ABSTRACT
Following on from the methods and database described in Chapter 3, this chapter seeks to analyse the financial position of the Indonesian private corporate sector in the 1990s (until the outbreak of the Asian crisis) by focusing on the liability side of the sector.1 The analysis also focuses on the period between 1994 and the first half of 1997, which the author has defined as the ‘finance boom’ of the 1990s. As argued in Chapter 1, the corporate sector accumulated huge external debt during the period by aggressively accepting offshore financiers’ enthusiastic offers, thereby totally changing the nature of Indonesia’s external debt problem from public-to-public to private-to-private. It is also argued that international private capital, which is mobile capital, was deeply integrated into the corporate sector’s financial structures over this short period. The author locates the source of fragility and instability of the Indonesian economy, which led to the crisis in 1997 and 1998, in the financial structures of the corporate sector that emerged under the finance boom.
