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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