Economy

Indonesia has a mixed economy in which both the private sector and government play vital roles. As the only G20 member state in Southeast Asia, the country has the largest economy in the region and is classified as a newly industrialised country. As of 2019update, it is the world's 16th largest economy by nominal GDP and 7th in terms of GDP at PPP, estimated to be US$1.100 trillion and US$3.740 trillion respectively. Per capita GDP in PPP is US$14,020, while nominal per capita GDP is US$4,120. The debt ratio to GDP is 29.2%. The services are the economy's largest sector and account for 43.4% of GDP (2018), followed by industry (39.7%) and agriculture (12.8%). Since 2009, it has employed more people than other sectors, accounting for 47.7% of the total labour force, followed by agriculture (30.2%) and industry (21.9%).

Over time, the structure of the economy has changed considerably. Historically, it has been weighted heavily towards agriculture, reflecting both its stage of economic development and government policies in the 1950s and 1960s to promote agricultural self-sufficiency. A gradual process of industrialisation and urbanisation began in the late 1960s and accelerated in the 1980s as falling oil prices saw the government focus on diversifying away from oil exports and towards manufactured exports. This development continued throughout the 1980s and into the next decade despite the 1990 oil price shock, during which the GDP rose at an average rate of 7.1%. As a result, the official poverty rate fell from 60% to 15%. Reduction of trade barriers from the mid-1980s made the economy more globally integrated. The growth, however, ended with the 1997 Asian financial crisis, which affected the economy severely. It caused a real GDP contraction by 13.1% in 1998, and inflation reached 78%. The economy reached its low point in mid-1999 with only 0.8% real GDP growth.

Relatively steady inflation and an increase in GDP deflator and the Consumer Price Index have contributed to strong economic growth in recent years. From 2007 to 2019, annual growth has accelerated to between 4% and 6% as a result of improvement in the banking sector and domestic consumption, helping Indonesia weather the 2008–2009 Great Recession, and regain in 2011 the investment grade rating it had lost in 1997. As of 2019update, 9.41% of the population lived below the poverty line, and the official open unemployment rate was 5.28%. However, in late 2020, Indonesia fell into its first recession in 22 years due to the effects of the global COVID-19 pandemic.

Indonesia has abundant natural resources like oil and natural gas, coal, tin, copper, gold, and nickel, while agriculture produces rice, palm oil, tea, coffee, cacao, medicinal plants, spices, and rubber. These commodities make up a large portion of the country's exports, with palm oil and coal briquettes as the leading export commodities. In addition to refined and crude petroleum as the main imports, telephones, vehicle parts and wheat cover the majority of additional imports. China, the United States, Japan, Singapore, India, Malaysia, South Korea and Thailand are Indonesia's principal export markets and import partners.

Transport

Indonesia's transport system has been shaped over time by the economic resource base of an archipelago, and the distribution of its 250 million people highly concentrated on Java. All transport modes play a role in the country's transport system and are generally complementary rather than competitive. In 2016, the transport sector generated about 5.2% of GDP.

The road transport system is predominant, with a total length of 542,310 kilometres (336,980 miles) as of 2018update. Jakarta has the most extended bus rapid transit system in the world, boasting some 251.2 kilometres (156.1 miles) in 13 corridors and ten cross-corridor routes. Rickshaws such as bajaj and becak and share taxis such as Angkot and Metromini are a regular sight in the country. Most of the railways are in Java, used for both freight and passenger transport, such as local commuter rail services complementing the inter-city rail network in several cities. In the late 2010s, Jakarta and Palembang were the first cities in Indonesia to have rapid transit systems, with more planned for other cities in the future. In 2015, the government announced a plan to build a high-speed rail, which would be a first in Southeast Asia.

Indonesia's largest airport, Soekarno–Hatta International Airport is among the busiest in the Southern Hemisphere, serving 54 million passengers in 2019. Ngurah Rai International Airport and Juanda International Airport are the country's second-and third-busiest airport respectively. Garuda Indonesia, the country's flag carrier since 1949, is one of the world's leading airlines and a member of the global airline alliance SkyTeam. Port of Tanjung Priok is the busiest and most advanced Indonesian port, handling more than 50% of Indonesia's trans-shipment cargo traffic.

