Updated August 1, 2023
Indonesia
Overview
South China Sea more frequently, and have accompanied
With over 279 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.
term. The U.S.-Indonesia relationship has broadened in
recent years, with closer military and counterterrorism
cooperation and a range of new educational, environmental,
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.

Some observers have bristled at Widodo’s willingness to
Indonesia is increasingly involved in rising South China
bring authoritarian and conservative Islamist voices into his
Sea tensions. Although the two nations do not dispute
sovereignty over any land features, China’s extensive nine-
cabinet. Defense Minister Prabowo Subianto, a former
dash line claims overlap with Indonesia’s Exclusive
Army Special Forces Commander, was implicated in a
range of human rights violations in the 1990s. Vice
Economic Zone (EEZ), the coastal area over which a state
has the right to regulate economic activity. Indonesian
President Ma’ruf Amin, a conservative Islamic leader, was
chosen at least in part to quell criticism from some Islamic
authorities periodically confront or warn off Chinese
groups that Widodo’s government is not sufficiently
fishing and law-enforcement vessels seen as encroaching on
conservative. Such criticism has been a thorn in Widodo’s
Indonesian waters. In 2017, Indonesia elicited a formal
side throughout his presidency.
diplomatic protest from Beijing by renaming waters off the
Natuna Islands, north of Borneo, the North Natuna Sea.
More recently, Chinese Coast Guard vessels reportedly
Indonesia is preparing for its next presidential and
parliamentary elections, slated for February 14, 2024.
have harassed Indonesian energy exploration vessels in the
President Widodo is barred by term limits from seeking a
third term. Defense Minister Prabowo, Central Java
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Indonesia
Governor Ganjar Pranowo and Jakarta Governor Anies
Economic Issues
Baswedan have declared their candidacy.
In recent years, Indonesia’s economy has frequently posted
growth of more than 5%-6% annually, buoyed in part by
U.S. Engagement with Indonesia
favorable demographics (66% of its population is of
The United States engages Indonesia across a wide range of
working age). It is a large producer of natural gas and oil,
issues, encouraging Indonesians to deepen their democratic
and a major supplier to the large economies of Northeast
institutions, promote religious tolerance and the rule of law,
Asia, including Japan, South Korea, and China. It is also the
develop a more liberal trade and investment climate,
world’s leading exporter of palm oil. Still, about half of
combat terrorism, and engage on international issues such
Indonesian households are near the national poverty line of
as maritime security and climate change. In October 2015,
$24.40 per month. Despite its large population, Indonesia is
the United States and Indonesia upgraded their bilateral
the 24th largest U.S. trading partner, ranking below
“Comprehensive Partnership” to a “Strategic Partnership,”
neighbors such as Singapore, Malaysia, and Thailand.
with a minister-level dialogue intended to address maritime
Bilateral trade totaled nearly $37 billion in 2021.
cooperation, defense cooperation, economic growth and
development, energy cooperation, cooperation on global
Indonesia has imposed some policies criticized by foreign
and regional issues, and people-to-people ties. Most U.S.
investors, including foreign ownership restrictions and local
assistance supports health, environmental, and educational
content requirements in some industries, and has
initiatives. Indonesia is part of the Indo-Pacific Maritime
renegotiated contracts for some energy and mining projects.
Security Initiative, which aims to strengthen Naval and
President Widodo has actively courted FDI, particularly in
Coast Guard capabilities in the region. In 2022, the two
the infrastructure sector, and in 2021, U.S. investment in
countries finalized several agreements, including a $698
Indonesia increased 75% year-on-year, to $2.5 billion.
million Millennium Challenge Compact supporting climate-
conscious infrastructure development, as well as pacts on
Human Rights Issues
Coast Guard capacity building and support for sustainable
Most observers say Indonesian human rights protections
fishing, marine biodiversity, and reducing plastic pollution.
have improved over the past 15 years. However, abuses still
occur, including some by members of the military. Alleged
Security Cooperation
abuses are particularly frequent in areas with simmering
U.S.-Indonesia security cooperation has deepened over the
secessionist movements such as Papua. Some argue that
past decade, with the two militaries conducting around 170
religious intolerance is rising. Islamist organizations have
annual engagements, including on maritime security
harassed and attacked minority religious groups, including
cooperation and combatting terrorism. This represents a
Christians and other Islamic sects, such as the Shia and
sharp change from the early 2000s, when U.S. policies
Ahmadiyya. In 2016, large demonstrations by Islamist
enacted in response to earlier human rights abuses by
groups opposed to Jakarta’s Christian governor raised
Indonesian forces severely limited bilateral engagements. In
concerns about creeping intolerance.
1999, Congress suspended all International Military
Education and Training (IMET) programs with Indonesia
The State Department’s 2022 Trafficking in Persons report
after Indonesia’s military, particularly the Kopassus special
listed Indonesia as a Tier 2 Watch List nation and reported
forces, and militia proxies killed over 1,000 in Timor-Leste
it “does not fully meet the minimum standards for the
following Timor’s vote to pursue independence from
elimination of trafficking but is making significant efforts
Indonesia. Programs were restarted on a limited basis in
to do so.” Corruption is relatively widespread:
2002 and, from 2005 to 2010, the United States largely
Transparency International ranked Indonesia 110th out of
normalized military relations. In 2010, the United States
180 nations in its 2022 Corruption Perceptions Index,
resumed limited IMET programs with Kopassus.
below other Asian nations such as China and India.
However, many observers say Indonesia’s democratic
Militancy and Terrorism
system and its growing independent press and civil society
Indonesia has had a long-running issue of domestic
are creating a more accountable system in which people can
militancy, and the Islamic State (IS) has raised concerns
choose their leaders and participate in policymaking
among many in Indonesia by conducting recruiting in
through community or nongovernmental organizations.
Bahasa Indonesia, Indonesia’s national language. In May
2018, a set of suicide attacks in Surabaya killed 12
Environmental Issues
civilians, with at least one attack conducted by a family that
The United States conducts numerous environmental and
had recently been deported from Syria. Indonesia amended
clean energy programs in Indonesia, which is among the
its 2003 Anti-Terrorism Law following the Surabaya
world’s most biodiverse countries. Indonesia’s record of
attacks, lengthening periods for which suspects can be
environmental protection is constrained by weak rule of law
detained without charge and broadening police rights to
and poor land management. Because of deforestation,
prosecute those who join or recruit for militant groups.
Indonesia is a major emitter of greenhouse gases—the
U.S.-Indonesia counterterrorism cooperation is close; the
world’s third or fourth largest when emissions from
United States and Australia helped to create Indonesia’s
deforestation are taken into account. Illegal logging remains
elite counterterrorism unit, Densus-88, which has weakened
rampant. In the 1960s, forests covered 82% of Indonesia;
militant groups such as Jemaah Islamiyah (JI), an Al Qaeda
today, they cover 49%. Extensive wildfires cause severe air
affiliate responsible for several bombings in the 2000s.
pollution each year. Climate change has led to recurrent
poor harvests. In 2022, Indonesia twice instituted palm oil
export bans, increasing the global costs of cooking oil.
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Indonesia

IF10247
Ben Dolven, Specialist in Asian Affairs


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https://crsreports.congress.gov | IF10247 · VERSION 18 · UPDATED

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