The National Economy
The country is rich in natural resources While 90% of the
population is engaged in agriculture, oil 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. To production and growth in the industry, the government
has formulated new policies and improved facilities. Significant
progress has been made in communications and transportation and
since 1976, Indonesia has had its own communications satelite 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 the growing traffic
on both domestic and international sectors, of passengers as well
Besides oil and liquefied natural gas (LNG), forestry products,
rubber, coffee, tea, tin, nickel, coper, palm products and fish
make important contributions to export earnings. 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
licence from foreign manufacturers. Also produced are electronic
equipment and electrical appliances. The aviation industry has been
growing and new production lines are coming onstream 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.