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Balmy breezes, silky sand, crystal clear gemstone water and the Hindu Religion influence the character of this beautiful island. Bali is so picturesque that you could be fooled into thinking it was a painted backdrop: rice paddies trip down hillsides like giant steps, volcanoes soar through the clouds, the forests are lush and tropical, and the beaches are lapped by the warm waters of the Indian Ocean. Adventure looms large on this small island, where you will find all different kind of influences like heady scents, vivid colours, dramatic vistas and diverse cultures spin and multiply, their potent brew leaving your senses reeling.

Indonesia Country Brief - May 2007

At a Glance

Land area 1.9 million square kilometres
Capital Jakarta
Population 224 million


Population under 15 (2005) – 28%

Proportion of Men/Women aged 60 and over (2005)
Men – 8%
Women – 9%

Population distribution Urban – 48%
Rural – 52%
Life expectancy 67
Major Religions Islam, Protestantism, Catholicism, Buddhism, Hinduism.
Languages Indonesian, 300 regional languages
Currency Unit Rupiah

Recent political developments

Susilo Bambang Yudhoyono was inaugurated as Indonesia’s sixth President on 20 October 2004 following the second round of presidential elections in which he won 60 per cent of the vote. President Yudhoyono’s Democratic Party secured 55 seats during the April 2004 parliamentary elections. In December 2004 Vice-President Jusuf Kalla was elected as the Chair of Golkar - the largest political party in the parliament. Parties supporting the President and Vice-President now have a majority in the parliament giving the Yudhoyono-Kalla government greater capacity to progress its agenda. The decentralisation process, underway since 1999, has transferred control of large amounts of public expenditure and service delivery from the central government to over 400 local governments. Indonesia’s transition to democracy is continuing with direct elections for the first time across the nation for governors, mayors and regents (heads of district governments).

Government and Politics

The Republic of Indonesia is a unitary state, headed by an executive President who is elected for a five-year term, together with a Vice-President. The directly elected President governs with the assistance of an appointed Cabinet. The 678-member People’s Consultative Assembly (MPR) includes a 550-member House of Representatives (DPR) and a 128-member legislative body called the House of Regional Representatives (DPD) with four representatives from each Indonesian province. Consistent with Indonesia’s decentralisation agenda, the current members of the DPD were voted in at the 2004 parliamentary elections after the organisation was created by an amendment to the constitution in 2001, increasing regional input into central government decision-making.

Indonesia has experienced a significant political transformation since the fall of the Suharto Government in May 1998, after a 32-year rule. The country has undergone major changes in its transition to a democratic and decentralised state. Key milestones in this transition were parliamentary and presidential elections held in 2004 – the first ever direct election by popular vote of the President and Vice-President.

Climat and Travel Information

Though travel in the wet season is possible in most parts of Indonesia, it can be a deterrent to some activities and travel on mud-clogged roads in less developed areas is difficult. In Bali you will not have problems like this outside the dry season. Usually you can travel the whole year through. But in general, the best time to visit is in the dry season between April and November. The rest of the year is more humid, cloudier and has more rainstorms, but you can still enjoy a holiday.

The December-January Christmas holiday period and the school holidays still brings a wave of migratory Australians, and Europeans head to Bali in July and August. Accommodation can be tight in these months and prices are higher airfares to/from Australia are higher and flights can be booked solid. But climatic impediments aside, pretty much any time is a good time to head to Bali at the moment. Balinese festivals, holidays and special celebrations occur all the time, so don't worry about timing your visit to coincide with local events. Just make some inquiries when you arrive and be prepared to travel around the island.

High level terrorism-related warnings have been issued by Western governments concerning travel in Indonesia. Recent tragic events have scared away many of those who simply saw Bali as a place for cheap beer. While the Bintang is still tasty and plentiful, Bali's temples, ceremonies, beaches, mountains and passion for life are undiminished and more easily enjoyed than ever. Travellers are advised to check their local consular information and monitor the situation in Indonesia closely before making travel plans. The Australian and Indonesian Governments have a strong commitment to mutually-beneficial engagement and cooperation to combat terrorism. These joint investigations against Crime support for travel security, including border management, aviation and port/cargo security. As a follow-up to the 2004 Bali conference, Australia and Indonesia co-hosted a Sub-Regional Ministerial Meeting on Counter-Terrorism in Jakarta on 5-6 March 2007 to strengthen and expand the scope of counter-terrorism cooperation among those countries in the region most directly facing the terrorist threat. The Agreement should set a benchmark for others in the region and will contribute to the stability and prosperity of both countries and the broader Asia-Pacific region.

