Asia's Turning Point: An Introduction to Asia's Dynamic Economies at the Dawn of the New Century

14

Indonesia: The Start of the Post-Suharto Era

A Few Basics

Overview

Indonesia is the largest country in Southeast Asia in terms of both territory and population. It is the largest archipelagic state in the world, spanning one-tenth of the equator; the largest Muslim nation; and the world’s fourth most populous nation. Its land territory is 741,100 square miles and the population is 240 million people.

The country is spread over more than 17,000 islands, about 6,000 of which are inhabited. However, 60 percent of the population lives on just one—the island of Java. All the other islands, except Java and its close neighbor, Madura, are often referred to as the Outer Islands. Java is densely populated. The Outer Islands are sparsely populated. A big gap in the level of economic development between Java and the Outer Islands is one of the structural problems the country is facing.

Other large islands are Borneo (only the southern part of the island is Indonesian territory and this region is known as Kalimantan), Sumatra, Sulawesi, and the western half of New Guinea which is known as Papua. The east and south of Sumatra and southeastern Kalimantan are the most economically developed parts of the Outer Islands. The island of Bali has become an internationally recognized beach resort. Other territories lag far behind and the fruits of modernization are reaching them at a very slow pace.

By nominal gross domestic product (GDP), in 2007, Indonesia was twentieth in the world. It is a low-middle-income ...