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All About Indonesia
Origin of the name: The term “Indonesia” originated from a suggestion by Austrian scholar Adolf Bastian in 1884. Combining the Greek words “Indos” (India) and “Nesos” (islands), the name reflects the archipelago’s geographical nature and historical ties to India. Despite initial concerns about being perceived as an extension of India, the name “Indonesia” gained acceptance among Indonesian nationalists in the early 20th century. In 1928, the Indonesian Youth Congress officially endorsed “Indonesia” as the country’s future name. Upon gaining independence from Dutch rule in 1945, Indonesia formally adopted “Indonesia” as its official name.
Origin & Inspiration for the Flag: The Indonesian flag, known as “Sang Saka Merah Putih” (Red and White), has a rich history dating back centuries. Its colors, red and white, are believed to have originated from several sources :
- Majapahit Empire (13th-16th century): The flag’s design is likely inspired by the banner of the Majapahit Empire, a powerful Hindu-Buddhist kingdom that ruled over much of Southeast Asia.
- Austronesian Mythology: Some scholars suggest that the colors represent the duality of Mother Earth (red) and Father Sky (white), a common theme in Austronesian mythology.
- Revolution Against Dutch Rule: During the Indonesian struggle for independence from the Netherlands (1945-1949), the red and white flag became a powerful symbol of resistance and unity.
Early Use and Adoption:
- 19th Century: The red and white colors gained prominence in the 19th century as symbols of Indonesian identity and resistance against Dutch colonialism.
- 1928: The colors were officially adopted by the Indonesian nationalist movement during the Second Indonesian Youth Congress.
- August 17, 1945: The Indonesian flag was formally adopted on August 17, 1945, three days after the country declared independence.
Moments to Remember:
- Surabaya Incident (1945): During the Battle of Surabaya, Indonesian youths famously tore the blue strip off a Dutch flag and raised it as the Indonesian flag, symbolizing their defiance against colonialism.
- Transfer of Sovereignty (1949): The Indonesian flag was hoisted again on December 27, 1949, marking the formal transfer of sovereignty from the Netherlands to Indonesia.
Symbolism and Meaning:
The colors of the Indonesian flag have various interpretations:
- Red: Represents courage, bravery, and strength.
- White: Represents purity, honesty, and peace.
- The flag also embodies the ideals of unity, freedom, and national pride for the Indonesian people.
Capital City of Indonesia: The current capital city of Indonesia is Jakarta, a bustling metropolis with a rich history dating back centuries. As the largest city in Southeast Asia, Jakarta boasts a vibrant cultural scene, and a strategic economic hub, and serves as the political centre of the nation. However, its continued growth has brought challenges such as overcrowding, infrastructure strain, and environmental concerns. Recognizing these issues, the Indonesian government has embarked on an ambitious plan to relocate the capital to a new, planned city called Nusantara. Situated in East Kalimantan, Nusantara is envisioned as a modern, sustainable, and resilient city designed to address the shortcomings of Jakarta.
The move to Nusantara aims to alleviate the pressure on Jakarta, allowing it to focus on its role as a major economic and cultural center. Additionally, Nusantara presents an opportunity to create a future-proof capital, equipped with cutting-edge technology and infrastructure, and designed to withstand environmental threats like rising sea levels. While the relocation process is still ongoing and faces various hurdles, the potential benefits of establishing Nusantara as the new capital city of Indonesia are significant. It marks a bold step towards addressing the challenges of urbanization and creating a sustainable future for the nation.
History & Independence: Indonesia’s history stretches back thousands of years, marked by the rise and fall of powerful kingdoms, periods of colonization, and ultimately, the struggle for independence. Here’s a brief timeline of some key events:
Pre-Colonial Period (Before 1602)
- 4th Century BCE: Earliest known stone inscriptions appear in East Kalimantan.
- 4th Century CE: The Hindu kingdom of Tarumanagara emerges in West Java.
- 7th Century: Srivijaya, a powerful Buddhist kingdom, dominates the maritime trade in Southeast Asia.
- 8th Century: The Hindu-Buddhist Sailendra dynasty builds the majestic Borobudur temple in Central Java.
- 13th Century: The Majapahit Empire, led by Gajah Mada, unites much of present-day Indonesia and becomes a major regional power.
Colonial Period (1602-1945)
- 1602: The Dutch East India Company (VOC) establishes a foothold in Indonesia, marking the beginning of Dutch colonial rule.
- 17th-18th Centuries: The Dutch exploited Indonesia’s natural resources, particularly spices, while facing resistance from local rulers.
- 19th Century: The Dutch expanded their control over the archipelago, consolidating their colonial administration.
- Early 20th Century: Indonesian nationalists begin to emerge, demanding independence from Dutch rule.
Independence and Modern Indonesia (1945-Present)
- 945: Sukarno and Hatta declare independence for Indonesia on August 17th, triggering the Indonesian National Revolution.
- 1946: Linggadjati Agreement was signed, which called for the creation of a United States of Indonesia with the Netherlands as a partner. However, the Linggadjati Agreement broke down, and the fighting resumed.
- 1948: Renville Agreement was signed, which granted the Dutch control over much of Indonesian territory. However, the Indonesian government rejected the agreement, and the fighting continued.
- 1949: After four years of struggle, Indonesia gains full independence from the Dutch trough Round Table Conference. This conference was held in The Hague, Netherlands, to discuss the future of Indonesia. The conference resulted in the Roem-Van Roijen Agreement, which called for the transfer of sovereignty from the Netherlands to Indonesia. This marked the end of the Indonesian National Revolution and the beginning of a new era for Indonesia as an independent nation.
