Yup, Indonesia was downgraded to Category 2, since 2007. But Indonesia's new President is determined to improve transportation safety, so getting back to Category 1 (full ICAO compliance) is currently one of the highest priorities for the Minister of Transport.
Earlier this year Indonesia signed a "Memorandum of Understanding" with the US to modernize the country's aviation sector. An FAA team has been working with the Indonesian regulator (DGCA) over the summer to identify key areas for improvements.
Indonesia's bid for a seat on the ICAO Council is also seen as a good thing -- it is another reason they are working hard to improve air safety.
So despite huge problems Indonesia is seen as a country that's trying (albeit slowly) to improve things. They're not going to get there overnight. They have a ton of cultural, structural and bureaucratic issues to solve.
Unfortunately Thailand seems to be working backwards at this point, due to the domestic political situation.