THE INDONESIAN BANK CRISIS AND RESTRUCTURING: LESSONS AND IMPLICATIONS FOR OTHER DEVELOPING COUNTRIES

Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country.

COMPETITIVENESS TOWARDS ASEAN ECONOMIC COMMUNITY

ASEAN Economic Community will be the driving force of an economic integration within ASEAN countries, and between ASEAN countries and the rest of the world. Many believe the economic integration will realize ASEAN framework as a single market and production base, to increase competitive economic region, to support more equitable economic development, and as a stepping stone toward full integration into globaleconomy. Commitments of the implementation of AEC Blueprint by ASEAN member countries will be a crucial role to achieve the objective of the ASEAN Vision, Mission, and Targets.Keywords: AEC, ASEAN, Economic Communit

The new economy and development: an Indonesian perspective

A lecture by Dr Mari Elka Pangestu on the role of the arts and culture in the development of Indonesia. Summary Development in most Asian countries has taken place through several conventional phases. Economies such as Indonesia have started with agriculture/resource based development; have moved to industrialisation first based on import substitution and then shifting towards export orientation as well as production networks; and have then started to transition towards a knowledge and information based as well as a more services oriented economy. The ‘new economy’ continues to evolve beyond knowledge and information based sectors; the fourth wave of change is known as the creative economy. At the same time developing countries are facing external and globalisation challenges. Technology disruptions have led to greater interdependence and changing models of international business engagement. Just what can be transacted and exchanged between countries in today’s context is so vastly different from the situation just a decade ago. How has a country like Indonesia developed over the course of these different phases of development? Has it been able to take advantage of the new economy? What are the important challenges, opportunities and policies ahead? &nbsp

Competitiveness Towards ASEAN Economic Community

ASEAN Economic Community will be the driving force of an economic integration within ASEAN countries, and between ASEAN countries and the rest of the world. Many believe the economic integration will realize ASEAN framework as a single market and production base, to increase competitive economic region, to support more equitable economic development, and as a stepping stone toward full integration into globaleconomy. Commitments of the implementation of AEC Blueprint by ASEAN member countries will be a crucial role to achieve the objective of the ASEAN Vision, Mission, and Targets

Japan's Future in East Asia and the Pacific

Japan’s Future in East Asia and the Pacific takes a ’big-picture‘ approach to Japan’s economic place in East Asia alongside that of China. It analyses Japan’s successes and experiments in trade policy as well as its failures in macro-economic policy. Japan’s diplomatic and economic integration strategies are also examined for their impact on East Asia and on Australia. The collection assesses China’s growth and dynamism and questions the nature of the competition for economic influence between Japan and China. Contributors to Japan’s Future in East Asia and the Pacific are all graduates of The Australian National University who are making their mark in the region as scholars and economists on East Asian and Pacific affairs

The Indonesian Bank Crisis and Restructuring: Lessons and Implications for other Developing Countries

https://unctad.org/system/files/official-document/gdsmdpbg2420034_en.pd

Report of the High-Level Commission on Carbon Prices

The purpose of this Commission is to explore explicit carbon-pricing options and levels that would induce the change in behaviors— particularly in those driving the investments in infrastructure, technology, and equipment—needed to deliver on the temperature objective of the Paris Agreement, in a way that fosters economic growth and development, as expressed in the Sustainable Development Goals (SDGs). This report does not focus on the estimation and evaluation of the climate change impacts that would be avoided by reducing carbon emissions. While the Commission also covers other policies relevant and important to carbon-pricing design and delivery on the Paris agreement, its primary focus is on pricing. This report has been prepared based on the Commission’s assessment of the available evidence and literature as well as on its members’ judgment, developed through their extensive international policy experience. While the commissioners are in broad agreement on the overall thrust of the arguments presented in the report, they may not necessarily support every single assertion and conclusion

The ASEAN : economies; economic and trade prospects in the 1990s. by Mari Pangestu

tag=1 data=The ASEAN : economies; economic and trade prospects in the 1990s. by Mari Pangestu tag=2 data=Pangestu, Mari tag=3 data=The Sydney Papers, tag=4 data=5 tag=5 data=2 tag=6 data=Autumn 1993 tag=7 data=57-68. tag=8 data=TRADE tag=11 data=1993/5/6 tag=12 data=93/0350 tag=13 data=CA