Indonesia is the third largest populated country in Asia after China and India. It houses over 200 different ethnic groups and comprises 3 major islands - Java, Sumatra, and Kalimantan - (Indonesian Borneo), and over 13,500 smaller and medium islands. Its coastline covers a massive 50,000 kilometers. It's outer islands adjoin Singapore, Malaysia, and the Philippines. Blessed by a temperate climate, Indonesia boasts very diverse fertile land, making many farming communities self-sufficient as well as serving the needs of the capital cities. However it is natural resources that are the major economic driver of Indonesia. Timber, tin, gas, and precious minerals abound. It's oil reserves governed by government oil company Pertamina represents some of the largest in the world, and some of the few outside the Arab states and Middle East, explaining the strategic interest the US in particular has with Indonesia. With a population of over 210,000,000 Indonesia dwarfs its more prosperous neighbours of Singapore and Malaysia. The original inhabitants were Malay, accounting for cultural similarities with Malaysia and the Southern Philippines. There are still signs of the relatively brief (historically speaking) period of Dutch colonization. Islam was introduced in recent times, as in neighbouring Malaysia, and though Indonesia is not an Islam state, 90% of the population are nominally Islam. The small population of Chinese represent a far greater proportion of wealth, mainly living in urban cities running businesses of all sizes. As the closest Asian neighbour, Indonesia is also of important strategic importance to Australia, though opportunistic internal politics has caused some hiccups in foreign relations of late, mainly related to Australia's role in the accession of East Timor. (Australia was the only nation to previously officially recognize East Timor as Indonesian territory.)

Jakarta, Surabaya, and Bandung (all in Java), and Medan (Sumatra) are the largest cities. Jakarta with a population of around 12,000,000 is one of Asia's largest cities - a virtual urban magnet for Indonesians of all ethnic groups. Much of Indonesia's wealth is centralized in Jakarta, a matter of concern for resource-rich provinces such as Aceh and in Kalimantan whose people have not seen the rise in living standards accorded to those in Jakarta, presumably on the back of these natural resources.

Indonesia has traditionally, just by the nature of its population and size, been seen as the key member of ASEAN. However the Asian crisis of 1997 brought to an end it's rapid economic growth and reducing it's influence on South East Asian political power.

Economic Base

Japan, the US and South Korea have traditionally been Indonesia's most strategically significant trading partners, with newcomers China and Singapore. Its key exports are in Manufacturing, Petroleum and Natural Gas, food, and raw materials. Imports reflect a ratio of any rapidly industrialising nation with an emphasis on capital equipment prior to 1997. The devastation of its economy, politics, and monetary crisis in 1997, exposed the complicity of government, financial organizations and private corruption in creating a fantasy-economy built on sand rather than solid foundations. Though efforts had been made to reduce poverty with some success, the collapse of the economy saw these efforts set back a decade or so.

At present Indonesia is staging a substantial but nevertheless initial recovery. Industrial and manufacturing investment is on the verge of a substantive increase. Consumer spending is up from admittedly very low levels.

Consumer Market

The press on Indonesia for the past 5 years hides the fact that there remains pockets of wealth in Indonesia, almost exclusively in the capital cities. The modern high rise department stores are starting to attract shoppers again, though store staff still seem to outnumber customers 90% of the time. (Wages for retail management and assistants remain very low). Up-market branded stores and cafe's abound, catering to a middle class starting to feel more comfortable.

Religion and Ethnicity

Almost 90% of Indonesians are Muslim, around 9% Christian (mainly Chinese and some converted tribes), with some Hindus and Buddhists (mainly Balinese in the Eastern tourist and agricultural island of Bali). It is ethnicity that really marks Indonesian diversity however. Javanese make up 45% of the population, Sudanese 14%, Madurese 7%, and "coastal Malays" (8%). There other 25% is made up of over 200 ethnic groups from the tribes of Kalimantan to ethnic groups with their own distinctive cultures in Central Java and Eastern and Northern Sumatra. This ethnic diversity is at the same time a strength of Indonesia, but also the albatross around it's neck as leaders struggle with pacifying so many groups with different cultures and languages. A day viewing the Indonesian parliament in action will reinforce this. Representatives turn up in many varieties of Western suits, Muslim suits, and various head-dresses.

As a result unity is the prime mover of Indonesian leaders. Government policy has reflected this in the invention and failed propagation of a new Indonesian language (sometimes called Bahasa Indonesia though many Indonesians feel it should be called simply "Indonesian"). Religion is another way of developing a unity on Indonesia's diverse people, hence many parties are religiously based. Sensitive to the view that Indonesia is an accident of several islands being historically dumped together, sovereignty is also a key agenda item of any national leader. With the loss of face from the loss of East Timor, sovereignty is one area in which Indonesian leaders are immovable.

