The document discusses the financial crisis in Indonesia from 1997-1998 and its aftermath. It analyzes the sources and development of the crisis, including monetary, economic, social, and political dimensions. It examines the crisis' impact on unemployment, income, and GDP. The crisis marked a transition from the New Order government to a period of political reform. Solutions discussed include improving human resources, information systems, public services, and implementing good governance through a strategy focused on excellent return on services.

1. DARI REVOLUSI MELALUI REFORMASI
MENUJU INDONESIA SEHARUSNYA *)
Prof . Dr. Hamdy Hady, DEA**
*) Seminar menuju Indonesia seharusnya
**) Professor of Post Graduate Program of Management Science,
Universitas Persada Indonesia Y.A.I, Jakarta
Metamorphosis of Indonesian Financial Crisis 1

2. LIST OF PRESENTATION
1. Phenomena of Indonesian Crisis
Source Of Indonesian Monetary And Economic Crisis
Metamorphosis Crisis
Trilogy Of Development
History Of Reformation
Fact & Figure
2. Strategy of Development
The Troubled Position Of Indonesia
Possibility Solution
Good Governance Of Government
Metamorphosis of Indonesian Financial Crisis 2

3. 1 THE PHENOMENA OF INDONESIAN CRISIS
Metamorphosis of Indonesian Financial Crisis 3

4. II. THE BIG QUESTION IS HOW IS THE DEVELOPMENT OF THE CRISIS IN INDONESIA
AND WHY IT SEEMS THAT THE CRISIS IS NOT FINISHED YET
Source of Indonesian Monetary Crisis
1. Thailand’s Balance of Payment deficit
2. Domino Effect
External Factors:
1. Moral Hazard
2. Currency collaps  Financial Panic (i.e. BLBI or Credit Liquidity
of Indonesian Central Bank using for Forex speculation)
3. Corporate Socialism  State Company (BUMN) acting as Social
Company and most of them become source of Nepotism,
Collution & Corruption practices. Profitable State Company sold
to foreigner but Lost Ones still existing.
4. Corporate Governance Cronism Company  High Cost
Economy
5. Mismatch Bank Liquidity (Mismatch Currency & Maturity) &
Mismanagement Not Prudent and High Speculation
6. Lack of Democracy  Ineffective Control System
Internal Factors:
Metamorphosis of Indonesian Financial Crisis 4

5. II. THE BIG QUESTION IS HOW DO THE DEVELOPMENT OF CRISIS IN INDONESIA
AND WHY IT SEEMS THE CRISIS IS NOT FINISH YET
Metamorphosis Phenomena of Indonesian Crisis
MONETARY CRISIS (July 1997)
ECONOMY CRISIS (1998)
SOCIAL CRISIS
POLITICAL CRISIS
TOTAL CRISIS
MORAL CRISIS MENTAL CRISIS LEADERSHIP CRISIS
Metamorphosis of Indonesian Financial Crisis 5

6. II. THE BIG QUESTION IS HOW IS THE DEVELOPMENT OF THE CRISIS IN INDONESIA
AND WHY IT SEEMS THAT THE CRISIS IS NOT FINISHED YET
MONETARY CRISIS (1997)
Marked by:
1. Appreciation of Forex Rate Mainly USD by around 300%
2. Increase of Inflation Rate by around 50%
3. Increase of Deposite Rate (60%) And Credit Rate (70%)
Metamorphosis of Indonesian Financial Crisis 6
ECONOMY CRISIS (1998)
Economy crisis or Economic Recession marked by negative economy growth in 1998 by
minus 13% .
Due to the increase of the three indicators of monetary crisis mentioned
above, there are escalation of business risk that have its implicatiopn to economic activity
either for macro unit (government sector) or micro unit of economy (private sectors). The
further consequences are the decrease of production & operation activities, decrease of
trade activitiess and mainly invesment activities especially for foreign investment.
Then the economy activity slows down & many companies were closed and as consequences
unemployement increase dramatically. The final result was the decrease of income/capita
and economic experiences contraction of -13% in 1998.

