Countries and Regions

	Table of Contents
p. 1 of 33 BACK | NEXT I. Current Development Trends and Issues A. Political Setting B. Economic Growth C. Poverty D. Governance and Institutional Capacity E. Private Sector F. Gender Assessment G. Environment H. Regional Cooperation I. Development Constraints II. The Government's Development Strategy III. ADB's Development Experience IV. ADB's Strategy V. ADB's Assistance Program VI. Risks and Performance Monitoring and Evaluation

Country Strategy and Program 2006-2009 (Draft for Consultation): Indonesia

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I. Current Development Trends and Issues

1. With about 17,000 islands, Indonesia is the world’s largest archipelago. Its population of 221 million comes from diverse ethnic groups with Javanese as the largest group. Indonesia has a considerable natural resource endowment (timber, fish, petroleum, natural gas, and a variety of metals), and is one of the world's most important countries in biodiversity. In the past 15 years Indonesia has experienced extraordinary changes. Following the rapid growth and declining poverty in the early 1990s, the country witnessed a sudden deterioration of its gross domestic product (GDP) and heightened poverty in 1997–2000, owing to the Asian Financial Crisis (the crisis). During the crisis, the authoritative, centralized decision-making system that had existed for decades gave way to a democratic and decentralized one, in turn giving the civil society a significant voice. The crisis also exposed key issues regarding the lack of coordination among different levels of government and endemic corruption. Subsequently, a strong focus on maintaining macroeconomic stability and a conservative fiscal policy have helped the country gradually overcome some of the economic, political, and social shocks. Growth has so far been moderate and poverty incidence has declined.

2. However, Indonesia is now at a critical stage in which recovery efforts must also aim at achieving higher growth rates of about 7% annually in order to create jobs needed to mitigate the unemployment rate of 10.4%. To meet this target, the much–needed reforms must continue to encourage the greater participation of the private sector through improved investment climate and a more responsive and supportive financial sector. Moreover, the country needs to boost its development spending in a manner that would support the attainment of the Millennium Development Goals (MDGs), the progress of which has been mixed with many regions lagging behind.

A. Political Setting

B. Economic Growth

C. Poverty

D. Governance and Institutional Capacity

E. Private Sector

F. Gender Assessment

G. Environment

H. Regional Cooperation

I. Development Constraints

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