Indonesia Modern History

By | January 31, 2023

Indonesia is a country located in Southeastern Asia. With the capital city of Jakarta, Indonesia has a population of 273,523,626 based on a recent census from COUNTRYAAH. Indonesia’s modern history is characterized by General Suharto’s long holding of power from 1968 to 1998. His authoritarian regime was dominated by the military and the army-controlled party Golkar. Political stability and economic growth were achieved at the price of severe repression by political opponents and separatists. The military and Suharto’s immediate circle were greatly enriched, but in an economic crisis of 1997-1998 the regime for popular demonstrations fell. Indonesia has since undergone an occasional painful democratization with many violent internal conflicts.

General Suharto’s take-over as president in 1967 led to major fluctuations in Indonesian politics and economy. The fight against communism continued for several decades. Foreign policy changed, both in relation to Malaysia and to the communist countries; contacts with the latter were broken or frozen, while relations with Malaysia were restored.

  • ABBREVIATIONFINDER: List of most commonly used acronyms containing Indonesia. Also includes historical, economical and political aspects of the country.

In domestic politics, Suharto launched “the new order”, whose main objective was political stability. The army-led party Golkar provided a political base for Suharto. Through Golkar, the army could play a role in all areas of society. Golkar quickly overshadowed all other parties by massive pressure on the electorate of the regime and the army.

In the 1971 parliamentary elections, Golkar received 63 percent of the vote, and in the subsequent elections until the end of the 1990s, the party continued to be at about the same level. In 1973, the country’s five nationalist and Christian parties were forced to merge into one party, the Democratic Party (PDI), while the four Muslim parties merged into the United Development Party (PPP). All other political activity was banned. Check best-medical-schools for more information about Indonesia.

Pancasila and economic growth

For Suharto’s rule, the state ideology, pancasila (introduced by Sukarno in the 1945 constitution), also came to play an important role. Five principles would govern the nation: the belief in a single god, humanism, national unity, democracy and social justice. Pancasila is based on unanimity, reverence for authorities and a priority of the collective over the individual. Opposing pancasila was done simultaneously with belonging to either the “extreme left” (ie, communist) or the “extreme right” (ie radical Muslim).

The second guiding principle for Suharto’s “new order” was economic development. Suharto enlisted the help of foreign experts who drew up economic policy guidelines. The targets were set in five-year development plans. Contrary to Sukarno’s socialist policies, the Suharto regime chose a more capitalist course, even though the state played a major role through investment and trade restrictions.

The regime favored certain industries and companies. Large conglomerates (mergers of companies) arose, often under the leadership of relatives of Suharto or wealthy Chinese. The conglomerates were given a monopoly on producing and importing certain products in exchange for financing government investment objects. In order to protect domestic companies, import restrictions were imposed. This led to the companies being able to sell their goods on the domestic market at soaring prices.

With the aid, foreign loans and oil exports – which were heavily favored by high oil prices in the mid-1970s – the economy expanded rapidly between 1968 and 1982. Indonesia, which in the 1970s was the world’s largest importer of rice, became self-sufficient in 1985 and could also export rice.

The Suharto family enriches themselves

When oil prices fell in 1986, the regime changed its focus on increased production of non-oil-based export goods. Plywood exports became significant. At the same time, trade was liberalized, favored companies lost their import monopoly and the credit and tax system was reformed. Suharto’s family and friends were given an increasingly important role in the economy. Through managerial positions in state-owned enterprises and allocations of state monopolies, contracts and subsidies, the people of the Suhartos sphere gained enormous wealth. The questionable economic dealings of the Suharto family aroused anger among the people and encouraged corruption among lower officials as well.

Suharto’s attempt to silence all criticism also helped to weaken his power base. The regime saw the popular Megawati Sukarnoputri, the daughter of President Sukarno, dismissed as party leader of the Democratic Party (PDI) in 1996. Suharto did not want her to challenge him in the 1997 parliamentary elections. Suharto’s actions. In the spring of 1998, Suharto was re-elected president for a seventh term by the People’s Advisory Assembly.

