Abstract

Indonesia had gone through major upheavals in the late 1990s following the Asian currency crisis. The departure of General Suharto, amid a deepening financial, economic and social crisis marked a turning point. Suharto’s protege and vice-president, BJ Habibie, took over the presidency from Suharto until October 1999, when Abdurrahman Wahid, a moderate Islamic cleric, was elected to the office. The controversial Wahid was impeached and replaced by his vice-president, Megawati Sukarnoputri, in July 2001. While Megawati seemed to be consolidating her power, and the prospects for the economy had improved significantly since the ousting of Wahid, various concerns remained to be addressed: political instability, corruption and foreign debt. Meanwhile, in view of the threats to secede by some territories, and the Bali bombing, some observers were even doubtful whether Indonesia, in its existing form, could survive. The case illustrates the linkages between social, political and economic policies in developing economies.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Indonesia, Country case study, Economics case study, Megawati Sukarnoputri, Bahasa Indonesia, Largest Islamic nation, General Suharto, Tourism industry in Indonesia, BJ Habibie, Java Bank, Berkeley Mafia, Most corrupt nation, Corruption in Indonesia, Economic policies in Indonesia, Foreign trade in Indonesia