7. II. THE BIG QUESTION IS HOW IS THE DEVELOPMENT OF CRISIS IN INDONESIA
AND WHY IT SEEMS THAT THE CRISIS IS NOT FINISHED YET
SOCIAL CRISIS (12 -14 May 1998)
Social crisis is marked by Social Gap, Riots and Racial Unrest
POLITICAL CRISIS (21 MEI 1998)
Political crisis is marked by the step down of the new orde government which replaced by
reformation orde and then a change of role of the parliament (DPR/DPRD) to become more
powerful then before
TOTAL CRISIS
Total crisis (cristal), morally, mentally, and leadership crisis, happens almost in all sectors of
government (Executive, Legislative & Yudicative) and private (mainly business sector).
Metamorphosis of Indonesian Financial Crisis 7

8. Metamorphose of Crisis Mechanism
MICRO ECONOMY UNITS
(PRIVATE & BUSINESS SECTOR)
MONETARY CRISIS
1. CURRENCY COLLAPS 2. HIGH INFLATION 3. HIGH INTEREST RATE
UNCERTAIN CONDITION FOR ECONOMY UNITS
MACRO ECONOMY UNITS
(GOVERNMENT SECTOR)
COST CALCULATION &
FINANCIAL REPORT
GOVERNMENT BUDGET & BOP
DECREASE of GOVERNMENT & PRIVATE ACTIVITY
DECREASE OF INVESTMENT
DECREASE OF PRODUCTION &
OPERATION
DECREASE OF TRADE
INCREASE OF UNEMPLOYMENT
{1 of 3 (continue)}
Metamorphosis of Indonesian Financial Crisis 8

9. Metamorphose of Crisis Mechanism {2 of 3 (continue)}
INCREASE OF UNEMPLOYMENT
DECREASE OF INCOME PER CAPITA
GNP =< 0 (in 1998 – 13%)
ECONOMIC CRISIS (RECESSION)
INCREASE OF SOCIAL GAP & UNREST
SOCIAL CRISIS
RIOTS & RACIAL UNREST (MAY 12 -14, 1998)
POLITICAL CRISIS
Metamorphosis of Indonesian Financial Crisis 9

10. Metamorphose of Crisis Mechanism {3 of 3 (end)}
POLITICAL CRISIS
CHANGEMENT OF GOVERNMENT (May 21, 1998)
POLITICAL REFORMATION
(LEGISLATIVE BECOME MORE POWERFUL THAN BEFORE)
TOTALLY CRISIS ( MULTI DIMENSIONAL CRISIS )
MORALLY MENTALLY LEADERSHIP
Metamorphosis of Indonesian Financial Crisis 10

11. THE FORMER CONCEPT OF NEW ORDE (ORDE BARU)
TRILOGY OF DEVELOPMENT
STABILITY
MONETARY
TRILOGY OF DEVELOPMENT IS A REAL CONCEPT BASED ON THE MACRO ECONOMY THEORY
as follows
DEVELOPMENT
GROWTH
EQUAL
DISTRIBUTION
1. If There Is A Stability Moneter, The Investment Will Increase
2. Increase of Investment It Means Growth of Economy
3. Growth of Economy Should Be Equal Distribution In Order To Maintain The Stability
Metamorphosis of Indonesian Financial Crisis 11

12. THE FORMER CONCEPT OF NEW ORDE (ORDE BARU)
TRILOGY OF DEVELOPMENT
Note :
1.During The New Orde Government, Indonesian Monetary Relatively Stable, Indicated By Low of
Inflation Rate and Stable Exchange Rate
2.Economic Development Growth by Arround 7% Per Year
3.But During This Periode, There Was Unequal Distribution of Economy And Development Growth
4.That’s Why Due To The Crisis 1997-1998, The People Ask Government of New Orde (Suharto) To Step
Down
5.But In Malaysia, Singapore And Thailand, Their People Did Not Ask The Leader of Government To
Step Down, Because There Is Relatively Exist The Equal Distribution of Economy Development
Metamorphosis of Indonesian Financial Crisis 12

13. RELATIONSHIP BETWEEN PROSPERITY AND EQUALITY(JUSTICE)
EQUALITY/JUSTICE
POVERTY PROSPERITY
Metamorphosis of Indonesian Financial Crisis 13
DISEQUALITY/
UNJUSTICE
1. EQUALITY IN
PROSPERITY
(IDEAL CONDITION)
UP COMING
3. EQUALITY/JUSTICE
WITHOUT PROSPERITY
(SELF SUFFICIENT CONDITION)
PERIODE 1950-1965
2. PROSPERITY
WITHOUT
EQUALITY/JUSTICE
(AUTHORITY CONDITION)
PERIODE 1966-1997
4. NO PROSPERITY
NEITHER
EQUALITY/JUSTICE
(THE WORST CONDITION)
PERIODE 1998-PRESENT ?