In the summer of 1997, the Asian financial crisis reached Indonesia. When the authorities, in response to speculation against the Indonesian currency rupiah, were forced to give up the US dollar, this meant that the exchange rate fell sharply. The country’s deeply indebted companies and banks faced major problems in meeting their interest rates, which led to a wave of bankruptcies. Inflation rose record-breaking.

The Asian crisis leads to riots

In October 1997, Suharto was forced to turn to the IMF for assistance. In January 1998, he signed an agreement with the IMF, which would allow Indonesia to borrow $ 43 billion. In return, Suharto promised to further liberalize the economy. The monopoly on plywood exports would be wound up as well as the support for status projects as a separate Indonesian car and aviation industry. But the promised help quickly froze in when Suharto did not show enough willingness to implement the reforms. New negotiations were carried out and the agreement was rewritten, but rupiahn collapsed and it became an impossible burden to pay interest and deductions on the $ 120 billion foreign debt.

When the Suharto regime, on May 4, 1998, as part of the agreement with the IMF, increased the gasoline price by 70 percent overnight, a violent dissatisfaction was created among the poor. The students had already mobilized ever more demonstrations against the regime for several months. The price increases, combined with the death of four students from the University of Trisakti during a peaceful demonstration on May 12, became the spark that two days later triggered a riot in Jakarta. 1,118 people died and 5,000 buildings were burned down. The riots were mainly aimed at banks, companies and businesses controlled by the Suharto family or its business friends, including the Chinese-owned conglomerates. The looting and murder indiscriminately affected the Chinese minority.

The suharto regimen falls

Suharto tried to appease the opposition by replacing parts of his government, but the demands for him to resign increased in strength and now came from former allies. It was also clear that Suharto could no longer count on the full support of the military leadership. After 32 years, on May 21, 1998, Suharto finally surrendered power to his Vice President BJ Habibie.

Following Suharto’s case, several high-ranking officials and politicians from Golkar have been subject to judicial investigations. But Suharto himself died at the age of 86 in January 2008 without being tried. In 2000, a court found Suharto incapable of passing a lawsuit because of poor health. He was then accused of embezzling $ 570 million of state funds. The lawsuit was formally closed in May 2006. The Suharto family is said to have accumulated assets worth $ 15 billion – $ 45 billion.

Indonesia’s new President Habibie implemented several democratic reforms. Among other things, political prisoners were released and a new law on freedom of assembly and press was introduced. Contacts with the IMF and other lenders improved.

The fact that Indonesia claimed its 24-year occupation of East Timor at the end of 1999 was also Habibie’s merit – or, as some Indonesians saw it, wrong. In January 1999, Habibie offered East Timorans autonomy in Indonesia or – if the offer was ratified – independence. In August, a UN-organized vote was held among East Timorans on the proposal. When the majority voted for independence, it led to strong protests from militia groups in East Timor who wanted the area to remain Indonesian. In its violent advance, the militia killed about 1,500 people. Two-thirds of East Timorians were forced to flee, either through mass movements organized by the militia or on their own initiative.

East Timor becomes independent

The militia groups received weapons and support from local phalanges in the Indonesian military and much indicates that even high-ranking military in Jakarta had knowledge of the militia’s plans. Following the pressure from the outside world, the Indonesian government reluctantly agreed to allow UN forces to reestablish the regime in East Timor. In October 1999, the People’s Advisory Assembly formally abolished East Timor’s position as an Indonesian province. According to the Truth and Friendship Commission set up by Indonesia and East Timor in 2005, systematic crimes against humanity were committed by Indonesia’s army in East Timor in 1999 by providing Indonesia-friendly militia with weapons. The militia then initiated mass murder of independence supporters.

The June 1999 parliamentary elections became a major step on the road to democracy. A new electoral law made it possible to hold elections under fair and democratic conditions. The previous duty of civil servants to vote for Golkar had been removed. The Democratic Party Camp (PDI-P), which broke out of PDI in 1998 with Megawati as its leader, became the largest party. Second place came Golkar.

