Updated April 13, 2023
Indonesia
Overview
South China Sea more frequently, and have accompanied
With over 270 million citizens, Indonesia is the most
fleets of Chinese fishing vessels into Indonesia’s EEZ.
populous country in Southeast Asia, the world’s most
populous Muslim-majority nation, and the world’s third-
Political Background
largest democracy (after India and the United States). It has
President Widodo, universally known by his nickname
the world’s 16th largest economy and the 10th largest when
“Jokowi,” was reelected in April 2019 elections, winning
ranked by purchasing power parity. It straddles important
55% of the popular vote. He campaigned on promises to
sea lanes and borders the Strait of Malacca, one of the
improve Indonesia’s infrastructure and raise living
world’s busiest trade routes, as well as the Indian Ocean
standards, particularly in underdeveloped areas. One of his
and the South China Sea.
signature initiatives is a plan to move Indonesia’s capital
from Jakarta to East Kalimantan, on the island of Borneo.
Over the past two decades, Indonesia has become a robust
Widodo has delivered on some of those promises, enacting
democracy, holding four direct presidential elections, each
several economic reform packages aimed at streamlining
considered by international observers to have been largely
bureaucratic processes to boost foreign and domestic
free and fair. In the most recent, held in April 2019,
investment. However, poverty and uneven economic
President Joko Widodo was reelected to a second five-year
development remain major issues. Indonesia was hard hit
term. The U.S.-Indonesia relationship has broadened in
by the Coronavirus Disease 2019 (COVID-19) pandemic,
recent years, with closer military and counterterrorism
with the largest number of infections in Southeast Asia and
cooperation and a range of new educational, environmental,
one of the largest mortality rates.
and energy programs initiated in the Obama
Administration. Indonesia’s foreign policy is guided by its
historical role as a leader of the Non-Aligned Movement,
and successive Indonesian governments have bristled at the
notion of aligning too closely with the United States or with
others, including China. Indonesia is an active member in
regional diplomatic institutions and is the 2023 chair of the
Association of Southeast Asian Nations (ASEAN).
Some 87% of Indonesians are Muslim, with the vast
majority subscribing to moderate, syncretic forms of Sunni
Islam. Religious diversity is enshrined in the constitution.
Some observers, however, express concern about growing
political influence of conservative religious groups. Non-
Sunni Muslims and other religious minorities have been
targets of violence, and some conservative groups have
organized mass demonstrations against non-Muslim
politicians. Indonesia also has a recent history of violent
extremism: several bombings in Jakarta and tourist center
Bali targeted Westerners in the 2000s, and smaller-scale
attacks have occurred periodically.
Indonesia is increasingly involved in rising South China
Sea tensions. Although the two nations do not dispute
sovereignty over any land features, China’s extensive nine-