14. HISTORY OF REFORMATION IN THE WORLD SINCE 1980
1. Glasnost & Perestroika or reformation simultaneus of politic & economy in Soviet Union, leading
by Gorbachev
Consequencies : Soviet Union be divided become 17 states
2. Reformation of Economy in China from socialist economy to become market oriented economy but
political remain comunist, leading by Deng Xiao Ping.
Economy of China increase by arround 10 % per year. In 30 years Economy of China multiple by
around 300%
3. Reformation of Politic in Indonesia.
The main crisis in Indonesia is Monetary & Economy Crisis, but the solution is Political Reformation
which marked by the Dominant Role of Parlement (legislative ) then before .
Main problem of crisis in Indonesia is mal diagnosis of crisis 1998 where monetary & economy crisis
solved only by Political Reformation instead of Monetary-Economy reformation etc.
Or in other word, a man who had headache was given a treatment for stomachache. The man still had
a headache and followed by a diarhea. So remain on the closet and there are bad smell
everywhere, like what we are experiencing now. (Many cases of nepotism, collusion, and corruption
are being revealed)
Metamorphosis of Indonesian Financial Crisis 14

15. FACT & FIGURE of ECONOMIC DEVELOPMENT in EAST ASIA SINCE 1998
DEVELOPMENT OF INCOME PER CAPITA OF SEVERAL EAST ASIA COUNTRY (in USD current)
COUNTRIES 1980 1990 2000 2010 2012
INDONESIA $. 536 $. 641 $. 790 $. 2.947 $. 3.557
MALAYSIA $. 1.803 $. 2.417 $. 4.005 $. 8.729 $. 10.381
PHILIPINES $. 685 $. 715 $. 1.043 $. 2.136 $. 2.588
THAYLAND $. 683 $. 1.508 $. 1.969 $. 4.803 $. 5.474
VIETNAM $. --- $. 98 $. 402 $. 1.224 $. 1.596
SINGAPORE $. 4.913 $. 11.845 $. 42.784 $. 42.784 $. 51.709
CHINA $. 193 $. 314 $. 949 $. 4.433 $. 6.091
SOUTH KOREA $. 1.674 $. 6.153 $. 11.347 $. 20.540 $. 22.590
SOURCE :www.data.worldbank.org
PHENOMENA OF CORRELATION BETWEEN ECONOMY DEVELOPMENT and LEADERSHIP in
SEVERAL EAST ASIA COUNTRIES
COUNTRIES 1980 2012 LEADERSHIP MULTIPLE BY
INDONESIA $. 536 $. 3.557 SOEHARTO ETC 6,63 X
MALAYSIA $. 1.803 $. 10.381 MAHATHIR 5,75 X
PHILIPINES $. 685 $. 2.588 MARCOS 3,75 X
THAILAND $. 683 $. 5.474 BHUMIBOL A. 8,01 X
VIETNAM $. --- $. 1.596 HO CHIN MIN 16,28 X
SINGAPORE $. 4.913 $. 51.709 LEE KUAN YEW 10,52 X
CHINA $. 193 $. 6.091 DENG XIAO PING 31,55 X
SOUTH KOREA $. 1.674 $. 22.590 PARK CHUNG HEE 13,49 X
Note : For Vietnam based on y/capita 1990
Metamorphosis of Indonesian Financial Crisis 15

16. 2 STRATEGIC OF DEVELOPMENT
Metamorphosis of Indonesian Financial Crisis 16

17. This Position Trouble of Indonesia Obtained due to :
Good In Planning Formulation Strategy indicated by :
1. Using Trilogy of Development Since Government of New Orde In 1968
2. Regulery of Balance Budget System
3. Regulery of Five Year Planning Program
4. Always Based on Four Pillars of Indonesian State Known as Pancasila, UUD 1945,
Bhineka Tunggal Ika & United State of Indonesia
But due to Bad Implementation Strategy, mainly caused of :
1. Lack of Value Chain of Human Resource Leadership Outcome
2. Lack of Value Chain of Information System And Technology
3. Lack of Equal Development
4. Lack of Law Enforcement
5. Lack of Good & Adequate Leadership
Metamorphosis of Indonesian Financial Crisis 17

