ABSTRACT
This chapter discusses theoretically and to examines empirically the effects of the current economic crisis in Indonesia on Small-Scale industries (SSIs) development in the country. It assesses theoretically the likely impact of the full implementation of the agreed IMF reform package on SSIs development in the country. A cursory examination of the Indonesian economy reveals many industries are severely affected by the economic crisis. Theoretically, the contraction of the economy can be expected to have positive or/and negative effects, or a net positive or a net negative impact on SSIs, as on other businesses. The fiscal reforms can be divided into two types. First, the joint IMF-Indonesian government agreement proposes to do away with government-backed or-funded projects16 and several subsidies. Second, to ensure the quality and durability of the fiscal reform, it proposes to make fiscal policy more transparent and efficient.