dash line claims overlap with Indonesia’s Exclusive
Some observers have bristled at Widodo’s willingness to
bring authoritarian and conservative Islamist voices into his
Economic Zone (EEZ), the coastal area over which a state
has the right to regulate economic activity. Indonesian
cabinet. Defense Minister Prabowo Subianto, a former
Army Special Forces Commander, was implicated in a
authorities periodically confront or warn off Chinese
range of human rights violations in the 1990s. Vice
fishing and law-enforcement vessels seen as encroaching on
Indonesian waters. In 2017, Indonesia elicited a formal
President Ma’ruf Amin, a conservative Islamic leader, was
chosen at least in part to quell criticism from some Islamic
diplomatic protest from Beijing by renaming waters off the
groups that Widodo’s government is not sufficiently
Natuna Islands, north of Borneo, the North Natuna Sea.
conservative. Such criticism has been a thorn in Widodo’s
More recently, Chinese Coast Guard vessels reportedly
side throughout his presidency.
have harassed Indonesian energy exploration vessels in the
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Indonesia
Indonesia is preparing for its next presidential and
Economic Issues
parliamentary elections, slated for February 14, 2024.
In recent years, Indonesia’s economy has frequently posted
President Widodo is barred by term limits from seeking a
growth of more than 5%-6% annually, buoyed in part by
third term. Defense Minister Prabowo, Central Java
favorable demographics (66% of its population is of
Governor Ganjar Pranowo and Jakarta Governor Anies
working age). It is a large producer of natural gas and oil,
Baswedan have declared their candidacy.
and a major supplier to the large economies of Northeast
Asia, including Japan, South Korea, and China. It is also the
U.S. Engagement with Indonesia
world’s leading exporter of palm oil. Still, about half of
The United States engages Indonesia across a wide range of
Indonesian households are near the national poverty line of
issues, encouraging Indonesians to deepen their democratic
$24.40 per month. Despite its large population, Indonesia is
institutions, promote religious tolerance and the rule of law,
the 24th largest U.S. trading partner, ranking below
develop a more liberal trade and investment climate,
neighbors such as Singapore, Malaysia, and Thailand.
combat terrorism, and engage on international issues such
Bilateral trade totaled nearly $37 billion in 2021.
as maritime security and climate change. In October 2015,
the United States and Indonesia upgraded their bilateral
Indonesia has imposed some policies criticized by foreign
“Comprehensive Partnership” to a “Strategic Partnership,”
investors, including foreign ownership restrictions and local
with a minister-level dialogue intended to address maritime
content requirements in some industries, and has
cooperation, defense cooperation, economic growth and
renegotiated contracts for some energy and mining projects.
development, energy cooperation, cooperation on global
President Widodo has actively courted FDI, particularly in
and regional issues, and people-to-people ties. Most U.S.
the infrastructure sector, and in 2021, U.S. investment in
assistance supports health, environmental, and educational
Indonesia increased 75% year-on-year, to $2.5 billion.
initiatives. Indonesia is part of the Indo-Pacific Maritime
Security Initiative, which aims to strengthen Naval and
Human Rights Issues
Coast Guard capabilities in the region. In December 2021,
Most observers say Indonesian human rights protections
the United States and Indonesia signed Memoranda of
have improved over the past 15 years. However, abuses still
Understanding (MOUs) on maritime cooperation,
occur, including some by members of the military. Alleged
education, and the reestablishment of a Peace Corps
abuses are particularly frequent in areas with simmering
program in Indonesia.
secessionist movements such as Papua. Some argue that
religious intolerance is rising. Islamist organizations have
Security Cooperation
harassed and attacked minority religious groups, including
U.S.-Indonesia security cooperation has deepened over the
Christians and other Islamic sects, such as the Shia and
past decade, with the two militaries conducting around 170
Ahmadiyya. In 2016, large demonstrations by Islamist
annual engagements, including on maritime security
groups opposed to Jakarta’s Christian governor raised
cooperation and combatting terrorism. This represents a
concerns about creeping intolerance.
sharp change from the early 2000s, when U.S. policies
enacted in response to earlier human rights abuses by
The State Department’s 2022 Trafficking in Persons report
Indonesian forces severely limited bilateral engagements. In
listed Indonesia as a Tier 2 Watch List nation and reported
1999, Congress suspended all International Military
it “does not fully meet the minimum standards for the
Education and Training (IMET) programs with Indonesia
elimination of trafficking but is making significant efforts
after Indonesia’s military, particularly the Kopassus special
to do so.” Corruption is relatively widespread:
forces, and militia proxies killed over 1,000 in Timor-Leste
Transparency International ranked Indonesia 110th out of
following Timor’s vote to pursue independence from
180 nations in its 2022 Corruption Perceptions Index,
Indonesia. Programs were restarted on a limited basis in
below other Asian nations such as China and India.
2002 and, from 2005 to 2010, the United States largely
However, many observers say Indonesia’s democratic
normalized military relations. In 2010, the United States
system and its growing independent press and civil society
resumed limited IMET programs with Kopassus.
are creating a more accountable system in which people can
choose their leaders and participate in policymaking
Militancy and Terrorism
through community or nongovernmental organizations.
Indonesia has had a long-running issue of domestic
militancy, and the Islamic State (IS) has raised concerns
Environmental Issues
among many in Indonesia by conducting recruiting in
The United States conducts numerous environmental and
Bahasa Indonesia, Indonesia’s national language. In May
clean energy programs in Indonesia, which is among the
2018, a set of suicide attacks in Surabaya killed 12
world’s most biodiverse countries. Indonesia’s record of
civilians, with at least one attack conducted by a family that
environmental protection is constrained by weak rule of law
had recently been deported from Syria. Indonesia amended
and poor land management. Because of deforestation,
its 2003 Anti-Terrorism Law following the Surabaya
Indonesia is a major emitter of greenhouse gases—the
attacks, lengthening periods for which suspects can be
world’s third or fourth largest when emissions from
detained without charge and broadening police rights to
deforestation are taken into account. Illegal logging remains
prosecute those who join or recruit for militant groups.
rampant. In the 1960s, forests covered 82% of Indonesia;
U.S.-Indonesia counterterrorism cooperation is close; the
today, they cover 49%. Extensive wildfires cause severe air
United States and Australia helped to create Indonesia’s
pollution each year. Climate change has led to recurrent
elite counterterrorism unit, Densus-88, which has weakened
poor harvests. In 2022, Indonesia twice instituted palm oil
militant groups such as Jemaah Islamiyah (JI), an Al Qaeda
export bans, increasing the global costs of cooking oil.
affiliate responsible for several bombings in the 2000s.
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Indonesia

IF10247
Ben Dolven, Specialist in Asian Affairs


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https://crsreports.congress.gov | IF10247 · VERSION 17 · UPDATED

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