Cooperation on Avian Influenza

In December 2006, Australia announced an additional $18.5 million over four years to help Indonesia fight avian influenza. Indonesia has been hardest hit by the disease, with 76 deaths confirmed by the World Health Organisation. The program will target three priority areas: control of the disease in animals; improved community awareness; and strengthened surveillance of the disease in humans and animals.

The provision of specialist expertise to the Indonesian Ministries of Agriculture and Health will help strengthen national policy and planning on how to limit the spread of the disease.

Community awareness-raising programs, the purchase of poultry vaccines and departmental training in infection control will help provincial populations deal with the threat of avian influenza at a community level.

Targeted support for disease surveillance/response and human and veterinary epidemiology study through links with Australian institutions will help put better trained lab and hospital infection staff at the front line of detecting and treating disease.

This brings Australia’s total commitment to Indonesia’s avian influenza response to $34 million. The $15.5 million already committed to Indonesia since 2004 has funded the training of lab staff in the diagnosis of the virus; supported rapid response teams to investigate all suspected human cases and associated animal outbreaks; and supplied 50,000 courses of the anti-viral medication Tamiflu to raise Indonesia’s buffer stocks.

Economic Overview

Indonesia was the country most affected by the 1997-98 East Asian financial crisis and only regained pre-crisis levels of real GDP in 2004. Owing to the severity of the economic impact, Indonesia received IMF assistance programs for six years, eventually graduating in December 2003. Indonesia’s GDP growth in 2006 was 5.5 per cent, and the Indonesian Government is seeking GDP growth over six per cent in 2007.

While solid economic growth has returned in recent years, Indonesia's GDP growth rates have tended to lag behind those of its South-East Asian neighbours. It is estimated that Indonesia needs economic growth of about 7 per cent a year to absorb new entrants to the workforce and to reduce the large numbers of unemployed and underemployed.

The partial, though substantial, removal of fuel subsidies in March and October 2005 and a weaker rupiah saw inflation rise to 18.4 percent in that year, the highest level in six years.The Indonesian government’s target inflation rate for 2007 is 6 per cent – to be further reduced to 5 per cent in 2008. Bank Indonesia announced year-on-year (yoy) inflation at February 2007 rose to 6.3 per cent. After successive rate rises in late 2005 (as a result of the ‘mini rupiah crisis’ of August 2005), Bank Indonesia successively eased interest rates in 2006 and into 2007 with an eleventh interest rate cut to 8.75 per cent in May. The financial sector continues to improve with stronger capital adequacy, loan growth and profits. The unemployment rate is 10.28 per cent.

Foreign investor sentiment towards Indonesia has improved with the election of President Yudhoyono and his government's determination to improve economic growth and the investment climate, including by improving infrastructure, strengthening the legal framework, enhancing governance and reducing fuel subsidies. Realised foreign direct investment (FDI) more than doubled to reach US$5.3 billion in 2005 from US$1.9 billion in 2004.

A 5 December 2005 Cabinet re-shuffle saw President Yudhoyono make several changes to his team of economic ministers. Dr Boediono was appointed as Coordinating Minister for the Economy and Sri Mulyani Indrawati as Finance Minister. Indonesia faces major reform and structural challenges which will need to be addressed if sustainable levels of GDP growth are to be achieved to enable long-term reductions in unemployment and poverty. These challenges include: declining competitiveness (particularly for cheap labour products where Indonesia is increasingly unable to compete with China and India); low labour skills; weak financial system; corruption; tax system reform; legal system and governance reform; the risk of further serious security incidents; and the need for significant infrastructure investment.

 Informations are taken from the Australian ministry of foreign affairs.