Published date: Jan 01 2016

Journal Title: KnE Life Sciences

Issue title: International conference on Agro-industry (ICoA) 2015

Pages: 61-66

DOI: 10.18502/kls.v3i3.389

Mochammad Maksum Machfoedzmaksum_ugm@yahoo.comDepartment of Agro-industrial Technology, Faculty of Agricultural Technology Universitas Gadjah Mada, Jl. Flora No.1 Bulaksumur 55281,

The Indonesia financial crisis in 1997 was an event waiting to happen very long before being precipitated by the Asian crisis. Such a collapse has its root in a development model imposed by a monolithically authoritarian government basically rooted on the topdown development model, the import-based industrial development, and the non-agro industrialization. Any policy measures, monetary-fiscal-trade policies, adopted by the government were generally in favor of import-based industry, IBI, but at the expense of agricultural and local-based economy. Based on an approximately the same scenario, the country’s crisis 2015 lasted longer since the collapse of local currency starting in May 2013. Among several differences, the most significant was the nature of capital flight. Such capital flight in 1997 was basically due to the major need to US dollars for foreign debt payment, whereas that in 2015 was principally due to remarkable economic prospect outside after its collapse following the Greek crisis. The adoption of dichotomy model in economy, protecting extremely strong dependence of the Indonesia economy on the IBI, sacrificing the domestic-based-industry, DBI, has been the central criticisms against the country’s economy as relatively unstable, centralized in Jakarta only, and having minimum value added. Challenging the weaknesses of such an economic model, the country should have been adopting the model of economic dualism positioning IBI and DBI as dual sectors having the same importance

Keywords: Economic dichotomy, Economic dualism, DBI, IBI. 

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