Background:  The Dutch began to colonize Indonesia in the early 17th century; the islands were occupied by Japan from 1942 to 1945. Indonesia declared its independence after Japan's surrender, but it required four years of intermittent negotiations, recurring hostilities, and UN mediation before the Netherlands agreed to relinquish its colony. Indonesia is the world's largest archipelagic state and home to the world's largest Muslim population. Current issues include: alleviating poverty, preventing terrorism, consolidating democracy after four decades of authoritarianism, implementing financial sector reforms, stemming corruption, holding the military and police accountable for human rights violations, and controlling avian influenza. In 2005, Indonesia reached a historic peace agreement with armed separatists in Aceh, which led to democratic elections in December 2006. Indonesia continues to face a low intensity separatist guerilla movement in Papua.

Location:  Southeastern Asia, archipelago between the Indian Ocean and the Pacific Ocean

Geographic coordinates:  5 00 S, 120 00 E

Area:   total: 1,919,440 sq km
land: 1,826,440 sq km
water: 93,000 sq km 

Climate:  tropical; hot, humid; more moderate in highlands

Natural resources:  petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile soils, coal, gold, silver

Population:  234,693,997 (July 2007 est.)

Ethnic groups:  Javanese 40.6%, Sundanese 15%, Madurese 3.3%, Minangkabau 2.7%, Betawi 2.4%, Bugis 2.4%, Banten 2%, Banjar 1.7%, other or unspecified 29.9% (2000 census)

Religions:  Muslim 86.1%, Protestant 5.7%, Roman Catholic 3%, Hindu 1.8%, other or unspecified 3.4% (2000 census)

Languages:  Bahasa Indonesia (official, modified form of Malay), English, Dutch, local dialects (the most widely spoken of which is Javanese)

Capital name:  Jakarta

Administrative divisions:  30 provinces (propinsi-propinsi, singular - propinsi), 2 special regions* (daerah-daerah istimewa, singular - daerah istimewa), and 1 special capital city district** (daerah khusus ibukota); Aceh*, Bali, Banten, Bengkulu, Gorontalo, Irian Jaya Barat, Jakarta Raya**, Jambi, Jawa Barat, Jawa Tengah, Jawa Timur, Kalimantan Barat, Kalimantan Selatan, Kalimantan Tengah, Kalimantan Timur, Kepulauan Bangka Belitung, Kepulauan Riau, Lampung, Maluku, Maluku Utara, Nusa Tenggara Barat, Nusa Tenggara Timur, Papua, Riau, Sulawesi Barat, Sulawesi Selatan, Sulawesi Tengah, Sulawesi Tenggara, Sulawesi Utara, Sumatera Barat, Sumatera Selatan, Sumatera Utara, Yogyakarta*
note: following the implementation of decentralization beginning on 1 January 2001, the 440 districts or regencies have become the key administrative units responsible for providing most government services

National holiday:  Independence Day, 17 August (1945)

Flag description:  two equal horizontal bands of red (top) and white; similar to the flag of Monaco, which is shorter; also similar to the flag of Poland, which is white (top) and red

Political parties and leaders:  Crescent Moon and Star Party or PBB [MS KABAN]; Democratic Party or PD [Hadi UTOMO]; Functional Groups Party or Golkar [Yusuf KALLA]; Indonesia Democratic Party-Struggle or PDI-P [MEGAWATI Sukarnoputri]; National Awakening Party or PKB [MUHAIMIN Iskander]; National Mandate Party or PAN [Sutrisno BACHIR]; Prosperous Justice Party or PKS [Tifatul SEMBIRING]; United Development Party or PPP [Suryadharma ALI]

Economy - overview:  Indonesia, a vast polyglot nation, has struggled to overcome the Asian financial crisis, and still grapples with persistent poverty and unemployment, inadequate infrastructure, endemic corruption, a fragile banking sector, a poor investment climate, and unequal resource distribution among regions. The country continues the slow work of rebuilding from the devastating December 2004 tsunami and from an earthquake in central Java in May 2006 that caused over $3 billion in damage and losses. Declining oil production and lack of new exploration investment turned Indonesia into a net oil importer in 2004. The cost of subsidizing domestic fuel placed increasing strain on the budget in 2005, and combined with indecisive monetary policy, contributed to a run on the currency in August, prompting the government to enact a 126% average fuel price hike in October. The resulting inflation and interest rate hikes dampened growth through mid-2006, while large increases in rice prices pushed millions more people under the national poverty line. Economic reformers introduced three policy packages in 2006 to improve the investment climate, infrastructure, and the financial sector, but translating them into reality has not been easy. Keys to future growth remain internal reform, building up the confidence of international and domestic investors, and strong global economic growth. Significant progress has been made in rebuilding Aceh after the devastating December 2004 tsunami, and the province now shows more economic activity than before the disaster. Unfortunately, Indonesia suffered new disasters in 2006 and early 2007 including: a major earthquake near Yogyakarta, an industrial accident in Sidoarjo, East Java that created a "mud volcano," a tsunami in South Java, and major flooding in Jakarta, all of which caused additional damages in the billions of dollars. Donors are assisting Indonesia with its disaster mitigation and early warning efforts.