ECONOMY

While 90% of 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. Significant progress has been made in communications and transportations and since 1976, Indonesia has had its own communication satellite system, which has enabled rapid expansion of telephone, television and broadcast facilities to all 30 provinces. Air and sea ports are being extended  to cater to the growing traffic in both domestic and international sectors.

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 motor cycles under license from foreign manufacturers. Also produced are electronic equipment and electrical appliances.

The aviation industry has been growing and the state owned Indonesian Aircraft Industry (IPTN) produces two types of fixed wing aircraft and helicopters. New production lines are coming onstream as well its Universal Maintenance  Centre for the overhaul of aircraft are for domestic use as well as for export. 

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 Rupee (Rupiah) and reviews the exchange  rate in terms of the 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 and the creation of employment opportunities for the country’s growing labor force. To attract foreign capital, certain incentives are provided and several sectors are open to foreign investment.