The Extractive Sector: Indonesian Government Efforts to Develop Oil, Mining and Forestry Industries

The use of foreign capital has been instrumental in the development of Indonesia’s banking sector since the New Order began in 1967. By judiciously allowing foreign involvement to bolster management skills and technology as well as financial resources of the domestic market, the Indonesian financial system is slowly becoming more broad and resilient. There have also been analogous developments in the natural resources area. The extractive industries — oil, mining and forestry — are of vital importance to Indonesia’s economy. Although the government’s goals vis-à-vis these industries are by and large the same as its goals with respect to the manufacturing sector, it has pursued the former in quite different ways.