Megawati was a big favorite when the People’s Advisory Assembly met in October 1999 to appoint a new president. But representatives of the Muslim parties considered it inappropriate with a woman in the presidential post and instead launched Abdurrahman Wahid as his candidate. Wahid’s newly-launched Muslim National Revival Party (PKB) had received 10 percent of the vote in the election. When the People’s Assembly rejected Golkar’s candidate Habibie, the party chose to support Wahid, who thus won the vote.

First female president

In Megawati’s camp, the wrath became great. Only since Wahid succeeded in persuading Megawati to stand as vice president did the protests subside. It soon became apparent that the government of Wahid did not manage the economy or end the regional conflicts in Aceh, Papua (formerly Irian Jaya) or the Moluccas. The morbid Wahid also showed samples of unpredictability and whimsicality. The criticism against the government grew and Wahid came on a collision course with the House of Representatives when he was accused of being involved in two corruption millions in the multi-million class.

The Prosecutor General in May 2000 released Wahid from the suspicions of corruption, but in July the People’s Advisory Assembly decided to dismiss Wahid for incompetence and for involvement in financial scandals. Vice President Megawati Sukarnoputri was elected by Parliament as new president until the 2004 elections.

In parallel with the political upheavals in the country’s leadership, violent unrest was going on in different parts of the kingdom. The conflicts had long since surfaced or intensified when the Suharto regime’s military repression eased in 1998. East Timor’s separation from Indonesia also increased the demand for independence elsewhere, including in Aceh and Papua (see Aceh and Papua, respectively).

In Kalimantan, fighting erupted among the indigenous people of the Dajak and invaded Maduras from the island of Madura in 1998. In new violence that erupted in February 2001, the Dajakas killed around 500 Maduris and 150,000 people fled. The conflict was rooted in the difficult economic and social situation of the Dajak as well as in the competition for natural resources.

Regional conflicts

In 1999, violent conflicts between Muslims and Christians were triggered in the Moluccas and Sulawesi. The balance of power between the fairly equal religious groups had been disrupted during the 1990s by the move of Muslims on the encouragement of the regime. During the conflicts, churches and mosques were burned down and people were evacuated. Mass killings took place on both Christians and Muslims. The clashes worsened as thousands of militant Muslims from the Java-based militia group Laskar Jihad traveled to the territories to participate in the fighting. The militias were supported by groups within the military and even politicians in Jakarta were reported to inflame the fighting.

Indonesian military was sent to the Moluccas, but its presence worsened the situation when soldiers took party for either party. Only in February 2002 did the Megawati government negotiate a ceasefire between Christian and Muslim leaders. By then, more than 5,000 people had been killed in the archipelago and hundreds of thousands had lost their homes. The acute crisis was over, but for years the violence continued to flare up even after the peace agreement.

In Sulawesi, the city of Poso became the center of religious conflict. The fighting raged between 1999 and 2001, when a peace agreement was reached which reasonably restored calm. An estimated 2,000 people had been killed in the fighting and tens of thousands had fled. Outbreaks of violence, however, also occurred after the peace agreement. In September 2006, riots erupted in Poso when thousands of Christians went into violent protests against the execution of three Christian militia. A month later, a Catholic priest was shot to death by unknown perpetrators. The murder was linked to the protests against the executions, as the priest had led several of the demonstrations.

(For information on the terrorist attack on Bali in 2002 and the consequences thereof, see Militant Islamism.)

First directly elected president

Through a constitutional change, in September 2004, the Indonesians were able, for the first time, to elect a president in direct, general elections. Winner was the former General Susilo Bambang Yudhoyono. He clearly won over incumbent President Megawati Sukarnoputri in the second and decisive round of elections.

Yudhoyono had left his post of security minister in Megawati’s government in March of the same year and formed his own party, the Democratic Party (PD), before the parliamentary elections in April. In the election Golkar became the biggest party, while Megawati’s PDI-P came in second place. Largest Muslim party became the moderate United Development Party (PPP). Yudhoyono’s PD became the fourth largest party. The election result was seen primarily as a defeat for Megawati, whose party backed by 44 seats compared to the 1999 election.

