Great Decisions 2012 Winter Update: Indonesia

 

Great Decisions Updates are issued seasonally and provide groups with the latest news and analysis on topics. The Winter 2012 Update is current as of January 13, 2012. Download the Winter 2012 Update as a PDF here.

by Leslie Huang, assistant editor

 

President Obama attended the annual Association of Southeast Asian Nations (ASEAN) meeting in November, as well as the East Asia Summit, and met with Indonesian President Susilo Bambang Yudhoyono (SBY).  Demonstrating the U.S.’s renewed focus on the Pacific region and on security in particular, Obama announced that the U.S. would transfer 24 F-16 fighter jets to the Indonesian military. The president also announced that U.S. forces would be permanently stationed in Australia to increase the U.S. presence in the region and to combat the growing threat of China.

On December 15, the ratings agency Fitch upgraded Indonesia’s status to investment grade, 14 years after the Asian financial crisis.  Industry analysts predict that the other ratings agencies, Standard and Poor’s and Moody’s, will follow suit. The upgrades are expected to strengthen investment in the country.

Growing discontent among laborers in Indonesia threatens to slow the country’s economic growth. International firms, such as the French company Carrefour and the U.S. mineral company Freeport McMoRan, have had to grapple with unions that contend that the companies are circumventing labor laws.

Violence has affected Freeport’s Grasberg mine in Papua, where large deposits of gold and copper are located. Cheap labor is one of the major attractions for foreign companies with operations in Indonesia.

On January 11, an earthquake struck off the coast of Aceh, Indonesia. Registering 7.3 on the Richter scale, the earthquake caused no major damage but rattled residents of the region, which was devastated by a massive earthquake and tsunami in 2004.