Since Ben Bernanke talked about tapering of the bond buying-program, Indonesia like some other emerging markets has seen a depreciation in of the Rupiah with funds fleeing emerging markets and chasing higher yields in the USA. With the Rupiah depreciating 14%, some investors wonder if this could be a repeat of the 1998 crisis when the Rupiah depreciated 85% and several banks collapsed with the economy in a deep recession. In my view there are differences that investors must note beore jumping to any such conclusion. The Indonesian economy is facing headwinds such as declining commodity prices (coal, tin, palm oil) impactng its export earnings, yet the economy is less dependent upon exports with nearly 70% of economy driven by domestic consumption. While its true that there gas been strong credit growth of more than 20% over the last few years, its also true that the credit has been backed up by domestic deposits versus overseas funding in 1998. The banks are much better capitalized at 17% capital ratios and non performing loans are at a low 2% today. I believe these may be challenging times as Indonesia overcomes the external headwinds, but internally the country isfar better prepared than 15 years ago to weather the storm.

http://www.kinibiz.com/wp-content/uploads/2013/08/Bank-Indonesia.jpg

http://www.economist.com/news/finance-and-economics/21586307-banks-solvency-not-question-profitability-another-matter-good-times