Indonesia / Economy

The country is rich in natural resources. While 90% of the population is engaged in agriculture, oi1 and gas contribute 70% of total export earnings and 60% of the government revenues. However, fluctuations in world prices of traditional export commodities have led to a change in recent years in the structure of the economy. Tourism is gaining a more important sector as a foreign exchange earner. Significant progress has been made in communications and transportation and since 1976, Indonesia has had its own communications satellite system, which has enabled rapid expansion of telephone, television and broadcast facilities to all 27 provinces. Air and sea ports are being extended to cater to growing traffic in both domestic and international sectors.

In recent years a number of steps have been taken to promote and stimulate non-oil exports which include handicrafts, textiles, precious metals, tea, tobacco, cement, fertilizers as well as manufactured goods.

To meet domestic needs, Indonesian plants assemble various types of automobiles, trucks, buses and motorcycles under license from foreign manufactures. Also produced are electronic equipment and electrical appliances. The aviation industry has been growing and the state owned Indonesia Aircraft Industry (IPTN) produces two types of fixed wing aircraft and helicopters. New production lines are coming on stream as well its Universal Maintenance Centre for the overhaul of aircraft engines. The aircraft are for domestic use as well as for export.

In the agricultural sector, Indonesia has become self sufficient in rice and does not need to import this staple food as it had for years.

Indonesia maintains a liberal foreign exchange system and has few restrictions on transfers abroad, and in general freely allows conversions to and from foreign currencies.

Bank Indonesia, the Central Bank, maintains the stability of the Indonesian Rupiah and reviews the exchange rate in terms of other currencies on a daily basis. The Rupiah is linked to a basket of currencies of Indonesia's major trading partners. The unitary exchange rate allows for fluctuation. With the objective of a more equitable distribution of development gains, the government gives high priority to expansion in the less developed regions of the country and the creation of employment opportunities for the country's growing labour force. To attract foreign capital, certain incentives are provided and several sectors are open and several foreign investment.

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