President Susilo Bambang Yudhoyono
President Susilo Bambang Yudhoyono
President of the Republic of Indonesia

Peace and prosperity now within reach
Indonesia is determined to develop; catching up with neighbours is essential to secure its place in the blazing ASEAN sun

A few points are generally accepted in political and business circles in Indonesia these days. Foreign direct investment has to pick up if the island-chain nation is to see sustained growth. Peace between separatists in the Aceh province and the central government in Jakarta is essential to nationwide stability. And deep reforms are needed to improve education, ensure job training and boost laggard productivity.

Despite its economic and political troubles, prospects are encouraging for this nation of nearly 240 million people, occupying a key shipping channel between the Indian and Pacific Oceans. Its 17,508 islands are home to the world’s largest Muslim population and the fourth largest total population after China, India and the United States.

Terrorism, separatist conflicts and the devastating 2004 tsunami have cast global attention on Indonesia in recent years. But the country is intent on selling a more upbeat message to drive growth.

There’s a lot of news to celebrate, leaders say. The Indonesian government and rebels from the Free Aceh Movement signed a peace pact in 2005, ending three decades of armed conflict. Separatists seeking independence for the region on the island of Sumatra surrendered as part of the deal. Democratic elections in Aceh followed in 2006, widely heralded as a victory for President Susilo Bambang Yudhoyono, who was nominated for the Nobel peace prize for his work in bringing peace to the region.

Similarly good news can be reported from economic quarters. Indonesia’s economy grew by six per cent last year, according to the International Monetary Fund. The organisation praised Indonesia for improving tax collection capabilities and adopting labour laws to help lure investors and spur job creation. And debt as a percentage of gross domestic product is on track to be reduced to 26 per cent by 2012, down from nearly 36 per cent this year.

Additionally, changes making it easier to do business as a foreigner are creeping in. For instance, work visas for non-Indonesians and property leases now have extended terms, reforms that were approved earlier this year in the new Investment Law, the first revision of Indonesia’s foreign investment procedures since 1967. Laying a strong foundation for continuous development is one of the key goals of President Susilo’s government, and a comprehensive economic reform programme (a three-pillared approach targeting an improved investment climate, infrastructure development and banking sector reform) is underway.

Recovering from the impact of the Asian financial crisis at the end of the 1990s has not been easy for Indonesia, but the country is finally emerging. As President Susilo said in his 2008 State of the Nation Address this past August, “Ten years ago, at the beginning of our devastating crisis, disbelief and distrust were common. When our nation was battered by economic crisis, which then turned into multidimensional crises, we came across grave challenges. With our determination as a nation, we successfully overcame every crisis that has come our way. Today, Indonesia is still standing tall; let us prove now that in ten years, or fifty years and beyond, our country will not merely be standing tall but also developed and prosperous.”


Project director: Lucas Heine
Project coordinator: Helena Alvarez-Vietez
Production assistant: Benjamin Williamson