Indonesia has experienced significant political and economic changes over the past century. It was formerly a Dutch colony known as the Dutch East Indies, and gained independence after World War 2. The country experienced authoritarian rule under Sukarno and Suharto for many years, and has transitioned to a democracy with direct presidential elections since 2004. Key events included the invasion and occupation of East Timor, and the 2004 Indian Ocean tsunami that killed over 200,000 people in Indonesia. The population is over 250 million, predominantly Muslim, and the economy has grown substantially but still faces challenges of inequality, infrastructure gaps, and skills shortages to sustain high growth rates going forward.

1. Hamid Modaressi
Ioannis Mikedis
Indonesia

2. What Indonesia meant
British - Indian islands, or Further India
Dutch - Islands Nederlands Indie, Dutch India’ or ‘Dutch
Indies
India meant simply what modern Europeans now refer to as
Southeast Asia.

3. History
1670-1900 - Dutch colonists bring the whole of Indonesia
under one government as the Dutch East Indies.
1942 - Japan invades Dutch East Indies.
1945 - The Japanese help independence leader Sukarno
return from internal exile and declare independence.
1949 - The Dutch recognize Indonesian independence after
four years of guerrilla warfare.

4. History 1950-1970
1950s - Maluku Island (Moluccas) declares independence
from Indonesia and fights an unsuccessful separatist war
1962 - Western New Guinea, or West Papua, held by the
Netherlands, is placed under UN administration and
subsequently occupied by Indonesian forces.
1965 - Hundreds of thousands of suspected Communists are
killed in a purge of leftists which
1966 - Sukarno hands over emergency powers to General
Suharto, who becomes president in March 1967.
1969 - West Papua formally incorporated into Indonesia,
becoming Irian Jaya Province.

5. History 1970-1999
1975 - Portugal grants East Timor independence.
1976 - Indonesia invades East Timor and incorporates it as a
province.
1998 - Protests and rioting topple Suharto; B J Habibie
becomes president.
1999 - Ethnic violence breaks out in Maluku. Free elections
are held in Indonesia.

6. History 2000
2000 - Two financial scandals dog the Wahid administration:
 Buloggate (embezzled funds from the state logistics agency)
 Bruneigate (missing humanitarian aid funds from the Sultan of Brunei). The
corruption case against former President Suharto collapses.
Irian Jaya separatists become more vocal in demanding a referendum.
2001 - Ethnic violence in Kalimantan as indigenous Dayaks force out
Madurese transmigrants. Mass political demonstrations by Wahid's
supporters and opponents. IMF stops further loans citing lack of
progress in tackling corruption.
2001 July - Parliament dismisses President Wahid over allegations of
corruption and incompetence. Vice President Megawati Sukarnoputri is
sworn in as his replacement, even as Wahid refuses to leave the
presidential palace.

7. History Cont.
2002 January - Indonesia inaugurates human rights court
2002 May - East Timor becomes independent.
2002 August - Constitutional changes are seen as a step
towards democracy. For the first time, voters will be able to
elect a president and vice president.
2004 First-ever direct presidential elections, Former
general Susilo Bambang Yudhoyono Wins

8. Obama Visits Indonesia
2010 -President Barack Obama
visits, hailing Indonesia as an
example of how a developing
nation can embrace democracy
and diversity.
2011- Three-month strike by
8,000 workers at copper and
gold mine owned by US company
Freeport-McMoran in the
province of Papua.

9. A statue of young Barack “Barry”
Obama in Indonesia.

10. Obama lived in
Indonesia from
ages 6-10
Attending school
in the Indonesian
language.
“The Future
Belongs to those
who believe in
the power of
their dreams”

11. Tragedies in Indonesia
2004 December - powerful undersea earthquake off
Sumatra generates massive tidal waves. (Tsunami)
More than 220,000 people are dead or missing
Thailand, India, Sri Lanka and Somalia
2006 July - A tsunami
kills more than 500 people on Java.
Over 29 Bombings since year 2000
Many linked to “Jemaah Islamiyah”
Islamic militant terrorist organizations.

