in regional affairs commensurate with its size and location but avoiding involvement in conflicts among major powers.

Indonesian foreign policy under the "New Order" government of President Soeharto moved from the stridently anti-Western, anti-American posturing which characterized the Sukarno era. Under President Habibie, Indonesia will likely preserve its non-aligned position while seeking constructive, responsible relations with many nations.

A cornerstone of Indonesia's contemporary foreign policy is its participation in the Association of Southeast Asian Nations (ASEAN), of which it was a founding member in 1967 with Thailand, Malaysia, Singapore, and the Philippines. Since then, Brunei, Vietnam, Laos, and Burma also have joined ASEAN. While organized to promote common economic, social, and cultural goals, ASEAN acquired a security dimension after Vietnam's invasion of Cambodia in 1979; this aspect of ASEAN expanded with the establishment of the ASEAN Regional Forum in 1994, which comprises 18 countries, including the U.S.

Indonesia was also one of the founders of the Non-Aligned Movement (NAM) and has taken moderate positions in its councils. As NAM Chairman in 1992-95, it led NAM positions away from the rhetoric of North-South confrontation, advocating instead the broadening of North-South cooperation in the area of development.

Indonesia has the world's largest Muslim population, but it is a secular state. It is a member and current chairman of the Organization of the Islamic Conference (OIC), and while it carefully considers the interests of Islamic solidarity in its foreign policy decisions, it has been an influence for moderation in the OIC.

Since 1966, Indonesia has welcomed and maintained close relations with the donor community, particularly the United States, Western Europe, Australia, and Japan, through the Intergovernmental Group on Indonesia (IGGI) and its successor, the Consultative Group on Indonesia (CGI), which have provided substantial foreign economic assistance. Until recently, Indonesia had no diplomatic relations with Portugal, due to Indonesia's unilateral incorporation of the former Portuguese colony of East Timor. Under the auspices of the United Nations, Indonesia and Portugal now meet regularly to discuss East Timor. In August 1998, Indonesia and Portugal agreed to open reciprocal interest sections.

Indonesia restored diplomatic relations with China in 1989 and, with the end of the Cold War, has supported efforts to gradually expand a regional security dialogue, under the aegis of the ASEAN Regional Forum, to all Asia-Pacific nations. Indonesia has advocated the eventual expansion of ASEAN to include all the nations of Southeast Asia.

Indonesia has been a strong supporter of the Asia-Pacific Economic Cooperation (APEC) forum. Largely through the efforts of President Soeharto at the 1994 meeting in Bogor, Indonesia, APEC members agreed to implement free trade in the region by 2010 for industrialized economies and 2020 for developing economies.

National Security

Indonesia's armed forces (ABRI) total about 420,000 members, including the national police and the traditional military services (army, navy, marines, and air force). The army is by far the largest, with 215,000 active-duty personnel. With defense spending at 1.48% of GDP for 1995-96, Indonesia ranks among those countries that spend least on their armed forces.

With Indonesia lacking a credible external threat in the region, ABRI sees itself as a unifying force among the various ethnic, religious, and political elements in Indonesia. The military views its prime mission as assuring internal security. Under Soeharto, the Indonesian military maintained an explicit role in the nation's political and social affairs. Traditionally a significant number of cabinet members had military backgrounds, while active duty and retired military personnel occupied a large number of seats in the parliament. Commanders of the various territorial commands played influential roles in the affairs of their respective regions.

Indonesia is at a relative peace with its neighbors although competing South China Sea claims, where Indonesia has large natural gas reserves, concern the Indonesians. During the Soeharto years, economic development took precedence over the military budget. Recently, however, the armed forces, particularly the navy, have undertaken measures to upgrade the overall preparedness to project force beyond Indonesia's borders.

U.S.-INDONESIAN RELATIONS

The United States has important economic, commercial, and security interests in Indonesia, developed largely during the latter half of the Soeharto era. Indonesia remains a linchpin of regional security due to its strategic location astride a number of key international maritime straits. Relations between Indonesia and the U.S. are good. The U.S. played an important role in Indonesian independence in the late 1940s, and appreciated Indonesia's role as a staunch anti-Communist bulwark during the Cold War. Cordial and cooperative relations are maintained today, although the two countries are not bound by any formal security treaties.

