Facts about the Indonesian Economy

This blog provides you with facts about the Indonesian economy, it’s diversity and strengths, it’s industrial growth and the effect of COVID-19 on the economy.

ECONOMY

The Indonesian economy is the largest economy in Southeast Asia and is a member of the G20 group of the world’s fastest-growing economies. It is the sixteenth largest country in terms of nominal GDP, and in 2020 Indonesia shipped as estimated US$163.3 billion worth of goods around the world. This being said, the average daily wage in 2021 is $7.87. This varies depending on the province in which you live. The lowest daily minimum wage is in Yogyakarta at  US$5.19, and the highest daily wage is in Jakarta at US$12.99 per day.

TOURISM INDUSTRY

In 2019 the top five international tourists visiting Indonesia were from Malaysia (2,980,753), China (2,072,079), Singapore (1,934,445), Australia (1,386,803) and Timor Leste (1,178,381). In 2019 there were 16,106,954 visitors, but because of the COVID-19 Pandemic in 2020, this number dropped to 4,052,923, a 75% drop. This same story is shared by many countries around the world.

The average income from international source in 2019 was US$1,145,640. this amount was cut drastically in 2020 because of the pandemic and many resort areas in Indonesia, such as Bali and Lombok were badly hit by this unfortunate turn if events.

Facts about the Indonesian Economy

Indonesia has something to offer all visitors, families, singles, couples, groups, seniors, and even couples wishing to marry. Many come to Indonesia especially to get married, as the tropical atmosphere and natural settings are magical and beautiful and something that will never be forgotten.

Australian Tourists

Australians prefer to vacation in New Zealand, but their second choice is Indonesia where they love snorkeling, diving, hiking, sightseeing and enjoying the many cultural events. Indonesia is very close to Australia. A flight of only 1 to 2 hours will get you directly into any one of the many international airports in the country. Australians have a special fondness for Indonesians because their military was given protection, friendship and resources during Japanese occupation of Indonesia in World War II. Many Australian lives were saved and many life-long friendships developed, and Australians have never forgotten this help in their time of need.

Indonesia has something to offer all visitors, families, singles, couples, groups, seniors, and even couples wishing to marry. Many come to Indonesia especially to get married, as the tropical atmosphere and natural settings are magical and beautiful and something that will never be forgotten.

couple in beautiful sunsetBali is a favorite as its economy has been built around tourism for many years, and architecture, culture and friendliness of the people is world-renowned There are many fantastic resorts on Bali island as well as in many other parts of the country. The eastern islands in Nusa Tenggara provinces are more primitive, but cultural, natural wonders and cost are well worth the excursion into this less traveled part of the country. Additional information related to tourism can be found at these two blog sites: Beautiful Places to see in Indonesia, and Tropical Island Clothing- the clothes you choose for your vacation.

Mining Industry

The production of minerals such as coal, copper, gold, silver, tin, bauxite, and nickel are still very active in Indonesia due an abundance of these resources. Other major exports include: petroleum gas, iron ferroalloys, natural rubber, stainless steel items, industrial fatty acids and alcohols, and cars.

Gold, Copper and Silver

Grasberg Mine, PT Freeport IndonesiaGold, Copper and Silver from the Grasberg Mine located in the Puncak Jaya district of Papua has the largest reserve of gold and the second largest reserve of copper in the world. The mine has a massive workforce of 19,500 daily laborers.

The mine used to be 90.64% owned by Freeport-McMoRan (FCX) but in 2018 the government negotiated an extension of the permit and was able to gain 51.23% ownership. The permit allows PT Freeport to conduct exploration, mining and production in two blocks: Block A being 11,100-hectare (27,400-acre) in size, and Block B 167,000 ha (413,000 acres) in size. The open pit in Block A is approximately 3 km in diameter. 

In 2016 the mine produced 1,063 billion pounds of copper, 1,061 million ounces of gold and 2,900 million ounces of silver.

Coal

Coal Mining in Indonesia is ranked 4th among the world’s top 10 coal and mining producers. The mining concession covers an area of approximately  90,000 hectares in three districts of East Kalimantan also known as Borneo.

The largest coal mining company is Bumi Resources (the largest), Adaro Energy (the second largest), Arutmin, Delta Dunia Makmur, Indika Energy, Berau Coal, Kaltim Prima Coal, and Kideco Jaya Agung.

