Economic Performance: Indonesia's rapid surge of growth into the 1990s was suddenly halted with the onset of the 1997 Asian financial crisis. The soaring foreign investments, exports of manufactured goods, and growth in the industrial sector all drastically dropped. Since the plunging rupiah against foreign currencies during the crisis, the inflation rate has decreased substantially from its 75 percent rate of 1998, but it is still above 10 percent as continued rupiah weakness and the unwinding of government controlled energy and food prices (i.e. subsidies to consumers and businesses) work their way through the economy. There remain three keys to future growth: internal reform, building up the confidence of international and domestic investors, and strong global economic growth. In facing its greatest challenge - to provide jobs and higher living standards - the government is focusing on incentives for foreign investments. In 2007, the economy recorded a modest growth of 6.3 percent as compared to 5.5 percent growth in 2006. Domestic consumption was the key factor to such growth instead of investments. With the lack of new investments fueling the growth in the economy, growth in the property industry will be affected, more specifically in the industrial and commercial estate sectors. In spite of this situation, the property industry, enhanced by the positive developments in the real sector, is an indication of an economy on its way to recovery. The government strives to realize a sustainable recovery in our economy. The Government's commitment to improve the investment climate and accelerate infrastructure developments are key factors to shape positively and fuel the Indonesian economy to grow 6.5% in 2008.
Indonesia at a Glance
Background
With a population of almost 240 million people, Indonesia is the world's largest Islamic nation. Consisting of more than 13,000 islands, Indonesia has the most varied social and geographical environment in the world. With at least 669 distinct languages and over 1,100 different dialects, the country truly lives up to its national motto: "unity in diversity." From the earliest times, the Indonesian archipelago has been a center of trade. The strategic position of the islands in relation to the rest of Southeast Asia is very close to the main trade route that passed through the Strait of Malacca into the South China Sea. Originally controlled by several Hindu and Islamic kingdoms, the islands attracted the interest of the European spice traders beginning in the 16th century. The Netherlands United East India Company established a trading post, which helped to seize control of the lucrative spice trade, and later, military and political control over the archipelago. Independence from the Dutch was declared on 17 August 1945. Indonesia has traditionally earned much of it foreign income from the export of rubber and copra. In more recent centuries, the demand for coffee, tea, sugar and other commodities that require a tropical climate has made Indonesia a leading producer of agricultural products. In addition to fertile agricultural land, Indonesia is also well endowed with a rich store of natural resources including world-class reserves of copper, gold, oil and natural gas. The most significant of Indonesia's mineral resources is petroleum. The prices petroleum products greatly influence other prices and all sectors of the economy. As the world's fourth largest country, Indonesia has a huge, young workforce giving it some of the world's lowest production costs and a huge domestic market to attract a wide range of foreign industries and investors. Current issues include: implementing International Monetary Fund mandated reforms of the banking sector and effecting a transition to a popularly elected government after four decades of authoritarianism. | 