- 1950s-1960s: Sukarno leads the country as president, pursuing a policy of neutrality in the Cold War and promoting national unity.
- 1967: Suharto takes power in a military coup, ushering in an era of authoritarian rule and economic development.
- 1998: Suharto resigns amidst widespread protests, leading to a period of political and economic reforms. During this year, B.J. Habibie became the third President of Indonesia.
- 1999: Abdurrahman Wahid elected as Indonesia’s first democratic president after Suharto’s fall. He promoted interfaith dialogue and social justice.
- 2001: Abdurrahman Wahid was removed from office by the People’s Consultative Assembly due to heath Concern. Megawati Sukarnoputri became president because she was Abdurrahman Wahid’s vice president. She focused on economic stability and poverty reduction
- 2004: Indonesia holds its first direct presidential elections, marking a significant step towards democracy. Susilo Bambang Yudhoyono become the Indonesia’s first directly elected president. He focused on democracy and human rights
- 2014: Joko Widodo becomes president, focusing on economic growth, infrastructure development, and social programs.
From its ancient roots to its modern-day achievements, Indonesia has forged a unique identity shaped by diverse cultures, religions, and historical influences.
Government: Indonesia operates under a presidential republic with a unitary system of government, meaning power is centralized at the national level. The President leads the country as both the head of state and the head of government, elected by popular vote for a five-year term with a single re-election. The Vice President accompanies the President as their deputy.
Indonesia’s bicameral legislature comprises the People’s Consultative Assembly (MPR) and the People’s Representative Council (DPR). The MPR holds the highest legislative authority, consisting of 575 members: 550 elected by popular vote and 25 appointed by the President. The DPR serves as the lower house, with 550 members all elected through popular vote.
The Supreme Court oversees Indonesia’s judicial system, acting as the highest court with final rulings on all legal matters. The Supreme Court comprises 50 justices appointed by the President with the approval of the DPR.
Indonesia is divided into 34 provinces, each governed by a governor. These provinces are further subdivided into regencies and cities, headed by regents and mayors, respectively. Districts and sub-districts, led by district heads and sub-district heads, respectively, make up the final administrative level.
The Indonesian government shoulders the responsibility of providing essential services to its citizens, including education, healthcare, and social welfare. Additionally, the government regulates the economy and maintains law and order.
Official Language: Indonesian is the official language of Indonesia and is spoken by most people in the country. English is also spoken by many people in big cities, but it is not as widely used. The culture of Indonesia varies from region to region. In Jakarta, the original Betawi culture is not as visible as it once was, but it is still present in the language, which is similar to Indonesian but with different pronunciation and intonation. In other regions of Indonesia, such as Java and Sumatra, regional languages are still commonly used, even in official settings. If you want to communicate directly with local residents in these areas, you may need an English translator. Translators are readily available, especially in areas near tourist destinations.
Indigenous Language: Indonesia is a diverse archipelago with a rich cultural tapestry, including a multitude of indigenous languages. The country is home to over 700 languages, making it one of the most linguistically diverse nations in the world. These languages are typically categorized into several major groups, such as Austronesian, Papuan, and others. Bahasa Indonesia, a standardized form of Malay, serves as the official language and a lingua franca for communication across diverse ethnic groups. However, many communities maintain their indigenous languages, which play a crucial role in preserving cultural heritage and identity. The Austronesian language family dominates in Indonesia, encompassing languages like Javanese, Sundanese, and Balinese. Additionally, the Papuan languages are spoken in Papua and West Papua provinces, contributing to the linguistic diversity.
Despite this richness, some indigenous languages face the threat of extinction due to factors like urbanization, migration, and the influence of dominant languages. Efforts are being made to document and revitalize these languages to ensure their survival and cultural significance for future generations.
Business Culture: Indonesia is culturally diverse, the standard way of addressing any present person upon arrival and departure from any gathering is a handshake.
WhatsApp is the most widely used online communication application, used for both business communication and communication with government officials. Companies may not respond to emails very quickly, especially if the sender is not well known.
Invitations to official events usually specify the appropriate dress code. Batik is a formal attire commonly worn in meetings by both Indonesian and foreign professionals, regardless of their gender. Long-sleeved batik shirts are considered particularly formal and are a popular choice. For men, trousers, shirts, and ties are standard business attire. Women typically wear a two-piece suit with a blazer or a simple dress with sleeves in business settings.
Due to Jakarta’s frequent traffic congestion, it’s crucial to factor in ample travel time for all meetings. Many business meetings are held over lunch (between 11:30 AM and 2:00 PM) or dinner (between 6:30 PM and 8:30 PM). It’s best to avoid scheduling meetings on Friday afternoons, as this is a day of prayer with extended lunch breaks for businesses (typically 11:00 AM to 2:00 PM).
Indonesia boasts a rich cultural tapestry, deeply influenced by its diverse religious landscape. While Islam is the majority faith, with 88% of the population practicing, the nation embraces a spirit of tolerance and respect for all denominations. Alcohol and pork are generally avoided by those following Islamic dietary laws, but many restaurants cater to a broader audience. Before ordering, inquiring about the availability of alcohol or pork dishes is a considerate gesture, demonstrating sensitivity to cultural and religious practices. This simple act of respect fosters understanding and allows everyone to enjoy a delicious and culturally enriching dining experience.