Energy

In 2017, Indonesia was the world's 9th largest energy producer with 4,200 terawatt-hours (14.2 quadrillion British thermal units), and the 15th largest energy consumer, with 2,100 terawatt-hours (7.1 quadrillion British thermal units). The country has substantial energy resources, including 22 billion barrels (3.5 billion cubic metres) of conventional oil and gas reserves (of which about 4 billion barrels are recoverable), 8 billion barrels of oil-equivalent of coal-based methane (CBM) resources, and 28 billion tonnes of recoverable coal. While reliance on domestic coal and imported oil has increased, Indonesia has seen progress in renewable energy with hydropower being the most abundant source. Furthermore, the country has the potential for geothermal, solar, wind, biomass and ocean energy. Indonesia has set out to achieve 23% use of renewable energy by 2025 and 31% by 2050. As of 2015update, Indonesia's total national installed power generation capacity stands at 55,528.51 MW.

The country's largest dam, Jatiluhur, has several purposes including the provision of hydroelectric power generation, water supply, flood control, irrigation and aquaculture. The earth-fill dam is 105 m (344 ft) high and withholds a reservoir of 3.0 billion m3 (2.4 million acre⋅ft). It helps to supply water to Jakarta and to irrigate 240,000 ha (590,000 acres) of rice fields and has an installed capacity of 186.5 MW which feeds into the Java grid managed by the State Electricity Company (Perusahaan Listrik Negara, PLN).

Science and technology

Indonesia's expenditure on science and technology is relatively low, at less than 0.1% of GDP (2017). Historical examples of scientific and technological developments include the paddy cultivation technique terasering, which is common in Southeast Asia, and the pinisi boats by the Bugis and Makassar people. In the 1980s, Indonesian engineer Tjokorda Raka Sukawati invented a road construction technique named Sosrobahu that allows the construction of long stretches of flyovers above existing main roads with minimum traffic disruption. It later became widely used in several countries. The country is also an active producer of passenger trains and freight wagons with its state-owned company, the Indonesian Railway Industry (INKA), and has exported trains abroad.

Indonesia has a long history in developing military and small commuter aircraft as the only country in Southeast Asia to build and produce aircraft. With its state-owned company, the Indonesian Aerospace (PT. Dirgantara Indonesia), Indonesia has provided components for Boeing and Airbus. The company also collaborated with EADS CASA of Spain to develop the CN-235 that has seen use by several countries. Former President B. J. Habibie played a vital role in this achievement. Indonesia has also joined the South Korean programme to manufacture the fifth-generation jet fighter KAI KF-X.

Indonesia has a space programme and space agency, the National Institute of Aeronautics and Space (Lembaga Penerbangan dan Antariksa Nasional, LAPAN). In the 1970s, Indonesia became the first developing country to operate a satellite system called Palapa, a series of communication satellites owned by Indosat Ooredoo. The first satellite, PALAPA A1 was launched on 8 July 1976 from the Kennedy Space Center in Florida, United States. As of 2019update, Indonesia has launched 18 satellites for various purposes, and LAPAN has expressed a desire to put satellites in orbit with native launch vehicles by 2040.

Tourism

Tourism contributed around US$19.7 billion to GDP in 2019. In 2018, Indonesia received 15.8 million visitors, a growth of 12.5% from last year, and received an average receipt of US$967. China, Singapore, Malaysia, Australia, and Japan are the top five sources of visitors to Indonesia. Since 2011, Wonderful Indonesia has been the slogan of the country's international marketing campaign to promote tourism.

Nature and culture are prime attractions of Indonesian tourism. The former can boast a unique combination of a tropical climate, a vast archipelago, and a long stretch of beaches, and the latter complement those with a rich cultural heritage reflecting Indonesia's dynamic history and ethnic diversity. Indonesia has a well-preserved natural ecosystem with rain forests that stretch over about 57% of Indonesia's land (225 million acres). Forests on Sumatra and Kalimantan are examples of popular destinations, such as the Orangutan wildlife reserve. Moreover, Indonesia has one of the world's longest coastlines, measuring 54,716 kilometres (33,999 mi). The ancient Borobudur and Prambanan temples as well as Toraja and Bali, with its traditional festivities, are some of the popular destinations for cultural tourism.

Indonesia has nine UNESCO World Heritage Sites, including the Komodo National Park and the Sawahlunto Coal Mine; and a further 19 in a tentative list that includes Bunaken National Park and Raja Ampat Islands. Other attractions include the specific points in Indonesian history, such as the colonial heritage of the Dutch East Indies in the old towns of Jakarta and Semarang, and the royal palaces of Pagaruyung, Ubud, and Yogyakarta.