U.S. Relations With Indonesia
More information about Indonesia is available on the Indonesia Page and from other Department of State publications and other sources listed at the end of this fact sheet.
Indonesia is a vital partner in the Indo-Pacific Region and U.S.-Indonesia relations have taken on increasing importance. Indonesia is the world’s third largest democracy, largest Muslim-majority country, and the eighth-largest economy by purchasing power. It possesses the world’s greatest marine biodiversity and its second greatest terrestrial biodiversity. Indonesia also borders the South China Sea, which has the world’s busiest sea lanes -- over $5 trillion in cargo and as much as 50 percent of the world’s oil tankers pass through the South China Sea every year. The United States was one of the first countries to establish diplomatic relations with Indonesia in 1949, following its independence from the Netherlands. Indonesia’s democratization and reform process since 1998 has increased its stability and security, and resulted in strengthened U.S.-Indonesia relations. The United States and Indonesia initiated in 2010 a Comprehensive Partnership to foster consistent high-level engagement on democracy and civil society, education, security, climate, maritime, energy, and trade issues, among others. Based on its success, in 2015 the two countries upgraded the relationship to the U.S.-Indonesia Strategic Partnership, extending cooperation to issues of regional and global significance.
Bilateral Economic Relations
Indonesia, the largest economy in Southeast Asia, has enjoyed steady economic growth over the past decade, averaging between 5-6 percent, with moderate inflation, rising foreign direct investment, and relatively low interest rates. Indonesia’s annual budget deficit is capped at 3 percent of GDP, and the Government of Indonesia lowered its debt-to-GDP ratio from a peak of 100 percent shortly after the Asian financial crisis in 1999 to 28.7 percent today. Indonesia’s growing middle class, strong domestic demand, large and youthful population, and need for new infrastructure makes it an important potential market for U.S. products and investment. U.S. bilateral goods trade with Indonesia totaled over $27 billion in 2017, while bilateral trade in services exceeded $3.2 billion in 2016. Principal U.S. exports to Indonesia include transportation equipment, including aircraft, food and agricultural products, machinery and equipment, and chemicals. The stock of U.S. foreign direct investment in Indonesia was $14.6 billion in 2016, while Indonesia’s investments in the United States for the same period was $1.6 billion. However, there are significant challenges to our bilateral economic relationship: the implementation of protectionist laws, limited infrastructure, and an unevenly applied legal structure.
Indonesia's Membership in International Organizations
Indonesia and the United States belong to a number of the same international organizations and forums, including the United Nations, ASEAN Regional Forum, the East Asia Summit, Asia-Pacific Economic Cooperation forum, G-20, International Monetary Fund, World Bank, and World Trade Organization. Indonesia also cooperates with the United States on issues of regional and global concern such as violent extremism, global peacekeeping operations, maritime security, and health pandemics.
U.S. Assistance to Indonesia
Indonesia faces domestic development challenges; uneven benefits from democratic and economic progress; fragile institutions that lack capacity to adequately address its social service needs; economic inequality; and risks from environmental degradation. Cooperation extends across a range of key development areas: strengthening education and professional ties, improving governance, strengthening health systems, advancing security, partnering on international issues, and supporting environmental stewardship. Both countries are committed to strengthening university partnerships and increasing the number of American and Indonesian students who study in each other’s country. Currently, over 8,000 Indonesians study in the United States, and nearly 600 U.S. citizens study in Indonesia.
U.S. development assistance is delivered through the U.S. Agency for International Development (USAID) and Peace Corps. Currently, through targeted investments and by harnessing the power of science, technology and innovation USAID works with the Government of Indonesia, local leaders, academia, the private sector, civil society, and other partners to address development challenges in diverse areas on the road to self-reliance. This ranges from governance—supporting Indonesian efforts to tackle corruption, better protect citizens’ rights, and ensure responsive representational government and access to justice, to helping Indonesia sustainably ensure the health, well-being, and unlock the potential of its poorest and most vulnerable citizens. USAID also partners with Indonesia to address development challenges of global consequence, such as stemming the spread of infectious diseases, reducing the risk of natural disasters, and improving land management and governance in high carbon and biodiversity landscapes.
In 2018, MCC concluded its successful five-year, $600 million compact with the Indonesian government, which advanced renewable energy, maternal and child health, and helped modernize Indonesia’s public procurement system. The Peace Corps works in underserved and rural schools and communities to help Indonesia reach its education development goals through grassroots people-to-people contact, cultural exchange, and technical skills transfer.
Indonesia is also one of the most biologically diverse countries in the world, with approximately two-thirds of its landmass covered by forests. The country’s coral reef, tropical forest, and mangrove ecosystems support what is generally recognized as one of the greatest concentrations of biodiversity on earth. However, decades of resource-driven development and illegal land clearance have damaged the country’s unique ecosystems and biodiversity. Illegal, unreported, and unregistered fishing (IUU) results in $3-5 billion in economic losses to Indonesia’s economy, threatening both local livelihoods and global food security. U.S. assistance programming supports the Government of Indonesia’s efforts to combat IUU fishing and counter illegal wildlife trafficking, while promoting local efforts to improve land use practices and increasing the amount of renewable energy generated as a proportion of Indonesia’s overall energy production.
Indonesia maintains an embassy in the United States at 2020 Massachusetts Avenue NW, Washington, DC 20036 (tel. 202-775-5200).
More information about Indonesia is available from the Department of State and other sources, some of which are listed here:
Department of State Indonesia Country Page
Department of State Key Officers List
USAID Indonesia Page
History of U.S. Relations With Indonesia
Human Rights Reports
International Religious Freedom Reports
Trafficking in Persons Reports
Millennium Challenge Corporation: Indonesia
Narcotics Control Reports
Investment Climate Statements
Office of the U.S. Trade Representative Countries Page
U.S. Census Bureau Foreign Trade Statistics
Export.gov International Offices Page
Library of Congress Country Studies