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October 2010 - Posts

  • Indonesia: an Emerging Island Economy


    To look at the Republic of Indonesia on a map, one may wonder how it manages to maintain a stable economy and government over the more than seventeen thousand islands that comprise the country. Declaring independence from the Dutch after World War II, Indonesia has since built weathered numerous political and natural obstacles to emerge as one of the Next Eleven economies to watch in the coming years.


    Despite the grand diversity, their improvements in governmental rule and uniform identity as strengthened by keeping to a national language have helped Indonesia through various economic road bumps. Today, while the majority of the republic's population (ranked fourth in the world) would be relegated to a low income bracket, there are improvements in unemployment and trade ties.



    The Economy of Indonesia


    Despite the majority of Indonesia's economy being founded in the services industry, the majority of the population is employed in the agricultural sector. Palm oil, rice, spices, and tea and coffee are primary products here - the Java islands are part of the republic, hence the popular nickname for the latter beverage. With an average gross domestic product of more than $500 billion, this island nation has proved a viable trade partner with Japan, the United States, China, and Singapore.


    Though Indonesia enjoys extensive natural resources like precious metals and tin, their list of top exports differs somewhat:


    Crude oil: Natural oil and gas is treasured especially by neighboring countries in Asia. The republic's resources are so valuable, Indonesia is Southeast Asia's only representative in OPEC.


    Electrical appliances and electronics: Nokia phones, notebook computers, printers, cameras, and video game peripherals are among the many products manufactured in Indonesia.


    Plywood: Approximately sixty percent of Indonesia is populated by forests. This natural wood is exported to provide construction materials throughout Asia.


    Rubber: In response to the demand for natural rubber, Indonesia ranks second only to Thailand in production and distribution. An average of 3 million metric tons of natural rubber is produced, accounting for a healthy percentage of overall global supply.


    Textiles: Gorgeous Batik prints on flowing gowns and sarongs are a popular export, found in eclectic boutiques around the globe.


    Where Indonesia is rich in specific natural assets, it lacks in other necessities. Here they rely upon trade partners to import a number of products, including:


    Machinery: What is needed to manufacture and assemble electronics, the nation acquires from mainland China and the U.S.


    Chemicals: Chemical necessary for medicine and other needs are brought in, as Indonesia lack the physical plants for creating them on their own.


    Refined fuels: What the country exports in crude, they accept to keep transportation and machinery running smoothly.


    Food: The US, Canada, Australia and New Zealand in particular provide the greatest percentage of processed foodstuff and meats to the islands.


    Where the republic lacks in technological advancement, Indonesia is rich in specific natural resources that remain important to global markets. The rubber soles of shoes you wear, the coffee you drink, and the phones you use daily may have ties to this region, and as they prosper you may find more of what you use originates from Indonesia.


    Photo by Yohanes Budiyanto.