The 1997 Asian financial crisis was the precipitant for many of the global crises that affected the world in the new millennium, but it has also had an adverse affect on many other areas within these countries – most importantly development, welfare and public health. Beginning with the so-called “Tom Yum Goong Crisis,” where Thailand was forced to float the baht due to a slowdown in foreign monetary exchanges. The currency quickly collapsed and the crisis expanded, with Indonesia, South Korea, Hong Kong, Laos, Malaysia and the Philippines all seeing substantial damage to their economies. Growth rates in the region dropped to nearly 0% in 1998, and the International Monetary Fund (IMF) had to step in to offer restructuring programs to those countries who were hit the hardest.
It’s quite obvious to see the surface-level damage to Southeast Asia during the crisis. However, not all of the problems that emerged are apparent just by looking at GDP forecasts. One country in particular – Indonesia – has suffered from some particularly debilitating setbacks. As a major aspect of the crisis was real exchange rate depreciation (i.e. the value of the rupiah falling relative to other countries), the relative prices of basic goods within Indonesia increased. This naturally includes foodstuffs, which means that the welfare consequences on individuals were serious. The severity of these consequences varied, of course: those who participate in Indonesia’s wide agricultural sectors were not affected as much as those in the manufacturing or service industries. Furthermore, the benefits of development are geographically imbalanced. The easternmost provinces within Indonesia (Sulawesi, the Malukus, and Papua) on average have the highest level of maternal mortality rates and similar health issues, with figures from Papua Province showing almost 400 maternal deaths per 100,000 live births (or 0.4%), compared to 0.039% in neighboring Malaysia.
So, how has Indonesia weathered this crisis? A postmortem suggests that it hit Indonesia the hardest not just due to financial factors. President Suharto resigned in 1998, capping off a thirty-year reign amidst whispering of dodging the IMF’s structural reforms, and riots by the general populace. Although Suharto’s departure allowed greater freedom to address human rights violations in Indonesia, the short-term fallout was a large amount of capital flight from the country (the majority to Singapore, which had weathered the fallout better). It is undeniable that the effects of the 1997 crisis can still be felt for several years after, despite best efforts at reconstruction.