In 2018 alone, Bumi Resources is estimated to produce 90-96 million tonnes of coal; Adaro Energy targets to yield 54-56 million tonnes; Delta Dunia Makmur aims to produce 50 million tonnes, and Indika Energy expects to have a coal output of up to 34 million tonnes. 

In 2020, there was substantially higher output. Coal mining companies in Indonesia produced 550 million ton of coal, and the Ministry of Energy and Mineral Resources stated that the target for 2021 would be 625 million tons. 

Kaltim Prima Coal Mine

Palm Oil Industry

Palm Oil is a super commodity in Indonesia and is used in food manufacturing, beauty products and as a biofuel. Indonesia is the world’s largest producer and consumer of the commodity, providing about half of the world’s supply. Palm oil was equivalent to 33% of global oils in 2014.

Plantations of palm oil is controversial in Indonesia, because large tracts of forest are removed to establish plantations. In 2019 there were 14.6 million hectares (35 million acres) planted with palm oil trees. It is estimated that 16.2 million people work in the palm oil industry here.

The use of palm oil has attracted the concern of environmental groups state cite deforestation in the tropics have reduced food production capacity of local populations, and created social problems due to allegations of human rights violations.

Oil palm plantation in Cigudeg, Indonesia

The total palm oil exports in 2020 was 27.3 million metric tons valued at approximately US$18.45 million. As of 2019, there are 16.381 million hectares of land planted with palm oil, spread across 26 of 34 provinces.

Approximately 60% of the palm oil is used for biofuel, power and heat, and 30% as food, animal food and chemical products. This a controversial issue raised by environmental groups and village communities as the annual expansion of palm oil plantations encroaches upon arable farmland and rainforests.

Telecommunications Industry

The growth of the telecommunication industry in Indonesia has been astounding since 2001. The introduction of cell phones into Indonesia started in 1995, but rapid growth really only started in 2004-2005. By 2010 there was an estimated 220 million cell phones in the country. In 2019 this had climbed to 338 million mobile cellular phone subscriptions, ranking 4th highest out of 219 countries.

Unlike many western countries, there are not many cell phones tied to contracts with telecommunication companies in Indonesia. The majority of cell phones here use a prepaid service. People buy internet data in limited amounts, and when this is used up, they buy some more. In Indonesia they call this ‘membeli pulsa’.

These top selling smartphones captured 91.24% of the market share in Indonesia in 2021:

  1. Samsung    – 22.32%
  2. Oppo          – 21.43%
  3. Xiaomi       – 20.25%
  4. Vivo           – 12.26%
  5. Apple         –   8.37%
  6. Realme      –   6.61%

SATELLITES

The telecommunication industry has been a top priority for the Indonesia government since 1976. In these early years, Indonesia was the first country in South East Asia to build their own satellite system. The first satellite was called ‘PALAPA’ and belonged to Indosat, an Indonesian telecommunications company.

Only two other countries operated communications satellites back then, namely the US and Canada. Since then Indonesia has launched 10 more satellites, 8 of which are no longer operating and the last 4 (TELKOM 1, 2, 3S and 4) launched in 1999, 2005, 2017 and 2018 consecutively are still in service.

All satellites were launched using US rockets out of Cape Canaveral in Florida, except for the TELKOM 3S satellite which was launched from the Guiana Space Center in France.

Newest Satellite Arrival

The most recent satellite is shown below: 

Indonesian Satellite Telkom-4

 

 

 

The TELKOM 4 Satellite was built by Maxar Company in California ( formerly SSL) and launched by SpaceX in Florida. The satellite weighs 5,800 kg and serves high definition television (HDTV) broadcasts, GSM and internet services, and has a service life of 16 years.

Many countries today are faced with growing challenges to meet market demand for high quality internet connectivity for people and business. The COVID-19 Pandemic has forced more people to work from home, placing much higher demands on telecommunication companies.

Providing low internet speeds results in low productivity, and will result in losing customers. Communications companies are now concentrating on upgrading and optimizing their systems to ensure businesses enjoy fast Internet speeds and continue to operate productively.

Due to recent cyber-security attacks around the world, much attention is also now being paid to securing all computer systems and preventing a recurrence of cyber-security threats on all on-site hardware as well as on cloud-based platforms.

More information on Indonesia can be found on these site: Facts about Indonesian Geography and Natural Disasters, and Facts about Indonesian History, Culture and Religion.

 

Please leave a comment if this blog was of use or interesting, and please provide suggestions for improvement should you have any. Your input is of great importance to me. Thank you!

 

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