Once on a lecture tour around Indonesia I took delight in sampling the various soups of each area. For many tourists or business people alike this is possibly the greatest introduction to Indonesian diversity. All soups are generally called "Soto" with the second part of the name being the region or city in which it derived. Soto Bandung for example is a highly distinctive beef and peanut concoction. You can also try Soto Padang, Soto Serembam and the like.

Political and Social Stability

Mention political and social stability in Indonesia and the first associations will relate to religion and separatist activities. Some observers have described Indonesia as a "historical accident". The claim has some credence due to the massive diversity throughout an archipelago spanning a massive crescent around the South East corner of Asia.

Indonesia has been far less successful in integrating new Chinese immigrants. It was only two years back that Indonesian President Abdurrahman Wahid legalized Chinese dragon festivals. Chinese in Indonesia must adopt an Indonesianization of their names as Chinese Thais do in Thailand.

Perhaps the most famous example of the Chinese-Malay divide in Indonesia is that of Bob Hassan, golfing mate of ex-President Soeharto and raper of most of the jungles of Kalimantan through his timber interests. On the advice of Soeharto, the Chinese businessman changed his name and converted - earning the nickname "Mohamad Bob" amongst the less respectful. Chinese-Malay relationships remain uneasy - in good times there is much "gotong royong" - in bad times jealousies and hatred rises to the top.

Most claims of successionists from Aceh to Lombok and Kalimantan are based on ethnic or religious arguments, but in reality are based on pure pragmatic economics. Centralization has meant that most of the profits from resource rich regions have been diverted to Jakarta (and hitherto lost for all time in the monetary crisis of the late 1990's). Contrary to most mainstream analysis, religious and ethnic rioting have existed in many areas of Indonesia way before the Asian crisis and their escalation due to rapidly increasing poverty. Though largely unreported, the burning of churches, mosques, and temples had been escalating for at least 20 years beforehand.

At present politics in Indonesia is at the most stable for 5 years. Behind the scenes, there is a lot of political maneuvering going on from the fundamentalists and university intellectual Amien Rais, and the still powerful Golkar party (Worker's Party) of ex President Soeharto. Some observers, including this one, saw the election of Abdurrahman Wahid and Megawati Soekarnoputri as "interim leaders", installed for sacrificial purposes to catch the flak from bruising economic effects while the real political elite maneuvered for the future behind the scenes. However Megawati is looking increasingly comfortable in recent times, mainly due to her substantial popular support and despite her less-than-impressive Islam credentials.

The existence of terrorist training camps and Al-Quaeda related luminaries in Indonesia is a favourite claim of Western, Singapore, and Malaysian governments, yet they themselves are less creative in coming up with ideas on how to prove it or limit it in a massive archipelago or 210,000,000 people spread over 6,500 inhabited islands.

Language

While in Malaysia the introduction of a manufactured modern language (Bahasa Melayu) several decades back was designed primarily to re-affirm independence and relieve the cultural baggage of the colonizers, in Indonesia the introduction of Indonesian was primarily to unite a country with over 200 different languages and dialects. The Indonesian experiment was more of a failure than Malaysia's however. As a result both countries suffered from a lower level of English competency than Singapore or the Philippines for example, reducing their international competitiveness. However while Malaysia succeeded in the mainstream adoption of the national language through all classes and regions, Indonesia failed miserably. While it was adopted by urban populations, many in central and remote areas still use their own language and understand neither Indonesian Malay nor English. One needs to realise this when interpreting official statistics on language from both Indonesian and international bodies.

The level of English proficiency in Indonesia is very low compared to neighbouring Malaysia, even amongst the middle and business classes. However Indonesian (or Bahasa Indonesia) is a simple language to master - being based on a curious mixture of French words and structure, English, and Dutch. Tenses don't really matter, and many business people get by with a mixture of their own language and a moderate knowledge of Indonesian in the major cities.

Business Practices

Like many countries in this region, business is based mainly on personal contacts. Like Thailand, a bit of the old folding stuff helps a bit too. As with any country in which public servants who can be gatekeepers to government approvals sanctions are paid very low wages, under the table gratuities, tips, and much larger amounts to be distributed amongst co-workers, mates and family, is essential for survival as well as the economy.

The players have changed however, and there has been some changes since the 1980's and 1990's. The days when Soeharto offspring Bambung ruled the waves (ports and shipping), Tommy the air (airlines), and Tutup the roads - is way past. In some ways business is now more complicated. Patronage still dominates Indonesian business at middle to upper levels, and market entry remains based on forging relationships with "influencers", for local and foreigner alike.