ABSTRACT
The New Order accommodation between the state elite and the Chinese
capitalists ended abruptly when the economic crisis hit Asia in 1997. Many
members of the oligarchy were seriously struck by the unexpected dishevel-
ling of the Soeharto regime. The big conglomerates, as the financial back-
bone of the system, were especially affected. Threatened with bankruptcy,
they were thought to be unable to survive without centralised KKN and the
conducive environment of a corrupt economy and authoritarian state. The
aim of this chapter is to examine how these times of economic and political crises affected the conglomerates and to evaluate their impact. To what
extent did the state-centred patronage networks disintegrate? Could the
reforms help constitute a new system that would finally pave the way for an
eventual dissolution of the oligarchy’s cling to power? Before I discuss in
Chapter 5 how the conglomerates reacted to an unknown terrain of
democracy, decentralisation, and deregulation,1 it is necessary to analyse
the unravelling of the New Order in some detail.
