Updated June 11, 2024
Indonesia
Overview
has the right to regulate economic activity. Indonesian
With over 279 million citizens, Indonesia is the most
authorities periodically confront or warn off PRC fishing
populous country in Southeast Asia, the world’s most
and law-enforcement vessels seen as encroaching on
populous Muslim-majority nation, and the world’s third-
Indonesian waters. In 2017, Indonesia elicited a formal
largest democracy (after India and the United States). It has
diplomatic protest from Beijing by renaming waters off the
the world’s 16th-largest economy—the 7th-largest when
Natuna Islands, north of Borneo, the North Natuna Sea.
ranked by purchasing power parity. It straddles vital sea
More recently, PRC Coast Guard vessels reportedly have
lanes and borders the Strait of Malacca, one of the world’s
harassed Indonesian energy exploration vessels in the South
busiest trade routes, as well as the Indian Ocean and the
China Sea more frequently, and have accompanied fleets of
South China Sea. Over the past 25 years, Indonesia has
PRC fishing vessels into Indonesia’s EEZ.
become a robust democracy, holding five direct presidential
elections, each considered by international observers to
Political Background
have been largely free and fair. In the most recent, held in
On February 14, 2024, over 200 million Indonesians voted
February 2024, Defense Minister Prabowo Subianto was
in presidential, parliamentary, and local elections—the
elected to succeed President Joko Widodo. Prabowo is
world’s largest one-day democratic exercise—and selected
scheduled to take office in October. His Vice President-
Defense Minister Prabowo as president. Prabowo, the ex-
elect is Widodo’s eldest son, Gibran Rakabuming Raka.
son-in-law of the country’s former authoritarian president
Suharto, is a former general who was removed from the
The U.S.-Indonesia relationship has broadened over the
military in 1998 for allegedly torturing political activists,
past two decades, with closer military and counterterrorism
and who was implicated in 1999 violence in Timor-Leste. A
cooperation and a range of new educational, environmental,
scion of a wealthy Indonesian family, Prabowo campaigned
and energy programs initiated during the Obama
on promises to continue the economic development policies
Administration. Congress has played a key role in guiding
of President Widodo, who remains popular. He has also
the relationship, including by restricting interactions with
advocated a more active foreign policy for Indonesia,
security services accused of rights abuses, promoting
although he has not outlined specifics of that role.
cooperation on issues such as maritime security and
Figure 1. Indonesia
counterterrorism, and conducting oversight of programs,
including Indonesia’s Millennium Challenge Compact.
Indonesia’s foreign policy is guided by its historical role as
a leader of the Non-Aligned Movement, and successive
Indonesian governments have resisted aligning too closely
with the United States or others, including the Peoples
Republic of China (PRC or China). Indonesia is an active
member in regional diplomatic institutions, and served as
the 2022 chair of the Group of 20 (G-20) and 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 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 history of violent extremism: several
bombings in Jakarta and 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
President Widodo tacitly supported Prabowo’s campaign,
sovereignty over any land features, China’s extensive
and many analysts expect the new government to continue
“nine-dash line” claims overlap with Indonesia’s Exclusive
Widodo’s populist focus on economic development. One of
Economic Zone (EEZ), the coastal area over which a state
Widodo’s signature initiatives is a plan to move Indonesia’s
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Indonesia
capital from Jakarta to East Kalimantan, on the island of
Economic Issues
Borneo. Widodo has enacted several economic reform
Over the past two decades, Indonesia’s economy has
packages aimed at streamlining bureaucratic processes to
frequently posted growth of more than 5%-6% annually,
boost foreign and domestic investment. Poverty and uneven
buoyed in part by favorable demographics (66% of its
economic development remain major issues.
population is of working age). It is a large producer of
U.S. Engagement with Indonesia
natural gas and oil, as well as critical minerals including
nickel, and a major supplier of natural resources to
The United States engages Indonesia across a wide range of
Northeast Asia, including Japan, South Korea, and China. It
issues, encouraging Indonesians to deepen their democratic
is the world’s leading exporter of palm oil. Indonesia is the
institutions, promote religious tolerance and the rule of law,
24th-largest U.S. trading partner, ranking below neighbors
develop a more liberal trade and investment climate,
such as Singapore, Malaysia, and Thailand. Bilateral trade
combat terrorism, and engage on international issues such
totaled $47.5 billion in 2022.
as maritime security and climate change. In 2023, the
United States and Indonesia upgraded their bilateral
Indonesia has imposed some policies criticized by foreign
