Michael Shari in Jakarta, with Joyce Barnathan in Hong Kong – The 60 Indonesian blue-chip company executives summoned to Bank Indonesia, the country's central bank, on Oct. 10 all had something in common. Soedradjat Djiwandono, governor of Bank Indonesia, suspected that each of their companies had at least $100 million in offshore debt, much of it unreported on their balance sheets. So the governor gave them each a blank form asking them to report their debts.

It's hard to think which is scarier: that Indonesia's companies may have billions in hidden hard-currency debt they can't repay, given the collapse of the rupiah–or that the governor of the central bank is reduced to handing out blank forms to find out what's going on. Either way, the tle illustrates the severity of the crisis. Before International Monetary Fund officials can give Indonesia a standby loan, the IMF must find out how steep the country's debts are. No one is sure. The best estimate is that companies owe more than $60 billion, in addition to the $100 billion owed by the government. What's certain is a slowdown in growth and a new challenge for President Suharto and his inner circle.

Infighting

The tumult is coming at a risky time for the 76-year-old Suharto. To secure the wealth and power of his family and associates, he wants his eldest daughter, Siti Hardiyanti Rukmana, or Tutut, to succeed him. But the success of his 32-year regime has depended on delivering year after year of solid economic growth–enough to have kept the people content and their anger contained as Suharto's associates enriched themselves. "Suharto is still strong, but his critics can now force him to realize there are limits to his ability to maintain power," says Abdurrahman Wahid, chairman of the 34-million-member Islamic mass organization Nahdlatul Ulama. Adds a Jakarta-based analyst: "The legitimacy of the regime is in question."

The anxiety is already creating divisions inside the regime. Senior officials of the ruling Golkar party report that Suharto's ministers have quarrelled over which of their pet projects would get the ax if the IMF pushes for cuts in state spending. Tension has reached such levels that Research & Technology Minister B.J. Habibie, long a Suharto protege, is under pressure. He complains "manipulators" fabricated a story that his fellow ministers shouted him down in front of Suharto at an Oct. 10 cabinet meeting for insisting his projects be spared any cuts. "Nobody dares to do that," he says. Habibie's airplane factory and shipyard have lost billions of dollars.

Southeast Asia's largest economy has tumbled to depths no one anticipated. The region's currency crisis has dragged the value of the Indonesian rupiah down nearly 40% since July. The central bank has driven up lending rates to 40% to protect the currency. Now, the economy is at risk. "Nobody can borrow at these rates. Business is stagnant. In another two weeks, you'll see factories grind to a halt," says Fadel Muhammad, chief executive of Bukaka Teknik Utama, which manufactures airport equipment.

Downgrades

Poor financial disclosure has added to the evaporation of confidence. Bank Indonesia, the only source of statistics on the economy, lacks the regulatory teeth to force well-connected banks to disclose details of their offshore loans. "We have some data, but we found it is not good enough," admits central banker Djiwandono. That begs the question of how bad things really are in the Indonesian economy. Citing fears of undisclosed debt, Standard & Poor's Corp. and Moody's Investors Service recently downgraded ratings for large Indonesian banks, including Bank Negara Indonesia, the biggest.

Also of great concern are white elephant projects linked to Suharto's family. The national car program, run by Suharto son Hutomo Mandala Putra, or Tommy, is slated to receive $690 million in loans from a consortium of Indonesian banks to start assembling cars. But the plan is unlikely to turn a profit in order to repay the debt. In addition, there are fears the government will be asked to shoulder $400 million in losses at Chandra Asri, a petrochemical plant run by Suharto son Bambang Trihatmodjo, industry sources say.

Some companies are taking drastic steps to get their money out. Salim Group, Indonesia's largest conglomerate, moved control over $1 billion worth of equity in a core subsidiary, Indofood Sukses Makmur, to a Singapore-listed company in July. Such a strategy is designed to keep assets out of the hands of a post-Suharto government. "This is a clear case of capital flight," says a Singapore-based economist.

Yet shielding assets makes sense to Indonesians, who remember that the fall of Suharto's predecessor, President Sukarno, in 1965 was preceded by the central bank's revaluation of 1,000 rupiah to 1. Recent scenes at bank tellers' windows have been tumultuous. On Oct. 9, a secretary on a routine errand waited nearly three hours in line at a Jakarta branch of Bank Central Asia, which is controlled by Suharto son Sigit and the Salim family. In front of her, scores of edgy Indonesians changed suitcases and rucksacks full of rupiah notes into dollars. One customer changed 300 million rupiah, or $83,000 at current rates.

Suharto is taking action to halt the anxiety and lock in at least 5% growth next year–the level needed to guarantee steady employment. He has called out of retirement Widjojo Nitisastro, an economist educated at the University of California at Berkeley who advised the Suharto regime in its early years. Widjojo heads a new council whose authority overrides that of the Finance Minister and central bank governor. Its mandate is to hammer out a deal with the IMF to obtain aid for the central bank, which will then lend the funds to overextended banks and companies. "Suharto knows he must not repeat history," says local analyst Christianto Wibisono. "He is willing to sacrifice his prestige for survival."

"Naive."

There are other mildly encouraging signs. Suharto postponed $12 billion worth of infrastructure projects, including a bridge linking Java with Sumatra, and the $560 million Jakarta Tower.

The last thing Suharto wants to do is move against his kids. "He trusts them. He is naive," says an economist who tracks the family's investments. More important, the President does not want to harm Tutut, who is rising fast through the Golkar leadership. "This is the key to his family's future," says a senior ruling party leader.

But for the first time in 32 years, Suharto's stature has weakened to the point that Vice-President Try Sutrisno, a Suharto protege who is entrusted with guarding the family empire, is under attack from ministers who hope to replace Sutrisno at the end of his term in March, say sources who are close to the palace. Islamic leader Wahid says that Suharto may not be able to last as long as he intends to as President. "Clearly, the [regime] has run its course," says Dewi Fortuna Anwar, senior economist at the government-run Indonesian Institute of Sciences. "If this crisis doesn't dent it, I don't know what will."

Suharto's best bet to ensure his daughter's political future is to move fast on reforms. "Indonesia needs good governance," says Jusuf Wanandi, head of the Center for Strategic & International Studies in Jakarta. "The system must be credible, transparent, and consistent" to gain public support for the IMF's "strong medicine." Such moves would be a good way to make the medicine palatable.