18. COMBINATION OF STRATEGY BETWEEN PLANNING, FORMULATION & IMPLEMENTATION
PLANNING FORMULATION STRATEGY
IMPLEMENTATION
STRATEGY
GOOD BAD
GOOD 1. SUCCESS 3. ROULETTE
BAD 2. TROUBLE 4. FAILURE
As Showing On Matrix Above About The Strategy Combination Between Planning
Formulation And Implementation Strategy, We Know Why Some Countries Get Succes
But Some Countries Get Roullet Or Trouble Even Failure In Their Strategy Of
Development
Based On Matrix Above We Can Conclude That Position Of Indonesia As Developing
Country Most Of Time Is In The Cell No. 2 Or Trouble Caused Of Good In Planning
Formulation Strategy But Bad In Implementation Strategy.
Metamorphosis of Indonesian Financial Crisis 18

19. WHY IN CERTAIN COUNTRY SO MANY THE ACT TERRORIST ?
THIS PHENOMENA MAY BE COULD BE EXPLAINED BY GRAPH BELOW :
PEOPLE CLASSIFICATION BASED ON SATISFACTION & LOYALTY RELATIONSHIP
LOYALTY
UNSATISFIED SATISFIED
DISLOYALTY
ADVOCATE
(PEOPLE SATISFIED & LOYAL)
HOSTAGE
(PEOPLE LOYAL BUT NOT SATISFIED )
MERCENARIES
(PEOPLE SATISFIED BUT NOT LOYAL )
TERRORIST
(PEOPLE NOT LOYAL & NOT SATISFIED )
Metamorphosis of Indonesian Financial Crisis 19

20. POSSIBILITY SOLUTION
THE SUCCES KEY IS DEPENDED ON :
1. Value Chain of Human Resouce Outcome
2. Value Chain of Information System & Information Technology
3. Public Services & Goods Excelent
Metamorphosis of Indonesian Financial Crisis 20

21. VALUE CHAIN OF HUMAN RESOUCE OUTCOME
HUMAN RESOURCES OUTCOME
1. ATTITUDE
2. BEHAVIOR
3. COMMUNICATION
ORGANIZATIONAL /
MANAGERIAL OUTCOME
1. PRODUCTIVITY
2. EFFICIENCY
3. EFFECTIVITY
4. QUALITY
PRODUCTION / MARKETING
OUTCOME
1. CUSTOMER / PEOPLE SATISFACTION
2. CUSTOMER / PEOPLE LOYALTY
3. PRODUCTION & SALES INCREASE
4. MARKET SHARE INCREASE
FINANCIAL / ACCOUNTING
OUTCOME
1. REVENUE INCREASE
2. EXPENSES CONTROLABLE
3. PROFIT & BENEFIT INCREASE
MARKET BASED OUTCOME
1. COMPANY or STATE VALUE INCREASE
2. HUMAN BEING VALUE INCREASE
Metamorphosis of Indonesian Financial Crisis 21

22. VALUE CHAIN OF INFORMATION SYSTEM (IS) & INFORMATION TECHNOLOGY (IT)
Note Problem Solving Note
Correct
Step I.
Data Collection
(Facts)
Fault
Correct
Step II.
Information Analysis
(Facts Structured)
Fault
Correct
Step III.
Knowledge as Power
Fault
Correct
Step IV.
Decision / Policy Making
Fault
Correct
Step V.
Actions
Fault
Profits & Benefits Result Loss
Metamorphosis of Indonesian Financial Crisis 22

23. R.O.S.E CYCLE STRATEGIC OF GOOD GOVERNANCE OF GOVERNMENT
RETURN ON SERVICE & GOODS EXCELLENT CYCLE STRATEGIC
PUBLIC SERVICES &
GOODS EXCELLENT
PEOPLE
SATISFACTION
PEOPLE
LOYALTY
PEOPLE
SUPPORT
NATIONAL
STABILITY
GOVERNMENT
PERFORMANCE
EXCELLENT
EMPLOYEE
SATISFACTION
WELFARE
INCREASE
GDP &
GOVERNMENT
BUDGET
INCREASE
DEVELOPMENT
INCREASE
Metamorphosis of Indonesian Financial Crisis 23

24. Source :
1. Google, Asian Crisis 1997
2. Internasional Financial Management , Hamdy Hady, 2012
3. Management Strategy , Hamdy Hady, 2012
4. www.dataworldbank.org
5. Taufik Kiemas, Four Pillars, 2012
Metamorphosis of Indonesian Financial Crisis 24