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Indonesia's crisis began in July 1997, following the float of theThai's Bath and the Malaysia's Ringgit. As a consequence, unemploymentsoared into the millions as the crisis spread. The number of poor people rosedramatically around 22 million at early 1997 to about 79 million in themiddle of !998, according to the BPS estimation. In fact the pressure, whichled to the ultimate collapse office indonesia's economic miracle, began in liveearly 19905. Indonesia failed to sustain microeconomic reform after 1993.When Soeharto administration was re-inaugurated in 1993, economic growthwas back to above 6.5 percent, and investment was pouring in. The days of themega-project arrived. Two feature common to most of these mega-projectswere 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 ofeconomic development, a more fundamental reform has not been touchedseriously, i.e. rise human capital improvement in health and education of :hepeople is of prime importance to raise labor productivity and turn will raisetheir earning and welfare. |