In October, Yudhoyono formed a government consisting of both secular and Muslim politicians. Golkar’s decision in December 2004 to support the government received strong support in Parliament.

Yudhoyonos ten years in power

During the 2004–2009 term of office, Yudhoyono and his government enjoyed strong popular support. The consequences of the tsunami disaster on July 2004 (see Aceh), when at least 170,000 people were killed in the province of Aceh, caused the nation to join the political leadership. Yudhoyono also became known as a pragmatic leader, who took power against the serious corruption within the state administration. During his time in power, a commission was established, as well as special courts for the fight against corruption. More than 1,000 politicians and civil servants at local and regional level were examined by the judiciary and hundreds were found guilty. The government’s methods of combating militant Islamism after the Balidade in 2002 were praised by the outside world, while the country’s economy showed strong growth. Also the peace agreement 2005 between the government in Jakarta and the separatist GAM guerrilla in Aceh (see Aceh) is considered to be Yudhoyono’s more significant success (Yudhoyono became very popular with the Aceh after the peace agreement; in the 2009 presidential election he received 93% of the Aceh vote).

During the 2009 election year, Yudhoyono reaped new successes. In the April parliamentary elections, his PD went strong and became the biggest party. Golkar and PDI-P backed and came second and third respectively. The fourth largest party was the Muslim Welfare and Justice Party (PKS). In the July 2009 presidential elections, Yudhoyono won the first round of his opponents Megawati Sukarnoputri from PDI-P and Golkar’s candidate Jusuf Akalla.

After the election victory, the president formed a broad coalition government consisting of DP, Golkar and the four Muslim parties National Mandate Party (PAN), PKS, National Revival Party (PKB) and PPP. PDI-P became the largest opposition party.

During the second term of the 2009–2014 term, the popularity figures of the Yudhoyono government turned significantly down. Despite the fight against corruption, Indonesia remained a severely corrupt country. The president’s reputation took a toll when he was forced to deal with a series of corruption scandals, including with government ministers involved. However, the Yudhoyono government received praise for piloting Indonesia through the global financial crisis of 2008-2009.



Tsunami kills 170,000 in Aceh

A powerful earthquake in the Indian Ocean sends a series of tsunami over the Aceh province in northern Sumatra. More than 170,000 Aces are killed and about 700,000 become homeless. The worst hit is the provincial capital of Banda Aceh and its environs and the city of Meulaboh, which is totally destroyed.


Yudhoyono’s new government takes office

President Yudhoyono’s new government takes office with ministers from secular DP and PDI-P, as well as the Muslim PAN and PKS. Golkar promises to support the government in parliament.


Bomb attack against the Embassy of Australia

Nine people are killed and over 180 injured when a car bomb goes off outside the Australian embassy in Jakarta. The militant Islamist network Jemaah Islamiah (JI) is suspected to be behind the attack.

Yudhoyono wins the presidential election

Susilo Bambang Yudhoyono of the Democratic Party (DP) gets over 60 percent of the vote in the second and decisive round of the presidential election, thus clearly winning over Megawati Sukarnoputri from PDI-P, despite Golkar having given the latter candidate his support. The turnout is estimated at 75 percent.


The first direct presidential election is held

In the country’s first direct presidential election, former general Susilo Bambang Yudhoyono, who is running for the newly formed Democratic Party (DP), gets about a third of the vote. In his election campaign, Yudhoyono emphasized the importance of stimulating the country’s economy and fighting terrorism and corruption. The second most votes are Megawati Sukarnoputri from PDI-P (just over 26 percent), followed by Golkar’s candidate General Wiranto (22 percent). As no candidate gets 50 percent of the vote, Yudhoyono and Megawati will meet in a second and decisive election round in September. The turnout is 78 percent.


Golkar wins the parliamentary elections

The secular party Golkar wins 128 out of 550 seats in the parliamentary elections and becomes the largest party of the legislative assembly. Two come with PDI-P with 109 seats, followed by the Muslim PPP (58 seats), the Democratic Party (57 seats) and the two Muslim parties PAN and PKB, which receive 52 seats each. The turnout is 84 percent.

Indonesia Modern History