The United States and Indonesia share the common goal of maintaining peace, security, and stability in the region and engaging in a dialogue on threats to regional security. The United States has welcomed Indonesia's contributions to regional security, especially its leading role in helping restore democracy in Cambodia and in mediating among the many territorial claimants in the South China Sea. The United States and Indonesia maintain a modest, fruitful program of military cooperation that in the past has included military training, ship and aircraft visits, joint exercises, and mutual visits of ranking military officers.

Friction points in the bilateral political relationship in recent years have centered on human rights, including labor rights. The U.S. Congress cut off grant military training assistance (IMET) to Indonesia in 1992 in response to a November 12, 1991, shooting incident in East Timor involving Indonesian security forces and peaceful Timorese demonstrators. This restriction was partially lifted in 1995. The U.S. currently supports UN efforts to promote a dialogue between Indonesia and Portugal to resolve their differences regarding the political status of East Timor. The U.S. has been encouraging the Habibie government to move ahead on economic and political liberalization and reform, including the question of East Timorese autonomy.

On worker rights, Indonesia was the target of two 1992 petitions filed under the Generalized System of Preferences (GSP) legislation. The petitions argued that Indonesia did not meet recognized labor standards, of excessive military involvement in legitimate labor activity, and severe restraints on the rights of workers to associate and organize. A formal GSP review was suspended in February 1994 without terminating GSP benefits for Indonesia, but an active dialogue continues on worker rights issues. Indonesia has taken some positive steps to improve worker rights under President Habibie, including ratifying International Labor Organization conventions on union formation and freedom of association. The occurrence of child labor is expected to rise as a result of the financial crisis.

Economic Relations With the United States

U.S. exports to Indonesia in 1997 totaled an estimated $4.5 billion. The main exports were construction equipment, machinery, aviation parts, chemicals and agricultural products. U.S. imports from Indonesia totaled $9.1 billion and consisted of clothing, machinery and transports, petroleum, natural rubber and footwear.

Economic assistance to Indonesia is coordinated through the Consultative Group on Indonesia (CGI), formed in 1989. It includes 19 donor countries and 13 international organizations and meets annually to coordinate donor assistance. The July 1997 meetings resulted in pledges of $5.2 billion.

The U.S. Agency for International Development (USAID) has provided development assistance to Indonesia since 1950. Initial assistance focused on the most urgent needs of the new republic, including food aid, infrastructure rehabilitation, health care, and training. After the 1965 turmoil, during which time U.S. aid was curtailed, USAID responded to the Indonesian Government's request to reactivate overseas training programs, assist in rebuilding infrastructure, invigorate the fledgling private sector, and help curb the country's exploding population growth. Through the 1970s, a time of great economic growth in Indonesia, USAID played a major role in helping the country achieve self-sufficiency in rice production and in reducing the birth rate.

By the mid-1980s, a drop in oil prices led Indonesia to undertake far-reaching economic policy reforms aimed at improving economic efficiency and reducing dependency on oil revenues. USAID supported this process with technical and financial assistance. USAID's current program aims to support Indonesia through the current economic crisis by providing food aid, employment generating activities, and maintaining critical public health services. USAID is also providing technical advisers to help the Indonesian government implement economic reforms, and is supporting democratization and civil society development activities through non-governmental organizations.

Principal U.S. Embassy Officials

Ambassador--J. Stapleton Roy
Deputy Chief of Mission--Michael Owens
Political Counselor--Edmund McWilliams Jr.
Economic Counselor--Judith Fergin
Administrative Counselor--John Salazar
USAID Director--Desaix Myers, III
Defense Attache--COL Charles McFetridge
Consul General--Stephen Edson
Public Affairs Officer--Richard Gong
Agricultural Counselor--Robin Tilsworth-Rude
Commercial Counselor--Laron Jensen

The U.S. Embassy in Indonesia is located at Jalan Medan Merdeka Selatan 3-5, Jakarta (tel. (62-021) 344-2211). U.S. mail to the embassy may be addressed to APO AP 96520.