12. Tsunami – 24-Dec-2004 (9 Richter)

13. Population
 17,508 islands,
 Indonesia is the world’s largest archipelago (chain or cluster of
islands), spanning 735,358 square miles.
 The climate is typically tropical, hot and humid.
 Languages : Bahasa Indonesia, English, Dutch and local
dialects.
 China:1.3 billion
 India: 1.2 billion
 United States: 317 million
 Indonesia: 251 million
 Brazil: 201 million

14. Population
 Indonesia is the fourth most populated country in the world.
 Fastest population growth in its region for 15 consecutive years
 The world’s largest Muslim country.
 Young consumers are largely debt free, providing opportunities
for future spending.

15. Religion Distribution

16. Religion Map

17. Indonesia makes 13% of worlds
Muslims

18. Currency / Cost
 $1 USD = 11,764.71 Rupiah (RP)
Apples (1kg) = 25,936.35 Rp
Tomato (1kg) = 9,864.97 Rp
Potato (1kg) = 11,343.25 Rp
Meal for 2, Mid-range Restaurant,
Three course =150,000.00 Rp = $12USD
New Minimum Wage Jakarta Set at IDR 2.4 Million ($213) per

19. Legal System
The Indonesian legal system is based on Roman-Dutch law,
modified by Islamic law

20. Political System
 Executive Branch
 President & Vice President cabinet
 5 year term, two term max
 Legislative Branch
 It has the power to set or change the Constitution and appoints (or
impeaches) the president
 Consist of 550 member to draw up and pass laws, annual budget and etc.
 Judicial Branch
 General Court
 Religious Court
 Military Court
 Administrative Court
 Independent Supreme Court
 2003-Constitutional Court

21. Marriage
Marriage Age:
Male 19, Females 16
Provision for marriage below minimum age is subject to
judicial discretion and parental consent
Marriage is considered monogamy,
Marriage Law does not prohibit polygamy for those
religions that allow it (Islam, Hinduism, Buddhism)
Permitted with consent of existing wife or wives
Judicial permission, by fulfilling conditions specified by law
 Proof of financial capacity
 Safeguards that husband will treat wives and children
equally;
 Court inquiry into validity of reasons for wishing to contract
polygamous marriage

22. Education
•Only a third of Indonesian students
complete basic schooling.
•Less than half of the teachers
possess the minimum qualifications
to teach
•Teacher absenteeism around 20
percent.
•Many teachers work outside of the
classroom to improve their incomes.
•40% of the budget is siphoned off in
bribery or embezzlement.

23. Major Exports:
Coal; briquettes
(10%)
Petroleum gases
(8%)
Palm oil, crude (7%)
Petroleum oils, crude
(6%)
Natural rubber (4%)
Gold 3%

24. Major Imports:
Petroleum oils, refined
(14%)
 Aircraft, spacecraft &
launch vehicles (3%)
Petroleum oils, crude (3%)
Parts and accessories of the
motor vehicles (2%)
Automatic data processing
machines (2%)

25. Major Trade Partners
 Exports:
Japan
China
United States
Singapore
Korea
Malaysia
Tailand

26. Major Trade Partners
 Imports:
Japan
Singapore
China
S. Korea
Malaysia
India
US

27. Doing Business
 Time is considered limitless in Indonesia
 Indonesians do not hurry, but rather see hurrying as impolite.
 They are generally not punctual, but expect foreigners to be on
time.
 Do what is achievable rather than follow rigid schedules.
 Flexibility and patience are critical to success. Things change
with time, and nothing is predictable.
 Drawn-out bargaining and negotiation is assumed and
encouraged.
 Foreigners must be patient and prepared for a slow process.
 Lengthy discussions must occur in order to develop respect in
the relationship.

29. World – South East Asia

30. Map

31. Age Distribution

32. Population Growth

33. Ethnic Groups

34. Population by City & Metro Areas

35. Population Density per mi2

37. Volcanism – The Ring Of Fire

38. Earthquake Hazard Map

39. Tsunami – 24-Dec-2004 (9 Richter)

40. Economy – Infrastructure projects

41. Economy – Economic Activity

42. Economy - GDP
2012 – GDP is $1.237 Trillion
6.2% growth rate

43. Economy – Trade Deficit/Surplus

44. Economy – Shipping Lanes

45. Economy – Trade Routes

46. Economy - Unemployment

47. Economy – Youth Unemployment

48. Economy - Poverty

49. Economy – Poverty adjusted
The Indonesian government defined the poverty line at a
monthly per capita income of 233,740 rupiah or
approximately USD $25 ($0.83/day).
Applying the poverty threshold used by the World Bank, of
population living on less than USD $1.25 a day
($37.50/month) as poor, the percentages of the population
living in poverty will rise significantly.
According to the World Bank, the Indonesian population
that lives on less than USD $2 a day, 2009 rises to 50.6% of
the population
A large proportion of the Indonesian population is
in fact near poor.