Demographics: The total population of Indonesia in 2023 is 277.5 million. Indonesia’s population is expanding at a rate 1.08% per annum. A large population also reflects the amount of manpower resources. Despite the unequal population density. DKI Jakarta is the most populous province and highest population density.Based on Statistics Indonesia (BPS) in 2023, 69.28% of the population will be in the productive age group (15-64 years). Meanwhile, the percentage of toddlers and children is much higher than the elderly. In the future, Indonesia’s population is estimated to be above 300 million in 2033. The dependency ratio will be above 50% after 2037. The demographic bonus will be experienced until 2037.
Time Zones: Indonesia encompasses three distinct time zones due to its extensive geographical coverage along the equator.
These time zones are as follows:
1. Western Indonesian Time (WIB):
- UTC+7:00
- WIB is utilized in the western regions of Indonesia, including significant islands like Sumatra, Java, and the capital city Jakarta.
2. Central Indonesian Time (WITA):
- UTC+8:00
- WITA is applicable to central areas, covering islands such as Bali, Sulawesi, and portions of Kalimantan (Borneo).
3. Eastern Indonesian Time (WIT):
- UTC+9:00
- WIT is observed in the eastern part of the country, encompassing regions like Papua, Maluku, and certain parts of Kalimantan.
Indonesia does not adopt Daylight Saving Time, ensuring that the time differences remain consistent throughout the year. The significant variation in time zones is a result of Indonesia’s archipelagic nature, spanning a wide range of longitudes. For instance, when it’s 10:00 AM in Jakarta (WIB), it’s 11:00 AM in Makassar (WITA) and 1:00 PM in Jayapura (WIT). Travelers to Indonesia should take note of the different time zones and adjust their clocks accordingly to avoid any scheduling mishaps.
Climate: Indonesia, an archipelago nestled amidst the Indian and Pacific Oceans in Southeast Asia, boasts a rich tapestry of ecosystems and a mesmerizing diversity of flora and fauna. With over 270 million inhabitants, Indonesia stands as the world’s fourth most populous nation.
The climate of Indonesia is classified as tropical, characterized by hot and humid weather throughout the year. Although the climate varies by region, with the highlands of Sumatra and New Guinea experiencing cooler temperatures than the lowlands. The eastern islands of Indonesia generally receive less rainfall than the western islands.
The average annual temperature in Indonesia hovers around 27°C , with distinct wet and dry seasons. The rainy season extends from October to April, while the dry season spans from May to September.
With a diverse climate comes several unique features:
- The average humidity in Indonesia is around 80%.
- The average annual rainfall in Indonesia is around 2,000 mm (79 inches).
- The strongest typhoons in Indonesia usually occur between November and March.
Climate change poses a substantial threat to Indonesia. Rising sea levels, extreme weather events, and altered rainfall patterns are anticipated consequences of climate change. These changes are likely to have a significant impact on Indonesia’s economy, infrastructure, and agriculture.
Therefore, it is crucial for Indonesia to implement climate adaptation and mitigation strategies to address the challenges posed by climate change and protect its rich biodiversity and the well-being of its people.
Borders Of Indonesia: Indonesia is the largest archipelagic country worldwide with more than 17,000 islands. This also made Indonesia shares several land and maritime borders with neighbouring countries.
Land Borders
- Indonesia shares a 1,881 km (1,169 mi) land border with Malaysia on the island of Borneo. The border aligns with the equidistant line between their baselines.
- Indonesia shares an 820 km (510 mi) land border with Papua New Guinea on the island of New Guinea. The border primarily follows mountains and rivers.
- Indonesia shares a 497 km (309 mi) land border with East Timor on the island of Timor. The border was established in 2002 following East Timor’s independence from Indonesia.
Maritime Borders
- Indonesia and Australia share a maritime border in the Arafura Sea and the Timor Sea. An ongoing maritime dispute exists between the two countries regarding the extent of their exclusive economic zones in the Timor Sea.
- Indonesia and India share a maritime border in the Andaman Sea. Both countries have agreed to collaborate on maritime security and search and rescue operations.
- Indonesia and Malaysia share maritime borders in the Malacca Strait, the Strait of Singapore, and the Celebes Sea. Numerous ongoing maritime disputes exist between the two countries, including over the sovereignty of several islands.
- Indonesia and the Philippines share a maritime border in the Celebes Sea, the Sulu Sea, and the Mindanao Sea. The two countries have agreed to cooperate on maritime security and fisheries management.
- Indonesia and Singapore share a maritime border in the Strait of Singapore. The two countries maintain a close economic relationship and have cooperatively managed shipping traffic in the strait.
- Indonesia and Thailand share a maritime border in the Andaman Sea. Both countries have agreed to cooperate on maritime security and fisheries management.
- Indonesia and Vietnam share a maritime border in the Natuna Sea and the Gulf of Thailand. The two countries have agreed to collaborate on maritime security and search and rescue operations.
Indonesia’s borders hold strategic importance for its national security and economic development. Maritime borders facilitate international trade and shipping.
Size of Indonesia: Indonesia is the 14th largest country in the world, spanning over 5,100 km east to west and 1,700 km north to south. With over 17,000 islands, Indonesia is the world’s largest archipelagic state. New Guinea, shared with Papua New Guinea, is Indonesia’s largest island. Major islands include Sumatra, Java, Kalimantan, Sulawesi, and Halmahera. Indonesia’s capital, Jakarta, lies on Java’s northwestern coast. Indonesia’s rich history and culture are complemented by its diverse population of over 270 million, making it the fourth most populous country globally. Indonesia operates as a republic under a presidential system, divided into 34 provinces.
