OVERVIEW OF THE SEVEN YEARS ’ EXPERIMENT: WHAT CHANGED AND WHAT MATTERS?

AFTER the Asian currency crisis in 1997, Indonesia struggled to reconstructits hard-hit economy and to implement a wide range of institutional reforms under the IMF loan program. At the end of December 2003, Indonesia finally graduated from IMF supervision, which had lasted for a period of over six years. The graduation signaled to the international markets that Indonesia’s crisis and the IMF-led reforms had at last been settled, and the markets reacted favorably. In October 2004, a new government was inaugurated in Indonesia following the first direct presidential election in the country’s history. For the first time after the fall of Soeharto, a government is expected to serve out its full term of five years. The resignation of President Soeharto in May 1998 triggered off democratization reforms, leading to a dramatic regime change from authoritarianism to democracy. The central government relaxed its unified grip not only in the political sphere but also as regards socioeconomic matters, a process that often had messy consequences. The initiation of the new government is expected to mark an end to this confused period of regime change. During the seven years in which Indonesia was busily occupied with interna