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20 years after the Asian Financial Crisis, Indonesia has lessons learned — and warnings

Indonesia suffered its worst financial crisis in 1997 to 1998. The Asian Financial Crisis that hit the nation severely affected its economy, with some reports indicating a 13.7 percent contraction in growth.

In one year, the Rupiah weakened from 2,500 against the U.S. dollar, to 10,000 Rupiah — with the pair peaking at 17,000.

Twenty years on, the decline that triggered poverty, political instability, and mass unemployment has taught policymakers important lessons about maintaining healthy debt levels, according to Chatib Basri, Indonesia's finance minister from 2013 to 2014.

Speaking with CNBC's "Capital Connection" on Monday Basri suggested that Indonesia has already learned from its mistakes, which could be seen during the Global Financial Crisis when the government's economic stimulus limited the negative impact.

Still, the government's efforts to deregulate the economy do not always translate to the local level, as municipal governments often refuse to comply with the state's laws. Due to decentralization, the central government doesn't have total control over, which impedes the full implementation of any new policies.

And he's not the only one expressing anxieties about the economy. J. Soedradjad Djiwandono, former governor of the Bank of Indonesia between 1993 and 1998, said he is worried about the country having too much debt.

Djiwandono, who was dismissed from office due to policy differences with former President Suharto during the crisis, said that Indonesia's "increasing leveraging scares me."

"Studies show that high leveraging is associated with more problems when crisis erupts, and also requires longer recovery time," he told CNBC.

Despite their nervousness regarding the future, foreign investors like Mark Mobius remain optimistic on the region.

Mobius, the executive chairman of Templeton's emerging markets group, said in a recent note that "many countries, companies and individuals have since learned from the harsh lessons of the [Asian Financial Crisis] and have built up foreign reserves and reduced foreign debt loads in relation to GDP and earnings," and that then means that the "outlook on emerging marks post-crisis is very good."

Adrian Zuercher, head of Asia Pacific asset allocation for UBS Wealth Management, told CNBC that while the Indonesian equity market may be a laggard for now, he expects it to outperform in the second half.

"Indonesia has underperformed in the first half, but we see multiple signs that the economy is starting to pick up," he said, adding that UBS expects "earnings to grow 15 percent this year, 10 percent next year, and we see upside for the equity market almost 10 percent, at this point, for the rest of the year."