Religion: Indonesia is a country with a multitude of religions, with the largest Muslim population in the world, with 231 million Muslims, making up 87.2% of the total population. Other religions include Christianity (10.3%), Hinduism (1.7%), Buddhism (0.7%), and Confucianism (0.0%). Indonesia’s constitution guarantees freedom of religion for all citizens, and the government generally respects this right in practice. However, there have been some instances of religious intolerance and violence, particularly against minority religious groups.
- Islam is the dominant religion in Indonesia, and it has shaped the country’s culture and society in many ways. Muslims in Indonesia practice a variety of traditions, including fasting during Ramadan, performing the Hajj pilgrimage to Mecca, and celebrating Islamic holidays. Indonesia is also home to a rich tradition of Islamic scholarship.
- Christianity is the second-largest religion in Indonesia, with approximately 28 million adherents.
- Hinduism and Buddhism have been practiced in Indonesia for centuries, and they continue to play an important role in the country’s religious landscape. Hinduism is most strongly practiced on the island of Bali, where it is an integral part of the Balinese culture. Buddhism is more widely practiced in Indonesia, but it is still a minority religion.
- Confucianism has also been influential in Indonesia, particularly among the Chinese minority.
Indonesian Currency: The Indonesian Rupiah (Rp, IDR) serves as the country’s official currency, managed by Bank Indonesia.
History of the Rupiah
The Rupiah’s introduction occurred in 1949, replacing the Dutch guilder following Indonesia’s independence. The term “rupiah” stems from the Sanskrit word “rupam,” meaning “silver.”
Navigating the Rupiah
Rupiah coins come in denominations of 25, 50, 100, 200, 500, 1,000, and 2,000 rupees. Rupiah banknotes are available in denominations of 2,000, 5,000, 10,000, 20,000, 50,000, and 100,000 rupees.
Exchange Rate Dynamics
The Rupiah’s exchange rate against major currencies experiences fluctuations. As of today (7/12/23), 1 GBP is equivalent to approximately 19,500 IDR.
https://www.xe.com/currencyconverter/convert/&Amount=1&From=GBP&To=IDR
Practical Tips for Using Rupiah
- Carry cash as not all places accept credit cards.
- Be vigilant against counterfeit currency.
- Bargain when shopping at traditional markets.
- Tipping is not customary in Indonesia, but a small gratuity
- is appreciated for exceptional service.
Indonesian Food
A Journey of Flavors and Traditions
Indonesia’s culinary scene is a vibrant tapestry woven with diverse regional influences, unique ingredients, and rich cultural heritage. From the fiery spices of Sumatra to the delicate seafood dishes of Sulawesi, Indonesian gastronomy offers a captivating exploration of flavors and textures.
Some Regional Delights:
Sumatra: This volcanic island boasts bold and spicy flavors, with dishes like rendang (slow-cooked meat in rich gravy), nasi padang, sate padang (grilled skewered meat with peanut sauce), and gulai (meat or vegetables cooked in coconut milk).
Java: Java’s cuisine is known for its balance of sweetness, savory, and spicy notes. Popular dishes include nasi goreng (fried rice), gado-gado (vegetable salad with peanut sauce), and gudeg (jackfruit dish).
Bali: Balinese cuisine is a harmonious blend of Indonesian and Indian influences, featuring dishes like bebek betutu (roasted duck in spicy sauce) and babi guling (suckling pig)
Sulawesi: Seafood takes center stage in Sulawesi, with dishes like ikan bakar (grilled fish), tinutuan (savory porridge), and panada (fried savory pastries).
Things to see and do
Indonesia is an archipelago country with over seventeen thousand islands which offers a diverse range of activities and leisure options for any traveller. Indonesia has something for everyone from thrilling adventures and stunning natural landscapers to vibrant cultural experiences and stunning beach vacations. There are several most popular destinations;
Borobudur Temple
Borobudur Temple, nestled in Indonesia’s lush green Kedu valley, is a treasure trove of history, culture, and spirituality. Built in the 9th century, it stands as the world’s largest Buddhist monument, showcasing a captivating blend of Indian and Indonesian influences. Intricate sculptures and reliefs whisper tales of Buddha’s life and teachings, while the temple’s nine levels symbolize the path to enlightenment. Witness the breathtaking sunrise over the temple and surrounding landscape, or simply soak in the peaceful atmosphere that has beckoned pilgrims for centuries. Borobudur is not just a historical marvel; it’s a gateway to the soul. Experience the beauty of this UNESCO World Heritage Site and embark on a journey of self-discovery.
Lake Toba
Lake Toba in Indonesia is a compelling destination for many reasons. Its breathtaking scenery, shaped by a massive volcanic eruption, makes it a unique natural wonder and appeals to those interested in geology. The presence of the Batak people adds cultural richness, with opportunities to experience traditional architecture, music, and dance. Samosir Island, situated within the lake, provides a tranquil setting for exploration and relaxation, along with historical sites and traditional villages. Outdoor enthusiasts can enjoy activities like hiking and boating, while hot springs offer a relaxing experience. The region’s unique Batak cuisine adds a delicious dimension to the visit. Lake Toba’s accessibility from major cities and well-developed infrastructure make it convenient for tourists to explore, offering a well-rounded travel experience that caters to nature lovers, cultural enthusiasts, and adventure seekers alike.