The U.S. Consulate General in Surabaya is located at Jalan Dr. Sutomo 33, Surabaya East Java (tel. (62-31) 568-2287). Principal Officer--William Pierce.

The U.S. Consular Agency in Bali is located at Jalan Hayam Wuruk 188, Bali (tel. (62-361) 233-605. Consular Agent--Andrew Toth.

For information on economic trends, commercial development, production, trade regulations, and tariff rates, contact the International Trade Administration, U.S. Department of Commerce, Washington, DC 20230.

TRAVEL AND BUSINESS INFORMATION

The U.S. Department of State's Consular Information Program provides Travel Warnings and Consular Information Sheets. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country. Consular Information Sheets exist for all countries and include information on immigration practices, currency regulations, health conditions, areas of instability, crime and security, political disturbances, and the addresses of the U.S. posts in the country. Public Announcements are issued as a means to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas which pose significant risks to the security of American travelers. Free copies of this information are available by calling the Bureau of Consular Affairs at 202-647-5225 or via the fax-on-demand system: 202-647-3000. Travel Warnings and Consular Information Sheets also are available on the Consular Affairs Internet home page: http://travel.state.gov and the Consular Affairs Bulletin Board (CABB). To access CABB, dial the modem number: 301-946-4400 (it will accommodate up to 33,600 bps), set terminal communications program to N-8-1(no parity, 8 bits, 1 stop bit); and terminal emulation to VT100. The login is travel and the password is info. (Note: Lower case is required). The CABB also carries international security information from the Overseas Security Advisory Council and Department's Bureau of Diplomatic Security. Consular Affairs Trips for Travelers publication series, which contain information on obtaining passports and planning a safe trip abroad, can be purchased from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954; telephone: 202-512-1800; fax 202-512-2250.

Emergency information concerning Americans traveling abroad may be obtained from the Office of Overseas Citizens Services at (202) 647-5225. For after-hours emergencies, Sundays and holidays, call 202-647-4000.

Passport Services information can be obtained by calling the 24-hour, 7-day a week automated system ($.35 per minute) or live operators 8 a.m. to 8 p.m. (EST) Monday-Friday ($1.05 per minute). The number is 1-900-225-5674 (TDD: 1-900-225-7778). Major credit card users (for a flat rate of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648).

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled Health Information for International Travel (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Information on travel conditions, visa requirements, currency and customs regulations, legal holidays, and other items of interest to travelers also may be obtained before your departure from a country's embassy and/or consulates in the U.S. (for this country, see "Principal Government Officials" listing in this publication).

U.S. citizens who are long-term visitors or traveling in dangerous areas are encouraged to register at the U.S. embassy upon arrival in a country (see "Principal U.S. Embassy Officials" listing in this publication). This may help family members contact you in case of an emergency.

Further Electronic Information

Department of State Foreign Affairs Network. Available on the Internet, DOSFAN provides timely, global access to official U.S. foreign policy information. Updated daily, DOSFAN includes Background Notes; Dispatch, the official magazine of U.S. foreign policy; daily press briefings; Country Commercial Guides; directories of key officers of foreign service posts; etc. DOSFAN's World Wide Web site is at http://www.state.gov.

U.S. Foreign Affairs on CD-ROM (USFAC). Published on an annual basis by the U.S. Department of State, USFAC archives information on the Department of State Foreign Affairs Network, and includes an array of official foreign policy information from 1990 to the present. Contact the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. To order, call (202) 512-1800 or fax (202) 512-2250.

National Trade Data Bank (NTDB). Operated by the U.S. Department of Commerce, the NTDB contains a wealth of trade-related information. It is available on the Internet (www.stat-usa.gov) and on CD-ROM. Call the NTDB Help-Line at (202) 482-1986 for more information.

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