E C O N O M Y

Indonesia and the US have wide ranging relations from political, strategic to economic and commercial links. Based on the US-Indonesia partnership and shared values of democracy and pluralism, there is a real strong commitment from both sides to enhance bilateral relationship including in trade and investment.

Since the democratic transition begun in 1998, Indonesia has continued its path towards consolidating its democracy. We have conducted robust and dynamic national and local elections in the last decade namely three national elections and about 300 elections for provincial and district officials. These were all carried out through a transparent and largely peaceful process where the participants have accepted the results of the elections. Institutionally, we have a much improved relationship between the executive, legislative and judicial branches of government.

Against the background of a solid democracy and a healthy and constructive checks and balance systems among the nation’s institutions, since 2006 Indonesia has introduced a number of economic reforms intended to improve the country’s investment climate. Reform packages that have been completed include such areas as the risk sharing framework for infrastructure, the revised Customs Law, and the Investment Law, which was passed in Parliament on March 2007. In a parallel process, there is an ongoing program of deregulation, administrative and bureaucratic reforms aimed at increasing the efficiency and good governance of the public service.

There is a real strong commitment from both sides to enhance bilateral relationship including in trade and investment. President Yudhoyono and President Bush have met in a number of occasions in the last three years: bilateral summits in 2005 and in 2006 in Washington, D.C. and Bogor respectively; and both presidents have also met on the sidelines of the APEC Summit in Santiago, Chile in 2004 and Busan, Korea in 2005, and Sydney in 2007.

This strengthening relationship, has resulted in a number of concrete steps such as: the June 2006 extension of U.S. Export-Import Bank coverage to private Indonesian corporations for the first time since 1998; the upgrading of Indonesia from the Special 301 Priority Watch List in November 2006 based on steps to improve intellectual property rights enforcement; and the resumption of cooperation and capacity building activities between the U.S. Forest Service and the Indonesian Ministry of Forestry.

Indonesia is also a founding member of the Association of Southeast Asian Nations (ASEAN), a region of about 600 million people with a combined GDP of $2.7 trillion and the grouping is the sixth largest economic group in the world. Geographically, ASEAN is located in one of the most dynamic region of the world. China and India, each with a one billion population and a large growing economy, sit immediately to ASEAN’s north and west respectively. While Japan, the world’s second largest economy, South Korea, an emerging economy, and Australia are only a short flight away. This region with ASEAN as its epicenter is strategic for US economic and political interests. ASEAN can be a strong and reliable partner of the US well into the future.

Indonesia is working with the other ASEAN members on steps towards the building of an ASEAN Community. The ASEAN Charter, established at the 13th ASEAN Summit in Singapore, 20 November 2007 serves as the guidance for the operation of ASEAN towards an integrated regional community and envisioned as, (i) a single market and production base, (ii) a highly competitive economic region, (iii) a region of equitable economic development and (iv) a region fully integrated into the global economy.