Political

The election of Joko Widodo in 2014 presidential elections is a strong testament to Indonesia's
democratic values as it marked the first time when a twice-elected president handed over power
to a successor directly elected by the people. However, the passage of a bill, which will scrap
direct elections for regional heads in favour of indirect elections held by regional assemblies,
is a regressive step.
Ever since the Indonesian government deregulated the aviation industry in 2000, Indonesias
aviation sector has been growing at a brisk pace in terms of passengers, airlines, fleets, flights,
and airports. For example, the number of airline passengers has increased from 9 million in
1990 to around 90 million in 2016. The same goes for the countrys airline fleets which have
soared in numbers by more than ten-fold from 102 aeroplanes in 1990 to 1,030 in 2017.
Economic
Since 2004, the Indonesian economy has recorded annual growth of above 5.0% in all years
except 2009. In 2013, GDP growth came in at 5.8%, which is expected to fall to 5.5% in 2014
partly due to the macro stabilizing monetary and exchange rate policy measures taken during
June-November 2013 to arrest further depreciation of Indonesian rupiah and control further
widening of its high current account deficit.
Indonesia currently has 61 scheduled and unscheduled commercial airlines. The country is
ranked as having the second-fastest growing aviation industry in the world after China in terms
of aircraft order and business value. Domestic air passenger volumes have posted double-digit
growth in the last five years. In 2013, air passenger growth reached 22.3%. A year later, the
figure grew by 16.7%. In 2015, Indonesian air passengers recorded a 13.1% increase.
Meanwhile, international air passenger volumes grew by around 8% in 2015 as more local and
foreign carriers offer international flights.
Social
Social analysis Overview Indonesia has implemented cash transfer programs for poor
households to mitigate the impact of effect of fuel subsidy reduction, and to provide them with
healthcare and education facilities, effectively raising their standard of living. The government
is also playing its part by aiming to provide social insurance to the entire population by 2029.
This will help in boosting up the aviation industry in Indonesia.
Technological
Indonesia has recorded marked improvement in technological and innovation parameters;
albeit from a low base. The country placed 34th out of 148 economies in the Global
Competitiveness Index 2014-15, 21 places up from its 2008-09 rank of 55th. However, low
R&D expenditure has taken a toll on the number of patents granted.
The Indonesian government has strived to improve the countrys aviation infrastructure by
enlarging and modernising existing airports as well as building new ones, especially in remote
areas to ensure equal development and to boost the local economy. From 2015 to 2016, the
Indonesian government has constructed new airports throughout the country such as Miangas
Airport in Talaud Islands, North Sulawesi. Moreover, a number of old airports have also been
expanded, particularly the Soekarno-Hatta International airport. The airports new Terminal 3
Ultimate is expected to accommodate another 25 million passengers.
Legal
According to the World Bank's 2015 Doing Business Report , Indonesia's total tax rate
(includes profits taxes, labour taxes and other taxes) of 31.4% is lower than the East Asia &
Pacific average of 34.4%. Further, it is lower than that of its neighbours, Philippines (42.5%)
and Malaysia (39.2%). A low total tax rate bodes well for an emerging economy to attract
investments.
The country has an effective competition law; besides, the total tax rate is lower than regional
average. However, the country's legal environment remains affected by an inefficient
bureaucracy, rigid labour laws and a weak judicial system, which can easily be influenced and
manipulated by the political and business elite.
The civil aviation industry is one of the most highly regulated industries in Indonesia. The
sector is regulated primarily by Law No. 1 of 2009 on Aviation (the Indonesian Aviation Law).
Besides the Indonesian Aviation Law, there are a number of other implementing regulations,
most of which are issued by the Ministry of Transportation.
Ecological
Indonesias unique geographical nature whereby most of its major cities are separated by
mountain ranges and seas means that transportation by land or sea can take days and this gives
the aviation sector a competitive edge. It is therefore only natural that as airline tickets becomes
increasingly affordable, Indonesians opt for plane travel over cumbersome and lengthy
journeys.