Reference no: EM132705264

Question 1: What unique problems does Indonesia face as its economy continues to expand?

Question 2: What problems does the freely-elected government face in protecting Indonesia's environmental habitats?

Indonesia

• Located along the Equator between the Indian and Pacific Oceans, Indonesia is a tropical, volcanic archipelago of over 6,000 inhabited islands. The island nation is home to hundreds of native ethnic groups, multiple languages, and the world's largest Muslim population. With a combined land area equivalent to roughly the size of Alaska, 60 percent of Indonesia is covered by tropical forest. Indonesia is second only to Brazil in biodiversity, and its land holds access to countless natural resources. Currently, Indonesia is the world's fourth most-populous nation, with over 250 million citizens. The economy has been rapidly emerging over the past 15 years. GDP, in terms of purchasing power parity, measured $1.212 trillion in 2012, ranking it 16th in the world. This equates to $5000 per capita. Colonized by the Dutch in the 1600s and briefly occupied by the Japanese during World War II, Indonesia is a parliamentary democracy.

• For the first 50 years after gaining independence from the Dutch in 1949, Indonesia's economy was government-controlled by corruptly elected leaders. In 1999, following constitutional reforms, truly free elections for both houses of parliament occurred for the first time since 1955. Over 40 political parties participated in the process. These free elections marked the end of the government-controlled economy and the start of more open economic policies and prosperity. Despite a slight setback in 2005, the economy has continued to expand, and diversify, at a rapid pace since 1999. Exports of fossil fuels, textiles, and electronic equipment have grown significantly, increasing individual wealth. Indonesia posted positive growth during the global recession of 2009 and is currently the third fastest-growing G20 country, eclipsed by only China and India.

• With this new prosperity, however, has come rapid environmental destruction. Industries such as mining, timbering, and agriculture have cleared Indonesia's rainforests at record paces. Many in the environmental community have called for increased environmental protections over Indonesia's unique habitats. The elected government representatives, now held responsible by the ballot box, have been hesitant to impose regulations which may stunt business growth and wealth accumulation. In December 2012, 200,000 acres of carbon-rich land were set aside by the government for permanent conservation to prevent the release of greenhouse gases-the first conservation of its kind for Indonesia. Private industry is slowly making environmental changes as well, though resistance is strong. As a result of international pressure, the world's third largest paper manufacturer, Asia Pulp and Paper Company, vowed to end its practice of logging in natural rainforests in Indonesia in February 2013. Other companies have yet to make the same commitment. In June 2013, massive forest fires broke out on the island of Sumatra, an annual event that results from clearing forests. The fires resulted in widespread air pollution that drifted to Malaysia and Singapore with air quality reaching very dangerous levels. Although the Indonesian president apologized to the neighboring countries, this event underscored the ongoing challenges of managing a rapidly growing emerging market while preserving the natural environment.