Country Details

Merged of Jakarta Stock Exchange (JSX) and Surabaya Stock Exchange (SSX), Indonesian Stock Exchange, Bursa Efek Indonesia (BEI), is located in Jakarta. Stock trading has been existing since 1912, when Dutch colonialism was happening. Now it has +600 companies, a market value nearly 480 billion USD, and an average volume of 500K daily transactions ($675 million USD in value).

Capital market in Indonesia began growing from this period, but became inactive during World War I, World War II, and the transition from Dutch government to Indonesian government, until the year of 1977 under President Suharto's reign; since then, the stock market has been growing continuously. In 1995, JSX launched the Jakarta Automated Trading System (JATS). Besides the Jakarta Composite Index (JCI), Indonesia also has the Jakarta Islamic Index (JII), launched in 2002 in order to regulate the trading market based on Islamic Law, named Sharia.

Stock options was launched in Indonesia in October 2004, followed by the merging of JSX and SSX in September 2007. This merger resulted in a changing from the JCI to the Indonesia Composite Index (IDX Composite). In 2011, another Islamic index was launched, named Indonesia Sharia Stock Index (ISSI), aiming at making Sharia an investment. Besides Islamic index, Indonesia also has Islamic stocks, Islamic bonds (called Sukuk), and Islamic mutual fund, to welcome diverse investments to its market.

Asian financial crisis (and response) 1997–1999

First stage of the crisis – limited initial falls

Asian Economic Crisis caused the Rupiah to fall drastically 70% from mid-1997 to end-1998 followed by explosive civil riots. Finally, this ended Suharto's reign, after 30 years in power, with the inflation in 1998.  Many foreign investors owning investment in the Indonesian stock exchange were adversely affected by the crisis. Bank of Indonesia attempted to intervene, but instead caused the Rupiah to float freely in the end. Government debts increased almost three times, to 30%, pushing it to call for banking sector restructure. Many government projects were cancelled to support banks liquidity after September 1997.

Later, the Rupiah depreciated to 3,700/USD in October from 2,500/USD in July. Indonesian government started to seek support from the International Monetary Fund (IMF) and was responded back, regarding closing 16 small banks, monitoring and merging some medium banks. As soon as the announcement was published, Rupiah appreciated to almost 3,300 per USD but sunk thereafter. This is a the most depressive crisis Indonesia has ever experienced; even IMF's support could not help. During that time, many relatives of Suharto (President of Indonesia), who controlled the country's economy owning 25% of the banks, acted against the policy designated for the crisis reformation. IMF's support couldn't realize any positive change because of the cronyism and corruption, and the Rupiah fell even further to 5,900/USD by the end of 1997.

Shortly, the government received another IMF support package of 43 billion USD, but the Rupiah continued falling since there was no sign of efforts from Suharto to support the reformation. By the end of January 1998, the rupiah was at its worst level of about 15,000/USD, while the government issued Rupiah in a huge amount of about 4.6 billion USD and made several restructurings on 54 banks in total. Merging, closing, or recapitalizing banks had strengthened the Rupiah to 7,500/USD at the end of February.

In April, Indonesian government doubled the SBI rates to 45%, while implementing the bank restructurings with the third support package from the IMF. Hyperinflation occurred when the SBI rates moved to 70% at the end of May when Indonesia was having the Jakarta riot which ended Suharto's reign. In June, when the new temporary president was elected, the Rupiah fell to 16,800/USD. The fourth IMF support package was 5 billion USD, only to cover emergency needs.

Bank restructuring was implemented continuously through the year of 1999, closing 38 banks, merging 4 state banks in October 1998, recapitalizing 9 banks, acquiring 7 banks and more after March 1999. As a result, the bank capital was ended with a negative 18.8 billion USD. Twenty-three bank recapitalization were continued in May, followed by the state bank merged and then recapitalized in October. SBI rate decreased 13.1% at the same moth, and the Rupiah was strengthened to 7,900 per USD at the end of 1999.

Indonesia has a republican government form, with a President and Legislative by election. The capital city, Jakarta, is the most crowded city. The country has 34 provinces with several neighbors, such as Singapore, Philippines, Palau, Australia, Papua New Guinea, East Timor, Malaysia, and the Indian territory of the Andaman and Nicobar Islands.

Indonesia is a member of several multilateral organizations, such as United Nations (UN), World Trade Organization (WTO), International Monetary Fund (IMF), Group of Twenty (G20), a founding member of Non-Aligned Movement (NAM), Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC), East Asia Summit (EAS), Asian Infrastructure Investment Bank (AIIB), and Organization of Islamic Cooperation (OIC). The country's nominal GDP ranks the 16th in the world with about 1.1 trillion USD and having the 8th PPP in GDP with about 3.7 trillion USD.

Indonesia has been operating as an important trading place since Srivijaya and Majapahit traded with India and China in the 7th century. Indonesia has been influenced by foreign cultures, religions, and political strategies since the Hindu and Buddhist kingdom evolution. The dominant religion Islam was brought to Indonesia by Muslim traders and Sufi scholars, while Christianity was introduced by the Europeans. Indonesians had been living under Dutch colonialism, which controlled all regions of the archipelago for three and a half decade. Portuguese, British, and French interrupted the colonialism at times; however, Indonesia achieved independence after the World War II. Indonesia has experienced many challenges in its history, such as natural disasters, mass riots, corruption, separatism, democratization, and economic fluctuation.

Indonesia has hundreds of native ethnic and linguistic groups, and Javanese is the largest ethnic group."Bhinneka Tunggal Ika", Indonesia's national motto, signifies unity in diversity. Indonesia, with its vast wildwood areas, is the 2nd highest biodiverse country supported by its size, tropical climate, and the archipelago geography. Natural resources are overflowing, such as oil, natural gas, tin, copper, and gold. Main agricultural products are rice, tea, coffee, spices, and rubber. United States, Singapore, Malaysia, Japan, and Australia are Indonesia's main trading partners.

In the 1950s, Indonesia focused on agriculture, but changed the focus to industrialization and urbanization while continue developing agriculture in the beginning of 1960. Having developed its own oil manufacturer due to the falling oil price in the 1980s, Indonesia started to export oil. Indonesia has abundant energy resources, including conventional oil and gas reserves, oil equivalent of Coal-Based Methane (CBM), and recoverable coal. It still occupies undeveloped resources, such as geothermal, solar, wind, biomass, and ocean energy.

Famous people

Indonesia's official currency is Rupiah (Rp) with IDR as the currency code according to the ISO 4217. Introduced in 1946 after the Independence Day, Rupiah is issued and controlled by the Bank of Indonesia. Indonesia used Netherland Indies gulden during the Dutch colonialism.

The word "Rupiah" was originated from the Hindustani word rufiyaa. Indonesia used to have small currency units up to 100 sen, but it was eliminated due to inflation. Riau island and West New Guinea used their own diversifiable currency in the past, but were nationalized to the official rupiah in 1964 and 1971.

Rupiah has coins from 100 to 1,000 value and banknotes from 1,000 to 100,000 value. Indonesia uses long fiber from woods for banknotes and uses aluminum and nickel for coins. The value of Rupiah has fallen to the lowest position since the 1998 crisis, at the level of 14,000 for 1 USD.