Indonesia's crisis began in July 1997, following the float of the
Thai's Bath and the Malaysia's Ringgit. As a consequence, unemployment
soared into the millions as the crisis spread. The number of poor people rose
dramatically around 22 million at early 1997 to about 79 million in the
middle of !998, according to the BPS estimation. In fact the pressure, which
led to the ultimate collapse office indonesia's economic miracle, began in live
early 19905. Indonesia failed to sustain microeconomic reform after 1993.
When Soeharto administration was re-inaugurated in 1993, economic growth
was back to above 6.5 percent, and investment was pouring in. The days of the
mega-project arrived. Two feature common to most of these mega-projects
were high capital requirements and their domestic market orientation.
Inefficiency in the real sector due to high costs generated by the so-called
?crony capitalism? also flourished. Despite several positive indications of
economic development, a more fundamental reform has not been touched
seriously, i.e. rise human capital improvement in health and education of :he
people is of prime importance to raise labor productivity and turn will raise
their earning and welfare.