Labuan Bajo
Labuan Bajo in Flores, Indonesia, is an appealing destination. It is acting as the primary entry point to Komodo National Park, it provides access to the fascinating Komodo dragons, as well as opportunities for island hopping to discover pristine beaches and diverse marine life through snorkeling and diving. The region features iconic spots like Padar Island with its panoramic views and the distinctive Pink Beach. Visitors can also explore caves, engage in cultural experiences, and enjoy stunning sunsets over the harbor. Labuan Bajo’s well-developed infrastructure and convenient access further enhance its allure as a destination that seamlessly combines natural wonders, marine biodiversity, and cultural richness.
Raja Ampat
Raja Ampat is an Indonesian archipelago located in the western part of Papua, known for its unparalleled marine biodiversity and stunning landscapes. Comprising over 1,500 islands, the region is a haven for divers and nature enthusiasts. Raja Ampat’s underwater world is celebrated for its diverse coral reefs, vibrant marine life, and pristine waters. The islands feature lush greenery, unique bird species, and picturesque scenery. This remote and relatively untouched destination attracts eco-tourists seeking to explore its rich natural heritage. Raja Ampat is recognized as one of the most biodiverse marine environments globally, making it a top destination for those passionate about marine conservation and sustainable tourism.
Monas ( Monument Nasional )
Monas, the National Monument, stands tall in the heart of Jakarta, Indonesia. This 132-meter obelisk serves as a powerful symbol of the nation’s fight for independence. Construction of Monas began in 1961 and was completed in 1975.
The design incorporates several significant elements
- The obelisk itself, shaped like a lingam, represents the phallus of Shiva, a Hindu god associated with creation and destruction.
- The flame at the top, coated with 35 kilograms of gold leaf, symbolizes the burning spirit of independence.
- The base of the monument houses a museum with dioramas depicting Indonesian history, from the ancient kingdoms to the modern republic.
There are a exhibitions museum inside Monas. Monas is a must-visit for anyone wanting to experience the heart of Indonesia’s history and culture. Its towering presence serves as a constant reminder of the nation’s resilience and spirit.
Jakarta Fashion Week
JFW is an annual fashion event held in Jakarta, Indonesia. It is considered to be the largest fashion event in Southeast Asia and was first held in 2008. JFW is a week-long event that features a variety of activities, including fashion shows, workshops, and exhibitions. The event is open to the public and attracts a large number of visitors each year. JFW is a major contributor to the Indonesian fashion industry and has helped to put Indonesian fashion on the map. JFW also offers a unique perspective on Indonesian fashion. You’ll see styles and trends that are not typically presented in Western media. If you’re visiting Jakarta during JFW, it’s definitely worth adding this event to your itinerary. It’s a great opportunity to experience Indonesian fashion, culture, and food all in one place.
Living In Indonesia
Housing and Living Cost
Indonesia has various types of housing. In urban areas, residents may live in landed houses, as well as in apartments. Until now, foreigners are still not allowed to own landed houses or apartments, although for apartment, its lease agreement has very long period, namely 30 years with an extension of 20 years. The Job Creation Law, as referred to in Article 144 paragraph (1), stipulates that the ownership of apartments may be granted to Indonesian citizens; Indonesian legal entities; Foreign citizens who have licenses in accordance with the provisions of laws and regulations; foreign legal entities which have representatives in Indonesia; or representatives of foreign countries and international institutions which are domiciled or have representatives in Indonesia. As of end-2023, Indonesia is now ranked as the 33rd most affordable country out of 137 countries, with a cost-of-living index of 32.20.
Health and Education Facilities
Health and Education facilities with international standards are available in urban areas, specifically in large cities such as Jakarta, Surabaya and Bali. Government-owned hospitals and clinics reach out to remote rural areas. The number of hospitals has been increasing in recent years, with a total of 2,985 hospitals as of 2023.
The health insurance system is divided into private insurance and basic insurance, which is provided by the state for all citizens living in Indonesia, including foreign citizens. Compulsory health insurance has been around since January 2014. This compulsory health insurance scheme is known as the National Health Insurance (Jaminan Kesehatan Nasional/JKN), which makes basic medical treatments and facilities available to all citizens.
Foreign workers who work in Indonesia for at least 6 months must be registered under the BPJS scheme with their families. Employers have an obligation to do this. BPJS Cards can be used in all government-owned public hospitals, clinics or health centers and in almost all private health facilities. Private health insurance offers a wider choice of health facilities. These private health facilities usually feature superior facilities and service quality. Moreover, they are also likely to have English-speaking staff available to assist you in obtaining better medical services.
COVID-19 restrictions are lifted since June 21, 2023. Tourist can come to Indonesia much easier.
In large cities, there are many international standard schools with English as the language of instruction. All citizens are required to study for nine years, six years at the primary level and three years at the secondary level, so that public schools are available in all regions of Indonesia, both in urban and rural areas. Foreign citizens in Indonesia usually send their children to international schools with foreign curricula that are officially accredited by the education authorities in their home countries. There are various international schools in Indonesia, with schools offering national curriculum from a number of countries, including the UK, the US, France, Germany, India, Japan, South Korea, New Zealand, Russia and Singapore.
These schools also offer International Baccalaureate (IB) programs. Admission and registration procedures vary from school to school. Spaces are often limited and preference may be given to students based on nationality. Tuition tends to be expensive by local standards, but offers a high standard of learning, boasting smaller class sizes, first-class facilities and extra-curricular activities. Boarding facilities are available in some schools, but most only offer daily classes.