“Strategic Partnership” to a “Comprehensive Strategic
investors, including foreign ownership restrictions and local
Partnership,” continuing minister-level dialogues intended
content requirements in some industries, and has forced
to address maritime cooperation, defense cooperation,
renegotiation of contracts for some energy and mining
economic growth and development, energy cooperation,
projects. President Widodo has actively courted FDI,
cooperation on global and regional issues, and people-to-
particularly in the infrastructure sector. U.S. investment in
people ties. Most U.S. assistance supports health,
Indonesia totaled $11.9 billion in 2022.
environmental, and educational initiatives. Indonesia is part
of the Indo-Pacific Maritime Security Initiative, which aims
Human Rights Issues
to strengthen Naval and Coast Guard capabilities in the
Most observers say Indonesian human rights protections
region. In 2022, the two countries finalized several
have improved over the past 15 years. Abuses still occur,
agreements, including a $698 million Millennium
including some by members of the military. Alleged abuses
Challenge Compact supporting climate-conscious
are particularly frequent in areas with simmering
infrastructure development, as well as pacts on Coast Guard
secessionist movements such as Papua. Islamist
capacity building and support for sustainable fishing,
organizations have harassed and attacked minority religious
marine biodiversity, and reducing plastic pollution.
groups, including Christians and other Islamic sects, such as
the Shia and Ahmadiyya. In 2016, large demonstrations by
Security Cooperation
Islamist groups opposed to Jakarta’s Christian governor
U.S.-Indonesia security cooperation has deepened over the
raised concerns about creeping intolerance.
past decade, with the two militaries conducting around 170
annual engagements, including on maritime security
The State Department’s 2023 Trafficking in Persons report
cooperation and combatting terrorism. This represents a
listed Indonesia as a Tier 2 nation and reported it “does not
sharp change from the early 2000s, when U.S. policies
fully meet the minimum standards for the elimination of
enacted in response to earlier human rights abuses by
trafficking but is making significant efforts to do so.”
Indonesian forces severely limited bilateral engagements. In
Corruption is widespread: Transparency International
1999, Congress suspended all International Military
ranked Indonesia 110th out of 180 nations in its 2022
Education and Training (IMET) programs with Indonesia
Corruption Perceptions Index, below other Asian nations
after Indonesia’s military, particularly the Kopassus special
such as China and India. Many observers say Indonesia’s
forces—headed at the time by Defense Minister Prabowo—
democratic system and independent press and civil society
and militia proxies killed over 1,000 in Timor-Leste
are creating a more accountable system in which people can
following Timor’s vote to pursue independence from
choose their leaders and participate in policymaking.
Indonesia. Programs were restarted on a limited basis in
Environmental Issues
2002 and, from 2005 to 2010, the United States largely
normalized military relations. In 2010, the United States
The United States conducts numerous environmental and
resumed limited IMET programs with Kopassus.
clean-energy programs in Indonesia, which is among the
world’s most biodiverse countries. In 2022, the United
Militancy and Terrorism
States, Japan, and Indonesia announced a Just Energy
Indonesia has had a long-running issue of domestic
Transition Partnership (JETP), aimed at accelerating private
militancy, and the government has expressed concern that
investment in sustainable energy. Indonesia has made some
the Islamic State (IS) is conducting recruiting in Indonesia’s
progress on environmental issues such as deforestation, but
national language (Bahasa Indonesia). In 2018, Indonesia
its record of environmental protection is constrained by
amended its 2003 Anti-Terrorism Law, lengthening periods
weak rule of law and poor land management. Because of
for which suspects can be detained without charge and
deforestation, Indonesia is a major emitter of greenhouse
broadening police rights to prosecute those who join or
gases—the world’s third- or fourth-largest when emissions
recruit for militant groups. U.S.-Indonesia counterterrorism
from deforestation are considered. Illegal logging remains
cooperation is close; the United States and Australia helped
rampant. In the 1960s, forests covered 82% of Indonesia;
to create Indonesia’s elite counterterrorism unit, Densus-88,
today, they cover 49%. Extensive wildfires cause severe air
which has weakened militant groups such as Jemaah
pollution each year. Climate change has led to recurrent
Islamiyah (JI), an Al Qaeda affiliate responsible for several
poor harvests. In 2022, Indonesia twice instituted palm oil
bombings in the 2000s.
export bans, increasing the global costs of cooking oil.
Ben Dolven, Specialist in Asian Affairs
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Indonesia

IF10247


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https://crsreports.congress.gov | IF10247 · VERSION 52 · UPDATED

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