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The History of Indonesia: Transcending Different Regimes to the Current Democratic Government

History of IndonesiaThe history of Indonesia has seen a transition from early kingdoms through Hinduism and Islamic to European occupation. It saw the introduction of the trade network, infrastructural, political, and economic development over centuries. Much has happened since the early kingdom through the colonial period and eventually the independence of the nation. We’ll look at the history of Indonesia, right from the medieval period to the different political dispensation in Indonesia.


The Most Populated Islands

Sumatra, Java, Bali, and Sulawesi are the most heavily populated islands out of the 17,000 that make up the country. The history of Indonesia began many millennia ago with the arrival of the Melanesians. Indonesia’s ethnic majority are descendants of the Austronesians. The Austronesians originated from Taiwan and first landed in Sulawesi. With them, they brought pigs, rice, and pottery to the country.


Culture and Spirituality

The history of Indonesia points out that the locals were originally animists. This means that they worshipped their ancestors. Once other cultures began to arrive on the island, Indonesia quickly and eagerly absorbed the spirituality and culture of India. This includes Hinduism and Buddhism. In fact, one of the earliest Indonesian kingdoms in its history was a Hindu one known as the Srivijaya empire.

Because of its naval roots that easily linked Indonesia to China, the Srivijaya empire quickly gained wealth and power.


Early Kingdoms

The oldest inscriptions were discovered in East Kalimantan in 375 AD when the Kutai Martadipura Kingdom was in power. These inscriptions indicate that there were three rulers during that period. A century later, a stone inscription also showed that in West Java, king Purnavarman of the Tarumanagara Kingdom had Hindu divinity. In the 8th and 10th centuries, Buddhism temple residue showed the ruling of two dynasties in Central Java. The Sailendra-dynasty and the Sanjaya-dynasty had since practiced Buddhism throughout their reign.

Historical landmarks prove that there had been existing dynasties before the influence of Islam. For instance, the Borobudur was the world’s biggest Buddhist temple in the 9th century. It was constructed during the Sailendra Dynasty.

Indonesia is also home to the Prambanan, the biggest Hindu temple. This temple was constructed during the Sanjaya Dynasty.

The Majapahit Empire reigned from 1293-1527. It was a mighty and majestic maritime empire. Under King Hayam Wuruk, the Majapahit empire was at its peak.


The Entry of Islam in Indonesia

The Hindu faith was very strong during the Majapahit empire. However, Muslim merchants consistently preached of their teachings during their trips to the island. Today, Islam is the predominant religion in Indonesia.

The Muslim traders’ arrival in Indonesia brought about the Islamic era. This led to the adoption of the new faith by the majority of the locals. In return, Islamic kingdoms followed, converting even more indigenous people. According to the inscription, there existed an Islamic kingdom in the northern part of Sumatra called Pasai (Samudera). This was the 1st Islamic kingdom in the 13th century to occupy Indonesia. Centuries later, multiple Islamic cities came up in Java. In the 14th and 15th centuries, the influence of Majapahit started to fade away due to succession skirmishes and the Islamic empires’ uprising.


Portuguese Arrival

Because Indonesia was a country rich in resources and spices, Europe began to have its eye on this location. Francisco Serrao was the first Portuguese from the continent to come and settle on the islands of Indonesia in the 16th century (1511). This was barely after conquering Malacca, an Islamic kingdom in the Malay Peninsula.


Dutch Occupation

In the 18th century, the Dutch cemented their occupancy in Indonesia through the United East India Company after the Mataram Empire’s collapse. Its political power was a result of its trading that began as early as the 17th century.

Under Dutch colonial rule, they adopted dualistic and direct systems. An indigenous Dutch hierarchy operated as an intermediary between the Javanese locals and the European civil service. At the helm was the Javanese nobility, formerly the administrators running the Mataram dispensation. Following the external altercation and the Napoleonic wars in Europe meant more financial burden on the colony. Therefore, a new system was introduced in 1830 by Governor Van den Bosch—a ‘Cultivation System’ of growing crops for export in Java.

In return, land-taxes came into existence as the Javanese were also paying taxes.