Investing in Indonesia
Economy in Indonesia
Indonesia is becoming the largest economy in ASEAN with a GDP of over 21 quadrillion rupiah (around $1.5 trillion USD) in 2023. Indonesia has a ranking 16th globally out of 212 countries. This impressive achievement stems from its vast size and population, making it a major economic player in the region.
Key Sectors in Indonesia;
- Agriculture: This sector contributes significantly to the economy, employing a large portion of the workforce and producing major export commodities like palm oil, rubber, and coffee.
- Industry: Manufacturing is a crucial sector, particularly in textiles, automotive, and electronics.
- Services: This sector is the largest contributor to GDP, encompassing tourism, finance, and transportation.
The Opportunity for industry;
- Digitalization: Growing internet penetration presents opportunities for e-commerce, digital services, and fintech development.
- Indonesia has many natural resources which can be explore such as oil, gas and minerals good.
Political Overview
Indonesia is a republic with a multi-party presidential democracy. The president is the head of state and the government. The number of parties in Indonesia is very large. In the 2019 election, there are 14 parties participating in the general election. There will be even more political parties participating in the 2024 election. Up to December 2023, 17 parties have passed the verification. Executive power is exercised by the president, vice president and ministers. Legislative power is vested in the House of Representatives and the People’s Consultative Assembly. The judiciary is independent from the executive and the legislature. The judiciary is held by the Supreme Court and the Constitutional Court. The Economist Intelligent Unit (EIU) annually measures the democracy index of all countries in the world. The score used is 1-10, the higher the score, the more democratic a country is. In 2023, the EIU placed Indonesia at number 54 out of 173 countries with a score of 6.71. Indonesia is in second place after Malaysia, among ASEAN countries.
Legal in Indonesia
Indonesia’s legal system is a mixed one, drawing from various sources:
- Civil law: This forms the primary framework, inherited from Dutch colonial rule. It relies heavily on codified statutes, like the Civil Code and Criminal Code.
- Adat law: This customary legal system applies to specific communities and regions, often governing personal and family matters. Its recognition and application vary across the country.
- Islamic law: Sharia law plays a limited role in Indonesia, primarily in family law matters for Muslims. Its application is subject to national legislation and regional variations.
- Constitution: The supreme law of the land, guaranteeing fundamental rights and outlining the structure of government.
- Statutes: Enacted by the legislature (Parliament), including the Civil Code, Criminal Code, and numerous sector-specific laws.
- Government regulations: Issued by the President and ministers to provide further details on specific legal areas.
Court System in Indonesia
- Supreme Court: Highest judicial institution, responsible for interpreting the Constitution and overseeing lower courts.
- High Courts: Serve as appellate courts for lower courts and handle certain original jurisdiction cases.
- District Courts: Hear a broad range of civil and criminal cases at the first instance.
- Religious Courts: Handle family law matters for Muslims, applying Islamic principles within the framework of national law.
Indonesia Investment Authority (INA):
A sovereign wealth fund has been established in Indonesia since February 2021. This organisation is aiming to drive economic growth and social progress. This organisation, known as the INA, aims to manage $24.5 billion in assets and attract investments across infrastructure, tourism, healthcare, and technology sectors. INA seeks to enhance Indonesia’s competitiveness and create a sustainable future for the nation.
Investment
Forms of Foreign Business in Indonesia
Foreign Investment (PMA) is an activity of investing to conduct business in the territory of the Republic of Indonesia which is carried out by foreign investors, both foreign individuals, foreign business entities and/or foreign governments that fully utilize foreign capital or joint ventures with investors in the country.
Based on Regulation of BKPM No. 4 Year 2021, Representative Offices of Foreign Companies (KPPA) are Indonesian individuals or foreign individuals or business entities which are representatives of foreign business actors with the approval of the establishment of offices in the territory of Republic of Indonesia and the following restrictions shall apply:
- As supervisor, liaison, coordinator, and take care of the interests of the company or its affiliated companies;
- Prepare the establishment and business development of PMA \companies in Indonesia or other countries and Indonesia;
- Located in an office building in the capital of a province
- Must not seek any income from sources in Indonesia, including not engaging in any activities or engaging in any engagements/transactions relating to the sale and purchase of commercial goods or services with domestic companies or individuals; and
Must not participate in any form in the management of any company, subsidiary or branch of a company in Indonesia.
The head of representative of a foreign company must reside in Indonesia, shall be fully responsible for the expediency of the office and is not allowed to conduct activities other than the representative activities of the foreign company and does not have any concurrent position as the head of a company and/or more than 1 (one) representatives of foreign company. If the appointed head of the representative of a foreign company is a foreign citizen (WNA) and/or also employs foreign workers, then the representative of a foreign company must employ Indonesian workers.
Establishing a Company in Indonesia as a Foreigner
Company Structure : PT PMA (Penanaman Modal Asing): This is the only company structure allowing foreigners to be official shareholders. You can own 100% of the company if your business meets specific criteria, such as large investments or being labor-intensive.
There are six steps to establish a company in Indonesia;
- Register your investment: This will go through the Indonesia Investment Coordinating Board (BKPM).
- Obtain a Deed of Company Establishment: This document is notarized by a legal professional and outlines the company’s structure, ownership, and purpose.
- Register your company’s products: This is necessary for certain industries; such as beauty products.
- Obtain industry licenses: It will depend on your business activity, licenses might be required for import, export, or other specific operations.
