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Indonesia a brief profile
Indonesia can be considered one of the richest countries on earth in terms of its biological diversity. The country is located between asia and australia, and comprises more than 17.000 islands that siretch some5.000 km from east to west. Because of its complex geographical makeup and unique biogeographical position, indonesia has enormous ecosystem divesity as well as a fascinating history and heritage.
In terms of human diversity, with more than 210 million inhabitats the country ranks as the fourth most populous nation in the world and the third largest democracy.
It is also the world’s largest islamic nation, where a constitutional freedom to practice other religions sees major groups of christans, buddhist, hindus and other faiths existing side by side. There are approximately 336 district recognized cultures that share more than 250spoken languanges. The lingua franca, bahasa indonesia, was addopted only 77 years ago and is now widely used throughout this vast land, serving as a means of communication and as a unifying factor.
Indonesia id diverse and is among the most culturally rich countries on earth. Add to this its enormous mineral, marine and natural resources and it is evident that it ranks as a major economic force in the region.
Following the economic and financial crisis that hit the country in 1997, the indonesian goverment recognized the important role that foreign investment needed to play in the reconstruction of the indonesian economy. During following years, succesive goverment enacted legal and regulatory reforms designed to make indonesia a competitive destination for foreign direct investment.
Acceleration of economic growth and trade
The central statistic agency (bps) announced that indonesia’s gdp grew 5.60% in 2005 per capita income rose to idr 12.45 million from idr 10.64 million in 2004.
Bps also annouced that indonesia’s export grew by 19.53% compare to previous year, meanwhile total imports increased by almost 24% in 2005 to usd 57.6 billion.
Batam free trade zone (ftz)
The goverment decided againts a proposal to turn the entire batam island area into a single ftz. Instead, it will specify bonded zones into which businesses can import goods duty free. The goverment also noted the export businesses outside the bonded zones could still make use of bondedd warehouses, as the status of neighbouring rempang and galang island (the islands closest to batam) has been decided by the goverment.
The batam authority, which governs vatam and has overseen its rapid economic development. Argued that the bonded zone scheme would confuse investors and lead to local government worload. However, local authorities claimed that bonded zones would enable them to better govern batam as mandated under indonesia’s decentralisation laws.
Legal system
The court system does not provide effective recourse for resolving commercial disputes. The judiciary is nominally independen under the law. However legal practicioners fear that irregular payments and other collusive practices often influence case preparation and the judicial ruling. The government recognises the need for judicial reform but has not yet taken any action. In several intances the local courts accepted jurisdictions over commercial disputes despite contractual arbitration clauses calling for adjudication in foreign venues. Indonesia is a signatory to the convention on the settlement of investment disputes between states and nationals of other states (icsid). So far only one american investment company has brought a case to the icsid, which ruled in its favour. Indonesia’s arbitration law recognises the right of parties to apply any rules of abritation that they may mutually agree upon and provides default procedural rules if no other rules have been designated. An indonesian commercial arbitration board, bani is available if both parties agree. Companies have resorted to ad hoc arbitrations in indonesia using the united nations commision on international trade law (unicitral) arbitration rules, as well as others. Other companies in indonesia have used international criminal court (icc) arbitrations.
On 12 august 1999, indonesia’s parliament passed arbitrations law number 30, endowing the district court of central jakarta with the power to enforce international arbitration awards. Before passage of the new arbitration law in 1999, enforcement lay with the supreme court, which was slow to act on decisions. Since 1999, indonesian court have swuftly enforced international arbitration awards-some have been executed within a month of the request for enforcemnt.
The new law greatly reduced instances where district courts fail to apply the law, and legal practitioners predict that the process should improve as more judges educate themselves about arbitration.
Since 1981, when indonesia joined the 1958 united nations convention on the recognition and enforcement of foreign arbitral awards (new york), fewer than two dozen foreign awards have registered with indonesian courts (most of which have beem enforced). The domestic and international press have widely publicised recent cases where those awards have not been enforced.
Right to private ownership and establishment
Indonesia recognized the right to private ownership and establishment and relies on the private sector (albert often heavily protected) as the principal engine of economic growth. At the same time state-owned enterprises (soes) play a dominant role in many sectors, including oil and gas retail and distribution, electric power generation and transmission,civil aviation, banking, and fertiliser production and wholesale distribution.
In the past three years indonesia has promoted competition in some sectors and has decreased the privilages awarded to soes. The parliament formed the siate ministry for soess in 1998, privatision is an important part of its mandate but political opposition has effectively kindered suct attempts. Some provincial government have improved the management and transparancy of provincially owned firms (bumds) in order to stem losses and prepare them for privatisation.
