Before the onset of the economic crisis in mid-1997, Indonesia was one of the most rapidly growing economies in the world. This rapid growth had generated an unprecedented reduction in poverty within a remarkably short period of time Between 1970 and 1996, absolute poverty fell by around 50 percentage points, accompanied by substantial gains in education and health standards. In the first half of the 1990s, GDP grew at an average annual rate of 7 per cent, and the poverty rate fell dramatically from 32.7 per cent in 1990 to 17.4 per cent by 1996 (Suryadarma et al., 2005).