- Register for tax and social security: Investors need to obtain a Tax Identification Number (NPWP) and register for employee contributions to BPJS Kesehatan (health insurance) and BPJS Ketenagakerjaan (social security).
- Investor must obtain a Business Visa (KITAS) and work permit (IMTA): These are mandatory for foreigners to legally operate their business in Indonesia.
There are several key points which need to be concern ;
- Minimum Investment: Certain industries have minimum investment requirements for foreign ownership.
- Local Partner: This is not mandatory. However, partnering with an Indonesian citizen can simplify processes and provide local knowledge.
- Professional Services: Hiring legal and accounting professionals is recommended to ensure compliance and navigate regulations.
Why invest in Indonesia?
Indonesia presents an exceptional opportunity for foreign investment due to its unique blend of economic strength, political stability, abundant resources, and a burgeoning young population. There are several reason why foreign investors should consider ;
Robust and Growing Economy:
- 16th largest economy globally by nominal GDP, exceeding US$1 trillion.
- Stable and consistent economic growth, averaging above 5% annually.
- Strong domestic consumption driven by a large and growing middle class.
- Beneficiary of regional economic integration through ASEAN and RCEP.
Abundant Natural Resources:
- Rich in minerals like nickel, copper, and tin, essential for global supply chains.
- Vast agricultural lands, making Indonesia a major producer of palm oil, rubber, and coffee.
- Significant oil and gas reserves.
Young and Skilled Workforce:
- Large population of working-age adults (around 180 million).
- Improving education system, generating an increasingly skilled workforce.
- Cost-competitive compared to other Southeast Asian countries.
Favorable Investment Climate:
- Government actively promoting foreign investment through various policies and incentives.
- Relaxation of foreign ownership restrictions in certain sectors.
- Improved infrastructure and business environment.
Strategic Location:
- Located at the crossroads of Southeast Asia, connecting major trade routes.
- Large domestic market with significant consumer purchasing power.
- Gateway to other Southeast Asian countries.
Additional Benefits:
- Political stability and democratic system,
- Vibrant and diverse culture.
- Growing tourism industry.
Investment Opportunities
Indonesia offers a wide range of investment opportunities across various sectors, fueled by its large population, growing economy, and strategic location. Here are some key areas with promising potential:
Infrastructure:
- Significant government investment in infrastructure projects like roads, railways, airports, and ports.
- Opportunities in construction, engineering, and related services.
- PPP (Public-Private Partnership) model provides attractive investment options.
Manufacturing:
- Government incentives for export-oriented industries.
- Strong potential in sectors like automotive, electronics, food processing, and textiles.
- Growing demand for industrial parks and logistics facilities.
Digital Economy:
- Rapidly growing e-commerce market, fueled by internet penetration and mobile technology adoption.
- Opportunities in online retail, fintech, education technology, and healthcare technology.
- Government initiatives to develop digital infrastructure and attract tech investments.
Renewable Energy:
- Indonesia aims to increase its renewable energy share to 23% by 2025.
- Investment opportunities in solar, wind, geothermal, and hydro power projects.
- Growing demand for energy storage solutions and smart grid technologies.
Tourism and Hospitality:
- Indonesia boasts stunning natural beauty, rich cultural heritage, and diverse tourist attractions.
- Government initiatives to promote tourism and develop tourism infrastructure.
- Opportunities in hotel development, resorts, ecotourism, and travel startups.
Agriculture and Food Processing:
- Indonesia is a major agricultural producer, offering opportunities in food processing, packaging, and distribution.
- Growing demand for organic and sustainable agricultural products.
- Potential for investments in cold chain infrastructure and agricultural technology.
Healthcare:
- Indonesia’s healthcare sector is undergoing rapid growth and modernization.
- Opportunities in hospitals, clinics, medical equipment, and pharmaceuticals.
- Growing demand for healthcare services due to an aging population and rising incomes.
Other promising sectors:
- Creative industries: Films, music, fashion, and design.
- Education and training: Growing demand for quality education services.
- Financial services: Banking, insurance, and wealth management.
Indonesian Maga Projects
Indonesia is currently undergoing a period of massive infrastructure development, with several ambitious mega-projects underway. These projects aim to improve connectivity, boost economic growth, and create new jobs. Here are some of the most notable mega-projects in Indonesia:
- Jakarta-Bandung High-Speed Railway: This 142-kilometer high-speed railway line will connect Jakarta, the capital city, with Bandung, a major industrial hub. Upon completion in 2024, it will significantly reduce travel time between the two cities, from 3 hours to just 40 minutes.
- Trans-Java Toll Road: This ambitious project aims to connect all major cities on the island of Java with a 1,167-kilometer toll road. The project is currently nearing completion, and is expected to significantly improve transportation efficiency and reduce travel times across the island.
- Trans-Sumatra Toll Road: Similar to the Trans-Java Toll Road, this project aims to connect major cities on the island of Sumatra with a 2,700-kilometer toll road network. The project is still in its early stages, but has the potential to unlock significant economic opportunities in the region.
- Jakarta MRT (Mass Rapid Transit): This metro system is being rapidly expanded to meet the growing transportation needs of Jakarta’s burgeoning population. Phase 1 of the project is already operational, and several additional phases are under construction or planning.
- New Capital City of Nusantara: The Indonesian government is in the process of relocating the country’s capital from Jakarta to a new, purpose-built city in East Kalimantan. This mega project is expected to cost billions of dollars and will include the construction of government buildings, residential areas, businesses, and infrastructure.