Colonial Indonesia Liberal Era

The majority of the peasants were against the cultivation system, and they echoed their voices and supported the liberal system. This was a new opening in the history of Indonesia for the Liberal Era. During this era, there was much stimulus on private capitalism on colonial policy in the Dutch Indies. The happenings’ culmination did not benefit as much as they would want as the farmers suffered famine and epidemics.

The ethical policy introduction was focusing on improving the living standards of the indigenous population. For this to happen, there was a direct state intervention under the motto ‘irrigation, education and emigration.’ But the policy did not achieve its primary purpose and unearthed the rise of Pan-Indonesian nationalism against colonial rule. In the 1920s, the Dutch regime was more repressive, which ignited the entire Indonesian nationalist’s radicalization.


British Occupation

Despite the Dutch control in Java’s island, they slowly lost their grip due to mismanagement, corruption, and vicious competition from the British East India Company.

In the 19th century (1814), the British arrived in Indonesia and constructed Fork York in Bengkulu, west coast of Sumatra. Indonesia came under British rule (1811-1816) when the Napoleonic wars were in Europe. At that time, Holland was under French rule. Under Sir Thomas Stanford Raffles’ leadership, there was fractional self-government. Indonesia now had a land-tenure system switching the detested Dutch forced-agricultural system. When the Napoleonic war ceased and the end of Holland’s French occupancy, a convention was signed between the British and the Dutch in London. The Dutch colonial possessions would return to their possessions dating back from 1803 onwards.


The Krakatoa Eruption

The history of Indonesia would not be complete without mentioning the mighty eruption of Krakatoa in 1883. It was the biggest and the loudest volcanic eruption the island had ever experienced.

Because of its location, Indonesia has been the victim of many natural disasters throughout its history besides the Krakatoa eruption. In 2004, there was the Indian Ocean earthquake and tsunami that hit the island and left more than 100,000 people dead. With many active volcanoes still present on the island, earthquakes are a common occurrence and something business investors should keep in mind.


Japan Occupation

The entrance of the Japanese rule in 1942 was again a different experience in the history of Indonesia’s political front. The natives thought that the Japanese were more liberators, but they soon realized that they only served their interests. They experienced a lot of adversity through that period, from scarcity of food to clothing and medicines alongside forced labour. The Dutch officials were replaced by Indonesian and reduced into camps. As a result, Indonesian could now prepare for their independence. The end of the Japanese occupancy was the start of a new era.


Declaring Independence

The journey to independence in Indonesia came after the Second World War in 1945. It was the end of Japanese occupancy of the territory, and the Dutch were eagerly anticipating reconquering their former colony. In return, it agitated the nationalists to seize the opportunity to throw off the Dutch’s colonial oppression and declare Indonesia’s independent state. Achmed Sukarno and Mohammed Hatta led the scramble for independence.

Through their collaboration with the Japanese, they played an integral role in speeding up the armed struggle. The Indonesia army had, by this time, secured the Japanese army backing against the Dutch well-trained army. By the time the Dutch were making substantial intrusion in Sumatra and Java, it attracted many critiques in the United Nations. In return, the United States’ final solution was to be through negotiations which led to a delegation conference at The Hague in August 1949. A delegation of 120 delegates under the Dutch prime minister’s chairmanship with Indonesia under the wings of Hatta culminated into a fruitful outcome. November 1949 opened a new chapter in the history of Indonesia of power transfer from the Dutch to independence Indonesia.

On December 27th, Indonesia celebrated its independence as a sovereign state in the same year.


Soekarno’s Rule

The Soekarno’s rule birthed independent Indonesia, and it marks the old order. Soekarno of Surabaya was born in 1901 in East Java, as he devoted his life to Indonesia’s independence. His becoming a nationalist began in 1927 when he established a political vehicle, the Indonesia National Party. However, this did not sit well with the colonial powers, and in 1929, Soekarno was arrested and incarcerated. The imprisonment only strengthened his national outlook as people saw him as a freedom fighter who liberated the indigenous Indonesians. His release didn’t stop him from continuing with his course as it got him in an altercation with the colonial authorities leading to multiple arrests in the 1930s.

Now, in 1942 during the Japanese invasion of the Dutch Indies, Soekarno saw it noble to collaborate with the Japanese as an easy avenue to reach their independence successfully. It turned out that this strategy was very effective.


