ion of debts as the baht continued its free fall.
Often called the "Asian financial crisis," the situation shows what happens when a nation, or group of nations, does not link its currency to more stable currencies. Most Asian nations, including Indonesia, exploited low-wage/low-skilled labor forces, to lure foreign direct investment (FDI) to build "screwdriver plants" that would assemble and ship consumer electronics products and other labor-intensive goods (Cimiero, 1997).
As long as the currency is pegged to a stable currency, Indonesia was viewed as an attractive home for FDI and foreign portfolio investment in its securities markets. This naturally pleased the Suharto family (the general has several sons and many cousins, all of whom are involved with, or control many of the nation's industries) who took advantage of the foreign investment. This created a problem, however, because it gave Indonesia a large negative balance of payments (BOP) on net investment income.
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