Indonesia

Republic of

Indonesia consists of over 17,000 islands and has more than 238 million inhabitants representing a variety of ethnic and religious groups, languages and cultures.A relatively young democracy, Indonesia has the largest Muslim population in the world. Various reforms were launched after the fall of PresidentSuharto in 1998.

The Indonesianarchipelago became a Dutch colony in 1789 and remained so for one and a half centuries, with the exception of the years between 1811 and 1816. However, certain regions did not actuallycome under Dutch ruleuntil the end of the 19th century.In addition to this historical dimension, there are also close social ties between the two countries. This is reflected in their ethnic composition: through migration, more than 400,000 first and second-generation Indonesians live in the , while an estimated 4,000 Dutch citizens are resident in Indonesia.

Relations with the Netherlands

Indonesia and the Netherlands maintain relations in a great many areas including government, the economy, sociocultural issues and science and research. The Netherlands supports the political and economic reform process in Indonesia, which has recently served to deepen bilateral relations and cooperation between the two countries.

The political and moral acceptance of the ‘Proklamasi’ 60 years after its declaration and the presence of the Dutch foreign Ben Bot at its commemoration in Indonesia on 17 August 2005 were seen by both countries as milestones in the normalisation of bilateral relations, marking the beginning of a further intensification of bilateral cooperation in a variety of policy fields. On this occasion, PresidentYudhoyono said that the Netherlands’ gesture paved the way for both countries to turn towards the future together. During the visit by Prime Minister to Indonesia in April 2006 it was agreed that bilateral cooperation would be stepped up in various policy areas.

In order to set the seal on this rapprochement and to affirm the excellent relations between the two countries, the then foreign ministers and Hassan Wirajuda initialled a broad cooperative agreement in January 2009 in the form of a Comprehensive Partnership Mechanism for Dialogue and Cooperation (CP). This set out a structured format for broad

AVT11/BZ103180 Indonesia 1 cooperation and the range of topics that would shape the bilateral dialogue: foreign policy, stability and security, human rights, sustainable development and economic cooperation, and cooperation on social, cultural and educational issues.

Bilateral visitsarefrequent, involving members of the Dutch and Indonesian governments and civil service. This has done much to open up diplomatic and political channels between the two countries and deepen the political dialogue between them.All this underlines the excellent state of relations between the two countries. A State visit by PresidentYudhoyono to the Netherlands in October 2010 had to be cancelled at the last moment.

Political situation

During the economic crisis in Asia between 1997 and 1998 the Suharto regime fell after losing the support of the established political and military order. In May 1998 an interim government was set up under PresidentHabibie, which called democratic parliamentary elections before June 1999. A new president was elected in October of that year – Abdurrahman Wahid, widely known in Indonesia by his nickname Gus Dur. Although extremely popular, he proved unable to lead the coalition government effectively and came under major pressure from his political and military opponents. Eventually, he was removedfrom office following a peaceful and democratic procedure. Abdurrahman Wahid was replaced by the then vice-president, Megawati Sukarnoputri. During direct presidential elections in 2004 she lost to SusiloBambangYudhoyono, who took office in October of that year as Indonesia’s first directly elected president. He was re-elected for a second five-year term of office in 2009.

In December 2004 the province of Aceh was hit by a tsunami. Over 100,000 people were killed and much of the coast was devastated.

President Yudhoyono’s policy seeks to further boost democratisation, economic growth, poverty reduction, education, healthcare and administrative reform, and to stamp out corruption. Although more and more cases of corruption are being investigated and successfully prosecuted by the Corruption Eradication Commission (KPK), it remains a serious problem. A start has been made on administrative reform. In particular, the rigorous decentralisation of government, which delegates a great deal of responsibility to district authorities, is posing major challenges to the government’s ability to implement its policy.

Since the end of the Suharto era, the human rights situation in Indonesia has improvedconsiderably, although problems still regularly crop up. The relatively free Indonesian

AVT11/BZ103180 Indonesia 2 press is instrumental in exposing abuses. The Netherlands supports programmes that strengthen human rights NGOs, boost police capacity, improve the judiciary and promote interfaith contacts.

Indonesia is a major player within its geographical region. Itis the most influential member of ASEANwhichit is chairing in 2011. Under the chairmanship of President Yudhoyono, Indonesia has organised the annual Bali Democracy Forum since 2008, which serves as a platform for regional dialogue about democratisation and human rights. Indonesia is also a member of the G20 group and a major stakeholder in the climate agenda.

