CONFIDENTIAL WORLD WATCH® REPORT ­­ON­­ Indonesia Date: 07/02/2018 21:18:40 GMT / UTC UnitedHealthcare Global Risk | 2925 Briarpark Drive, 11th Floor | Houston, Texas 77042 | ph: (713) 430­7300 | email: [email protected] | url: www.uhcglobal.com World Watch® is confidential and is intended solely for the information and use of UnitedHealthcare Global's clients. Given the nature of the information, UnitedHealthcare Global does not guarantee the accuracy or completeness of the information because agencies outside the control of UnitedHealthcare Global contribute information to World Watch®. 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For Terms and Conditions go to Terms Of Use World Watch® Report from UnitedHealthcare Global Indonesia Executive Summary for Indonesia An ethnically and linguistically diverse country, Indonesia consists of 17,000 islands spanning across the Indian and Pacific oceans. The islands, which are generally grouped by region, include the Sumatra Islands, Kalimantan/Borneo Island, Java Island, Bali Island, Sulawesi Islands, Nusa Tenggara/Lesser Sunda Islands, Maluku/Spice Islands and Papua. Natural attractions ­­ such as beaches, active volcanoes and tropical forests ­­ proliferate across the islands. Diverse marine and wildlife, such as the Komodo dragon, serve to distinguish Indonesian biodiversity from the country’s Southeast Asian neighbors. The constitutional republic is the most populous Muslim­majority nation and fourth most populous country in the world. Indonesia is a politically stable country under the leadership of President Joko “Jokowi” Widodo. Since coming to office in 2014, Widodo has focused on reforms by attempting to crack down on corruption, end intolerance of minorities and promote economic growth. While continuing sectarian tension, civil unrest, corruption and terrorism have served as impediments to progress, Indonesia’s economy remains the largest in Southeast Asia, and relative political stability continues to attract increasing numbers of foreign investors. The overall assessment of threats in Indonesia is High. Crime varies according to traveler location on the various islands of Indonesia. Jakarta has a notably higher crime rate than other locations in the country, while tourist destinations such as Bali experience higher rates of opportunistic theft. Political and economic developments motivate frequent large­scale protests across Indonesia and have the potential to become violent. Separatist movements affect the security environment in some parts of the country, particularly Aceh and Papua provinces. Terrorism is a longstanding concern in the country, as evidenced by the 2018 Surabaya church bombings and occasional arrests of extremists and militant sympathizers. Natural disasters are a concern in Indonesia. The country’s position in an area known as the “Ring of Fire” makes it prone to seismic activity, and it is not uncommon for powerful and potentially devastating earthquakes to occur. Flooding is also relatively common during the rainy season, which runs from November to March. Indonesia Information Country Facts Current Analysis Official Republic of Indonesia Country Name President Joko Widodo has faced a number of challenges to his attempts to Type Of Republic reform socially and economically since his election in 2014. Government Repeated incursions by Chinese vessels into Indonesian waters have Leadership President Joko Widodo increased tensions over the Natuna Islands in the South China Sea. Capital Jakarta The economy is expected to continue growing around 5 percent in 2018 as Official Bahasa Indonesia the government tackles projects and reforms to deregulate and attract Language investors. Population 265 million Political Situation Ethnic Javanese (40.1%), Sundanese Divisions (15.5%), Batak (3.6%), Madurese Indonesia has undergone significant political development over the past two (3%), Betawi (2.9%), Minangkabau decades, including the strengthening of the democratic process, the expansion (2.7%), Buginese (2.7%), of the political system to include multiple parties and the establishment of direct Bantenese (2%), Banjar (1.7%), Other (25.8%) presidential elections. Although continuing sectarian tension, civil unrest, corruption and terrorism have served as impediments to progress, the institution Religion Muslim (87.2%), Protestant (7%), of democracy within Indonesia is currently stable. Roman Catholic (2.9%), Hindu (1.7%), other or unspecified (1.3%) Testament to the country’s evolving political environment, in 2014 Joko “Jokowi” GDP Growth 5.1% Widodo won the presidential election in the first such victory by an individual Inflation 4% outside of the established political and military elite. Jokowi’s campaign promises Unemployment 5.4% ­­ which included ambitious plans to crack down on corruption, end intolerance of minorities and increase economic growth ­­ faced significant obstruction from Currency rupiah coalition partners outside of the president’s Indonesian Democratic Party of Office Work Monday­Friday Struggle (PDI­S) during his first year in office. While Jokowi has since Week World Watch® Report from UnitedHealthcare Global strengthened his hold over the ruling coalition, his efforts have only resulted in Time Zone UTC +7 (Sumatra, Java (Jakarta), modest improvements in the economic arena, while intolerance of minority Offset and West and Central Kalimantan) religious groups has arguably increased under his rule. Indonesia also remains among the most corrupt emerging economies in the Southeast Asian region, UTC +8 (Bali, Nusa Tenggara, South and East Kalimantan, and ranking 96 out of 180 on Transparency International’s 2017 Corruption Sulawesi) Perceptions Index. UTC +9 (Irian Jaya and Maluku) In addition to the obstacles presented by the cross­cutting interests of Jokowi’s Country Phone 62 coalition partners, the president has also faced social challenges. Most Code significantly, the rise in prominence of radical Islamist groups such as the Capital City 21 Islamic Defenders Front (IDF) have damaged Jokowi’s attempt to portray Phone Code Indonesia as a tolerant Muslim­majority nation. The extent of Indonesia's social Nationwide 110 (police), 113 (fire), 118 or 119 divide is likely to play out in local elections, which are scheduled to take place on Emergency (medical) 27 June 2018. The election results and preceding campaign period are also Number(s) expected to play a significant role in determining the likelihood of Jokowi's re­ Electricity 127­230 V, 50 cycles AC election on 17 April 2019; significant wins by hardline Islamist­supported candidates would serve as a detriment to Jokowi’s re­election potential. *Conversion to 230 volts is still in progress; however, complete in International Relations principle cities Plug Styles Types C and F Indonesia is one of several countries in Southeast Asia with competing claims in the South China Sea. Although Indonesia has generally been able to avoid disputes between China and neighboring countries, Indonesia’s claim to the Natuna Islands has threatened this neutrality. An incident in 2016 demonstrated this tension most significantly, when Indonesian naval vessels fired warning shots at a fleet of Chinese ships fishing in waters claimed by Indonesia, injuring one Chinese fisherman. In light of continuous Chinese incursions into Indonesian waters, President Jokowi has increased the country’s military presence on the islands, equipping Natuna with a port and extending the runway of the islands’ Ranai military air base. Economic Situation Indonesia’s economy is the largest in Southeast Asia and the country is the only one in the region included in the Group of Twenty (G­20) major global economies. According to recent data, the service sector accounts for the largest percentage of the economy at approximately 45 percent, followed by the manufacturing and agricultural sectors at 22 and 13.5 percent of GDP, respectively. Indonesia recorded a GDP growth of 5.1 percent in 2017; the country is expected to maintain or increase this growth rate in 2018. Despite an already relatively high and consistent growth rate, economic experts state that Indonesia has the potential to experience 6­8 percent growth rates if the government increases high­value, export­oriented manufacturing and takes advantage of opportunities in tourism, oil and gas. Currently, low­value manufacturing accounts for approximately 60 percent of manufacturing output; however, President Jokowi continues to implement economic policy packages in an effort to attract foreign investors who may expand export­oriented manufacturing. Standard & Poor’s upgrade of Indonesia’s sovereign credit rating to investment grade status in 2017 has assisted in these efforts, as the country has now obtained investment