NOW! JAKARTA | In Decades, Fostering the U.S. - Indonesia Strong

In Decades, Fostering the U.S. - Indonesia Strong Relationship

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The United States and Indonesia have had strong relations for decades. The United States has important economic, commercial, and security interests in Indonesia. It remains a linchpin of regional security due to its strategic location astride a number of key international maritime straits, particularly the Malacca Strait.

The United States has important economic, commercial, and security interests in Indonesia which manifest in long term relationship between those two countries. iStock/NOW!JAKARTA

We offer a snapshot of the key parts of this relationship that has been built over the years.

The U.S. continues to consult closely with Indonesia to support and strengthen the three pillars of the Nuclear Nonproliferation Treaty—nonproliferation, peaceful uses of nuclear energy, and disarmament.

President Jokowi’s 2015 trip also saw the strengthening of ties in the diplomatic, security, and economic realms. Diplomatically, the upgrading of ties to a strategic partnership was also accompanied by concrete steps to broaden and deepen the bilateral relationship. Most importantly, the United States and Indonesia established a new annual ministerial strategic dialogue to institutionalise regular high-level consultations.

The United States and Indonesia share a military relationship that has included a range of interactions including visits, exchanges, and regular exercises, with previous major restrictions in place in the 1990s largely lifted under the George W. Bush administration. U.S. policymakers across administrations have recognised that Indonesia is a significant actor in Southeast Asia and an important partner in addressing challenges ranging from maritime security to Islamic extremism.

According to published sources, Indonesia, the largest economy in Southeast Asia, has enjoyed steady economic growth over the past decade, averaging between 5-6 per cent, with moderate inflation, rising foreign direct investment, and relatively low interest rates. Indonesia’s annual budget deficit is capped at 3 per cent of GDP, and the Government of Indonesia lowered its debt-to-GDP ratio from a peak of 100 per cent shortly after the Asian financial crisis in 1999 to less than 25 per cent today. Indonesia’s growing middle class, strong domestic demand, large and youthful population, and need for new infrastructure makes it an important potential market for U.S. products and investment.

Reports state that U.S. bilateral goods trade with Indonesia totaled almost USD 27 billion in 2015, while bilateral trade in services with Indonesia exceeded USD 3 billion. Principal U.S. exports to Indonesia include transportation equipment, including aircraft, food and agricultural products, machinery and equipment, and chemicals. However, there are significant challenges to our bilateral economic relationship: the implementation of protectionist laws, limited infrastructure, and an unevenly applied legal structure.


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