In Indonesia, the greatest impact was created by the financial crisis of 1997 to 1998 and eventually resulted in reforming the society, economy, and political scenario. Due to unavoidable debacle led to a skyrocketing the poverty scenario at that time. The scenario became a worldwide discussion theme leading the experts to analyze the scenario as an institutional deficiency and the main factors contributed to Indonesia’s economic recession include regulation in an imperfect central bank, practices which are irregular within banks, and lacking financial regulation.
The condition was recognized by the Indonesian and hence, the corporate governance to be important with a number of improved efforts. The effective measures taken into consideration by the government and other private institutions are establishing corporate governance institutions, the development, and revision of the relevant laws, and the corporate governance standards are improved.
The Coordinating Minister for Economic Affairs, the national corporate governance committee in 1999 was established due to the promulgation of Indonesia’s first code of Good Corporate Governance was followed in 2001. The revision of the code happened in 2006. A series of changes were made in the Capital Market and Financial Institutions Supervisory Body and their implementation for improvement were overseen for the investor’s protection.
Bank Indonesia in 2006, published, monitored, and enforced the corporate governance regulations for banks and also a series of legislative reforms were enacted by Indonesia on governance such as the Law on Foreign Investment adopted in 1967 and amendment in 2007 where the International Environmental Law was adopted in 1995 and amendment happened in 2007, the insurance business law in 1992 and the competition law was adopted in 1999.
In my opinion, the growth in terms of societal, political and economic reforms in Indonesia cannot be avoided and also can be viewed as a potential hub for new and profitable opportunities. The citizens can also be seen very forward-looking and welcoming towards the latest trends.
Source:- D. Hartono and D. Hermann, “The Indonesian Economic Crisis and Its Impact On Educational Enrolment and Quality,” Institute of Southeast Asian Studies 7, May 2001.; IFC Indonesia, The Indonesia Corporate Governance Manual (Jakarta: IFC, January 2014).