The economy

Economically speaking, Indonesia has recovered from the crisis of 1998: the average growth rate is between 5%and 6% per year, inflation is reasonably under control at between 6% and 7%, and government debt has fallen as the country’s investment climate has improved. Despite active efforts by the government to tackle corruption across the board, this problem continues to hamper Indonesia’s economic growth and development. Poverty reduction is stillone of Indonesia’s chief aims, since an estimated 50% of the population still live on less than two dollars a day.

Economic growth is still primarily driven by exports of raw materials and increasing domestic consumption. Investments in industrial production are stagnating, so relatively few jobs are being created. The government is making efforts to improve the investment climate but there are still problems with red tape and bureaucracy.

Indonesia’s total trade volume with the Netherlands in 2010 was worth €2.35 billion, the Dutch trade deficit being €1.4 billion. Imports from Indonesia consist of animal and vegetable fats, organic chemical products, raw rubber, furniture and shoes. The Netherlands mainly exports dairy products and eggs, vehicles, machines and paper pulp.

The Netherlands is supporting economic development in Indonesia, throughvarious channels, including the Indonesian Netherlands Association (INA, the bilateral Chamber of Commerce) and the following programmes: • Infrastructure Development Facility (ORIO) • Programme for Cooperation with Emerging Markets (PSOM) • Indonesia Facility (INDF) • public-private partnerships (PPPs)

AVT11/BZ103180 Indonesia 3 • Management Cooperation Programme (PUM) • Economic Cooperation Projects Programme (PESP) • Centre for the Promotion of Imports from Developing Countries (CBI). For up-to-date information please see the NL Agency website: http://www.agentschapnl.nl/en .

Culture

At the cultural level Indonesia and the Netherlands have a great deal of contact, both through private channels and with government support.

Institutions such as the Erasmus House and the three Indonesian Dutch cultural centres on Java regularly put on performances inDutch or Indonesian, or a combination of the two. The cultural programme also promotes public discussion of social themes such as the environment, history and gender.

Through the Culture and Development programme, an active contribution is being made to supporting and developing the Indonesian cultural sector, notably through cooperation with the Tropenmuseumin Amsterdam and exchange programmes involving artists from both countries.

On the international culturalpolicy front, the Netherlands and Indonesia will be further fleshing out cooperation on the arts, theatre, museums and support for programmes targeting the preservation and accessibility of cultural heritage linked to the historic past shared by the two countries.

Development cooperation

Indonesia is one of the 15 countries identified in the government’s policy letter on development cooperation of March 2011. In the future, development cooperation will focus more specifically on areas where the Netherlands offers particular added value in Indonesia and whereopportunities exist for Dutch business. The priority themes are water and food security. The programmes targeting higher education and good governance serve to support these themes. In addition, the good governance programme will put greater emphasis on the legal sector, where the Netherlands has obvious opportunities on account of its shared history with Indonesia. Increasingly, Dutch aid will be implemented through bilateral

AVT11/BZ103180 Indonesia 4 channels, and it will be tailored to match other aspects of foreign and economic policy. Close cooperation with the Indonesian government will be of the essence.

The Netherlands’total development budget for Indonesia was approximately €60 million in 2011. Where possible, relations are being expanded by involving Dutch partners in existing bilateral programmes. These include the following ministries:Economic Affairs, Agriculture and Innovation;Infrastructure and the Environment;Security and Justice;Education, Culture and Science; and Defence. Also involved are non-governmental and business partners such as the Netherlands Institute for Multiparty Democracy (NIMD), the National Police Services Agency (KLPD), theAssociation of Netherlands Municipalities (VNG) and civil society organisations, including Hivos, Cordaid, Plan and ICCO.

In addition, a number of public-private partnerships are currently working to enhance the business climate, eradicate bird flu and provide better drinking water facilities.The WSSD Market Access Palm Oil partnership was introduced in 2005 . Within the partnership, the International Round Table on Sustainable Palm Oil agreed international principles and criteria in November 2005. Within the partnership on prawns, capacity building is making a significant contribution to sustainable production methods and sustainable systems.

Treaties

For up-to-date information on bilateral treaties, please see the Ministry of Foreign Affairs Treaty Database: (www.minbuza.nl/Key_Topics/Treaties/Search_the_Treaty_Database)

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