Recession Of Indonesia

Indonesia has been among the world's fastest growing economies for the past thirty years. However, all of a sudden, it was badly hit by the economic meltdown in South East Asia region in late last year. In recent months, fueled by Thailand's economic meltdown, Indonesia's currency, the rupiah, has lost more than 80 percent of its value against the U.S. dollar. The unexpected rush forced supermarkets to put limits on goods and many ran out of goods like rice, sugar, cooking oil, and milk. At least 28 garments factories inn the Bandung, West Java area, have been forced to shut down production due to cash flow problems and a weakening market. It's estimated that 200 of the 228 companies listed on Jakarta's stock exchange are now technically bankrupt. Mass unemployment is inevitable and so is serious inflation.

In response, many outraged demonstrators are calling for Suharto, the president, to step down at end of his term in March. Yet President Suharto has expressed his will to run for a seventh five-year term of office this month. In order to settle the current problem, the government has just banned exports of all crude palm oil related products in an effort to stabilize domestic supply of cooking oil. On January 27, Indonesia announced fresh reforms to restore confidence in its banking sector, guaranteeing commercial bank obligations and allowing foreign investment in local banks. The government liquidated 16 banks, including some closely associated with President Suharto's family. The government also announced a freeze on new framework was worked out between international lenders and Indonesian borrowers on how to tackle a crippling private sector foreign debt estimated at least $66 billion. Internationally, a rescue package of $43 billion has been transferred to Indonesia from IMF on January 11 in hopes of its economic revival.