50. Health – Mortality under 5

51. Threat to Business - Piracy

52. Threat to Business - Terrorism

53. Future Prospects
Business Environment – Government Efforts
Equal treatment of domestic and foreign investors
Shortening the length of time to do business
Allowing foreign investors to employ expatriates in some
positions
Right of foreign investors to repatriate profit as: dividends,
reduction of capital, liquidation payments, royalties or
technical fees
Granting tax facilities based on numbers of local employees

54. Future Prospects
Economy dynamics
Far more diversified economy than one would think
from being on the outside.
Strong macroeconomic position
16th
economy in the world,
Inflation falling to single digits
Government Debt to GDP ratio far better than a lot of
advanced economies.

55. Future Prospects
Young population
Urban proportion of the population is increasing
improving individual incomes.
90 million additional consumers entering the market
The second strongest spending-power in the world
after China.

56. Future Prospects – Tail Winds
The Rise of Asian Consumer
Urban Population Increase
Working Population Growth
Tech driven and digital technology proliferation
production flexibility
efficiency
communication
Faster, Cheaper, Better products and services

57. Future prospects

58. Future Prospects – Head Winds
Productivity Requirements to maintain 7% growth
Uneven distribution of growth across the dominion
and rising inequality.
Infrastructure and resource constraints

59. Future Growth - Recommendations
Tackle each challenge methodically,
With clear strategy,
As a long term effort that extends over a number
of administrations and
As a national rather than political effort.

60. Future Growth - Recommendations
Boost productivity
To work with sense of urgency in removing barriers
to competition.
Telecommunication and Broad Band internet. Reaching the
market of products and services avoiding physical barriers
Mitigate the barriers to higher productivity.
Financial Services: Simplify present regulation
Retail Trade: Limit areas of protectionism
Transportation: Address the aging and often nonexistent
infrastructure

61. Future Growth - Recommendations
Rapid increase of the affluent middle classes of India, China,
and domestically
High demand for food and agricultural products
Study ways of boosting the productivity in agriculture and fishing
industry.
The required increase in productivity in agriculture has
to reach 60% from 3tons per farmer to five tons in 2014.
Utilizing more modern and efficient methods of farming
instead of deforestation.
More efficient cultivation of the land rather
than increasing the available land.

62. Future Growth - Recommendations
High demand for food and agricultural products (Cont.)
Three fronts in the area of agriculture productivity.
o Boost yields.
o Shift production to more profitable crops.
o Reduce waste in the process of handling the
products though out the supply chain.

63. Future Growth - Recommendations
Rapid urbanization and high demand for energy,
rough materials, water and other critical to growth
resources.
Work in the area of intelligent resource
allocation.
Expand the network of water supply that is safe
and adequate.
Address basic sanitation with priorities in areas that
have very high population densities.

64. Future Growth - Recommendations
High demand for energy resources
Take advantage of unconventional energy
sources.
Geothermal Energy
Biofuels
Biomass
Strive to modernize conventional energy
source utilization.
Estimated savings by 2030 to be as high as 15%.

65. Future Growth - Recommendations
Significant size of skilled labor force requirements
To maintain 7% growth demand for skilled labor
from todays 55 million in 2030 need to become
113 million.
Increasing the female participation to the work force
It is the view of the World Bank and others that by 2030
Indonesia will face a 9 million workforce shortfall.

66. Future Growth - Recommendations
Teaching standards must improve
Investment in buildings and teaching material
Designing curriculum that will address future
demands in skills.

67. Conclusions
Indonesia is the 16th
-largest economy in the world
It has 45 million members of the consuming class
53% of the population resides in cities
The urban population is responsible for 73% of GDP
There are 55 million skilled workers in the Indonesian
economy
There is a $500 billion market opportunity in
Consumer services
Agriculture and Fisheries
Resources
Education

68. THANK YOU