Changes

In the mid-1980s, the government began eliminating regulatory obstacles to economic activity. The steps were aimed primarily at the external and financial sectors and were designed to stimulate employment and growth in the non-oil export sector. Annual real gross domestic product (GDP) growth averaged nearly 7% from 1987–97 and most analysts recognized Indonesia as a newly industrializing economy and emerging major market. The Asian financial crisis of 1997 altered the region's economic landscape. With the depreciation of the Thai currency, the foreign investment community quickly re-evaluated its investments in Asia. Foreign investors dumped assets and investments in Asia, leaving Indonesia the most affected in the region. In 1998, Indonesia experienced a negative GDP growth of 13.1% and unemployment rose to 15-20%. In the aftermath of the 1997-98 financial crisis, the government took custody of a significant portion of private sector assets via debt restructuring, but subsequently sold most of these assets, averaging a 29% return. Indonesia has since recovered, albeit slower than some of its neighbors, by recapitalizing its banking sector, improving oversight of capital markets, and taking steps to stimulate growth and investment, particularly in infrastructure. GDP growth was 4.5% in 2003, 5.1% in 2004, and 5.6% in 2005. Estimates for real GDP growth in 2006 are 5.5%.  

In the mid-1980s, the government began eliminating regulatory obstacles to economic activity. The steps were aimed primarily at the external and financial sectors and were designed to stimulate employment and growth in the non-oil export sector. Annual real gross domestic product (GDP) growth averaged nearly 7% from 1987–97 and most analysts recognized Indonesia as a newly industrializing economy and emerging major market. The Asian financial crisis of 1997 altered the region's economic landscape. With the depreciation of the Thai currency, the foreign investment community quickly re-evaluated its investments in Asia. Foreign investors dumped assets and investments in Asia, leaving Indonesia the most affected in the region. In 1998, Indonesia experienced a negative GDP growth of 13.1% and unemployment rose to 15-20%. In the aftermath of the 1997-98 financial crisis, the government took custody of a significant portion of private sector assets via debt restructuring, but subsequently sold most of these assets, averaging a 29% return. Indonesia has since recovered, albeit slower than some of its neighbors, by recapitalizing its banking sector, improving oversight of capital markets, and taking steps to stimulate growth and investment, particularly in infrastructure. GDP growth was 4.5% in 2003, 5.1% in 2004, and 5.6% in 2005. Estimates for real GDP growth in 2006 are 5.5%.  

*GDP (2005): $281.3 billion; (2006 est.): $351.9 billion.

*GDP: $1.1 trillion (2020)

*GDP per capita: $3,929 (2020)

*Annual growth rate (2005): 5.6%; (2006 est.): 5.5%.

*Annual growth rate (2005): 5.6%; (2006 est.): 5.5%.

*Inflation (2005): 10.5%; (2006 est.): 13.2%.

*Inflation (2005): 10.5%; (2006 est.): 13.2%.  

*Per capita income (2005): $3,600 (est., PPP).  

*Natural resources (10.4% of GDP): Oil and gas, bauxite, silver, tin, copper, gold, coal.  

*Natural resources (10.4% of GDP): Oil and gas, bauxite, silver, tin, copper, gold, coal.  

*Agriculture (13.4% of GDP): Products—timber, rubber, rice, palm oil, coffee. Land—17% cultivated.  

*Agriculture (13.4% of GDP): Products—timber, rubber, rice, palm oil, coffee. Land—17% cultivated.  

President Yudhoyono and his economic ministers have stated repeatedly their intention to improve the climate for private sector investment in order to raise the level of GDP growth and reduce unemployment. In addition to general corruption and legal uncertainty, businesses have cited a number of specific factors that have reduced the competitiveness of Indonesia's investment climate, including: corrupt and inefficient customs services; non-transparent and arbitrary tax administration; inflexible labor markets that have reduced Indonesia's advantage in labor-intensive manufacturing; increasing infrastructure bottlenecks; and uncompetitive investment laws and regulations. In February 2006, the Indonesian Government announced a new policy package to improve the investment climate in Indonesia for both domestic and foreign investors. The package, announced in Presidential Instruction (INPRES) No. 3/2006, consists of policies designed to strengthen investment services, harmonize central and regional regulations (Perda), improve customs, excise, and taxation services, create jobs, and support small and medium enterprises. However, labor reforms planned for 2006 have been delayed in parliament.  

President Yudhoyono and his economic ministers have stated repeatedly their intention to improve the climate for private sector investment in order to raise the level of GDP growth and reduce unemployment. In addition to general corruption and legal uncertainty, businesses have cited a number of specific factors that have reduced the competitiveness of Indonesia's investment climate, including: corrupt and inefficient customs services; non-transparent and arbitrary tax administration; inflexible labor markets that have reduced Indonesia's advantage in labor-intensive manufacturing; increasing infrastructure bottlenecks; and uncompetitive investment laws and regulations. In February 2006, the Indonesian Government announced a new policy package to improve the investment climate in Indonesia for both domestic and foreign investors. The package, announced in Presidential Instruction (INPRES) No. 3/2006, consists of policies designed to strengthen investment services, harmonize central and regional regulations (Perda), improve customs, excise, and taxation services, create jobs, and support small and medium enterprises. However, labor reforms planned for 2006 have been delayed in parliament.  

The passage of a new copyright law in July 2002 and accompanying optical disc regulations in 2004 greatly strengthened Indonesia's intellectual property rights (IPR) regime. Despite the government's recent efforts to improve enforcement, IPR piracy remains a major concern to U.S. intellectual property holders and foreign investors, particularly in the high-technology sector. In March 2006, President Yudhoyono issued a decree establishing a National Task Force for IPR Violation Prevention. The IPR Task Force will formulate national policy to prevent IPR violations and determine additional resources needed for prevention. It will also help to educate the public through various activities and improve bilateral, regional, and multilateral cooperation to prevent IPR violations. Due to these positive developments on IPR issues, Indonesia was removed from the U.S. Trade Representative's "Priority Watch" list and placed on the "Watch" list.  

The passage of a new copyright law in July 2002 and accompanying optical disc regulations in 2004 greatly strengthened Indonesia's intellectual property rights (IPR) regime. Despite the government's recent efforts to improve enforcement, IPR piracy remains a major concern to U.S. intellectual property holders and foreign investors, particularly in the high-technology sector. In March 2006, President Yudhoyono issued a decree establishing a National Task Force for IPR Violation Prevention. The IPR Task Force will formulate national policy to prevent IPR violations and determine additional resources needed for prevention. It will also help to educate the public through various activities and improve bilateral, regional, and multilateral cooperation to prevent IPR violations. Due to these positive developments on IPR issues, Indonesia was removed from the U.S. Trade Representative's "Priority Watch" list and placed on the "Watch" list.

== History ==

== History ==