Still reeling from ruinous episodes of social and political upheaval, the country faces an uphill battle to restore the rapid economic growth that once was the envy of many other developing countries. Last year, Indonesia's gross domestic product contracted 13.7 percent. As a Pacific neighbor with strong economic links, Japan has a keen interest in Indonesia's stability and prosperity. That year, Indonesia also was the top Asian destination for Japanese direct investment. Today, hundreds of Japanese companies operate in Indonesia, producing goods for the local market as well as for export to third countries and providing a range of services.
Credit flows from Japan to Indonesia also are substantial.
Moreover, Tokyo has pumped a tremendous amount of aid into the country. Tokyo also has contributed to several multilateral assistance programs. In August, an audit of Bank Bali, one of several insolvent financial institutions covered by a government restructuring program, turned up evidence of questionable dealings. International lenders called for a full investigation and froze the release of additional funds pending the results of an independent audit. Indonesia's Supreme Court ruled October 19 that after being suppressed for weeks by the administration of former President B.J. Habibie, the contents of the audit report should be fully disclosed to the public.