Other notable mega-projects include:
- Kertajati International Airport: A new international airport being built in West Java.
- Patimban Deep Sea Port: A new deep-sea port designed to handle larger container ships.
- Batang Industrial Park: A new industrial park being developed to attract foreign investment.
- Borobudur Masterplan: A project to develop the Borobudur temple complex into a world-class tourist destination.
- Kepulauan Seribu Seaport: A new seaport being built to improve connectivity to the Thousand Islands archipelago.
- Greater Jakarta Metropolitan Area Development: A comprehensive plan to develop the greater Jakarta area into a more sustainable and livable region.
These mega-projects are expected to have a significant impact on Indonesia’s economy and infrastructure. They will create jobs, attract new investment, and improve the lives of millions of Indonesians.
Immigration
The Indonesian Directorate General of Immigration (Ditjen Imigrasi) is responsible for managing immigration policies, issuing visas, and controlling immigration checkpoints. They also handle residence permits and other immigration-related matters for both Indonesian citizens and foreign nationals. To encourage investment and strengthen the economy, the government has implemented various business facilities, including Government Regulation No. 48 of 2021, which streamlines immigration procedures. There are two types of Visa ;
- Visa Visitor
Visitor visa is granted to Foreigners who will travel to the Indonesian Territory for a visit in the framework of governmental duties, education, socio-cultural duties, non-commercial sports, giving lectures or attending seminars, tourism, pre-investment, business talks, family, journalism, stopover to continue their trip to other countries, and join the Trans- portation Means located in the Indonesian Territory.
Pre-investment activities are activities in order to start a business, among others, field surveys and/or feasibility studies. After the issuance of Government Regulation No. 48 Year 2021, foreigners who come to the Indonesian territory to engage in this activity may obtain a visitor visa for either one trip or several trips.
- Limited Stay Visa
Limited-stay visa is granted to foreigners who will travel to the Indonesian territory for working purposes and non-working purposes. Government Regulation No. 48 Year 2021 adds 2 new requirements for applying for a limited-stay Visa, namely (i) a statement of good conduct from the authorized authority in the country of origin or the representative of the Foreigner’s country of origin and (ii) the results of a medical examination stating that they are free from any communicable diseases which endanger public health.
In addition, for certain foreigners who are going to apply for visitor visa or limited-stay visa, they must have a Guarantor (an individual or a corporation) that is responsible for the existence and activities of the guaranteed Foreigner during their stay in the Indonesian Territory and must report any changes in their civil status, Immigration status, and change of address. For foreigners who invest their capital in Indonesia, foreigners who obtain second-home facility, foreigners who conduct pre-investment do not have the obligation of having a Guarantor. However, if they do not have a Guarantor, then they may deposit an immigration guarantee in lieu of the requirement for a Guarantor. The immigration guarantee will be returned to the relevant foreigners in full upon the expiration of their residency permit if they are not used to pay immigration obligations.
Stay Permit
Although Government Regulation No. 48 Year 2021 changes several important provisions, the main provisions regarding the presence of foreigners in the Indonesian territory still apply.
Visitor Stay Permit :
- Holders of visitor Visa for 1 trip shall be granted a maximum of 180 days from the issuance date of Entry Stamp and cannot be extended.
- Holders of visitor Visa for multiple trips shall be granted a maximum of 180 days from the issuance date of Entry Stamp and may be extended provided that the overall Stay Permit in the Indonesian Territory is no longer than 12 Months
- Visitor Stay Permit for holders of Visa on arrival shall be granted for a maximum period of 30 days from the issuance date of Entry Stamp and cannot be extended.
Limited Stay Permit:
- Limited Stay Permit shall be granted for a maximum period of 5 years and may be extended provided that the overall Stay Permit is no longer than 10 years.
- Limited Stay Permit shall be granted to Foreigners to do work, within a maximum period of 90 days and may be extended provided that the overall Stay Permit in the Indonesian Territory is no longer than 180 days.
- Limited-Stay Permit for holders of limited-stay Visa upon arrival shall be granted for a maximum period of 180 days and cannot be extended.
- Application for transfer of status of limited Stay Permit to Permanent Stay Permit may be submitted by a Foreigner or a Guarantor to the Head of the Immigration Office whose working area covers the domicile of the Foreigner. However, submissions may be made if said foreigner has been in the Indonesian Territory for at least 3 consecutive years from the date upon which the Limited Stay Permit was granted.
Useful resources:
Indonesia Immigration Official website: https://www.imigrasi.go.id/en/
Indonesia Taxes for Foreigner
- Foreigners in Indonesia can be subject to two types of taxes:
Personal Income Tax (PIT): This tax applies to those deemed tax residents. This means staying in Indonesia for more than 183 days within a 12-month period or residing and intending to stay. Residents are taxed on worldwide income, including income earned outside Indonesia. - Withholding Tax: This tax applies to non-residents, taxed at a flat rate of 20% on Indonesian-sourced income only. The paying entity (employer, etc.) is responsible for withholding and remitting the tax.
There are exceptions:
- Certain foreign expatriates with special legal status are exempt from PIT, even if they stay longer than 183 days.
- The Omnibus Law allows foreigners who become tax residents due to their skills to be taxed only on Indonesian-sourced income (even if paid offshore).
Further information:
- PwC: Individual – Taxes on personal income: https://taxsummaries.pwc.com/indonesia
- ASEAN Briefing: Personal Income Tax in Indonesia: https://www.aseanbriefing.com/
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