Indonesia has assumed an unobtrusive part in the economy of the world since the mid-twentieth century, and its significance has been impressively not as much as its size, assets, and geographic position would appear to warrant. The nation is a noteworthy exporter of natural gasand unrefined petroleum. Moreover, Indonesia is one of the mainsuppliers of coffee, rubber, palm oil and cocoa in the world. It likewise produces an extensive variety of different products, for example, tea, sugar, copra, tobacco, and spices such as cloves. Virtually all production of commodities originates from extensive estates. Extensive exploration for oil and other minerals deposits has brought about various large-scale projects that have added significantly to general advancement funds.
In spite of the fact that Indonesia has remained a keyimporter of manufactured products, technical skills, and advanced technology since the mid-1970s, the nation’s monetary base has moved from the primary sector to secondary and tertiary businesses—trade, manufacturing, and services. Manufacturing outperformed agriculture as far as contribution to gross domestic product (GDP) in the mid-1990s and has kept on being the biggest single constituent of the nation’s economy. A considerable part of the national budget has kept on being allocated to agriculture, however; as a result, the nation has maintained its self-sufficiency in the production of rice since the mid-1980s.
In the first few years of Indonesia’s independence, mismanagement of the economy plus the subordination of development to political standards under the “Guided Economy” strategy of the nation’s first president, Sukarno (1949–66), resulted in financial chaos and a severe decline in the capital stock. With a major shift in economic course after Suharto took over power in the mid-1960s, some degree of steadiness was recovered, and the settings for a methodical approach of rehabilitation and financial advancement were initiated.
From 1969 to 1998 a succession of five-year strategiesunderscored the administration’s part in building up the financial framework of the nation, prominently in agriculture, transportation, communications, and irrigation. Hence, the government, in conjunction withforeign aid, has been a keyforce in drivingdevelopment in sectors where private venture has not been promptly forthcoming; the state-owned oil organization PERTAMINA was a result of these governmentinitiatives. In the late twentieth century, the accentuation in the public sectortilted progressively toward state enterprises that were independent and self-financing.
Considerable development of the private sector has been clear since the mid-1990s. Preceding that time, development, for the most part, had been kept to a somewhat little gathering of corporations, most profiting by the administration’s support. Small business was slower to create. The capital market deregulation in the mid-1980s activated breathtaking development in the stock exchange, however, in spite of the expansion in local investment, direct contribution in the stock exchange stayed restricted to a little group of investors.
Foreign direct investmentrose sharply in the 1990s yet quickly retreated in the outcome of the Asian economic crisis started by the Thai baht’s collapse in 1997. The government along these lines initiated a four-year national development strategy that returned the economy to its pre-emergency strength. By 2003 the nation was sufficiently steady to permit the ending of an economic reform program previously supported by the International Monetary Fund (IMF). Another strategy for development involving the limitation of foreign ownership in some areas and liberalization in others has intended to build up Indonesia as a completely independent nation in the 21st century.