The Challenges of Young Independent Nation

The journey right after independence wasn’t smooth, but it experienced a couple of challenges. At the time, Soekarno was the first president, and Mohammed Hatta was his vice. After the proclamation of independence in August 1945, the country underwent into revolt against the Dutch that lasted four years. The contention was that the Dutch did not want to relinquish their power from this lucrative Asian colony.

By 1950, the government replaced the Dutch constitution with a new constitution that ushered in a government parliamentary system. This government system would reassure individual freedoms and subjugate the military subordinate to the country’s civilian leadership. Again, the President would only remain as a ceremonial leader within this system.

Under the guidance of Soekarno’s rule, he proposed a “Guided Democracy,” which meant going back to the 1945 Constitution where the President had authority. The proposal came about to ease the ideological disparity within the cabinet that was hindering Indonesian growth. Soekarno was able to quell any tension between the different groups; the nationalist, communists, and the Muslims. However, he had formed an extremely threatening and antagonist government with these different fractions during his reign. This was the beginning to an end of Soekarno’s rule that saw a period of extraordinary crisis, economic downfall, and bloodshed.


Suharto’s Rule & the New Order

The end of Soekarno’s rule entered Soeharto’s administration and was the writing of another chapter of the history of Indonesia. By 1966, Indonesia was in the middle of a crisis, and President Soekarno was under immense pressure to transfer power to the army. The decree—Supersemar—as it came to be known meant the immediate transfer of executive power from Soekarno to Suharto.

The inauguration of Suharto as the second president of Indonesia in 1968 marked the ‘New Order.’ The first emphasis was economic development and renewal of ties with the western world that had shattered to enable foreign aid flow.

Technocrats in the financial sector implemented practical fiscal policies. At the beginning of Suharto’s reign, cabinet ministers only implemented policies sanctioned from high office. Suharto introduced the Golkar (functional groups), which were his powerful parliamentary vehicle. This active group was highly networked from district level to village levels and sponsored financially to boost the central government.

During Suharto’s new order, macroeconomic figures began to soar up, despite getting resistance from the local people. The local people believed that the government was only concerned with attracting foreign investors than investing in local investors.

Despite frustrations within the country, Suharto was able to tighten his stance in the 70s. During this period, when there were oil booms, infrastructural development programs were in progress. In the 90s, there was a shifting focus on Islam by establishing the Indonesian Association of Muslim Intellectuals (ICMI). Educated Indonesia at this point was now frustrated with the regime, which marked the rising of opposition. Street demonstrations and protests were the order of the day as they became more frequent. Suharto’s patronage system of rule and the Asian Financial Crisis greatly impacted all the strides made marking his government’s collapse.


The Road to Democracy & Modernization

The resignation of Suharto’s regime in 1998 due to mounting pressure from street protests and demonstrations and economic turmoil set the stage for a new political democracy in Indonesia. The political history of Indonesia would significantly take another direction. Under the New Order regime, political parties were reduced to only two to prevent others from participating in elections. Suharto used his political vehicle Golkar and the army to intimidate voters. There was the gaging of the media by the government.

The road to democracy has been bumpy in Indonesia right from the end of the Suharto regime. Following the transition, the lawmakers could freely appoint regional executives. However, the old elites’ supremacy in the provincial legislature’s conspiratorial horse-trading for votes between parties diluted the citizens’ voting power. After the announcement of direct elections in 2005, it alleviated the influence of the authoritarian legacies. Eventually, the citizens would have the constitutional right to vote for a leader who best represented their interests.

Ever since the introduction of the election policy, there is some decency in governance and more public participation in its political process. The current President, Joko Widodo, is the first beneficiary of the new democratic dispensation.


The Indonesia of Today

The history of Indonesia has seen much power change of hands from early kingdoms to the current democratically elected political regime. Over those centuries, we’ve witnessed Indonesia’s introduction to new religions such as Hinduism, Buddhism, Islamism, among others, due to the influence of the powers in place. The foundation is intact, and Indonesia has what it takes to chart the following new chapter of its history from now moving forward.

Today, Indonesia has achieved a high level of human development and enjoys steady financial growth. It is one of the many idea destinations in Asia to consider starting a business venture.

If you are thinking of launching a business in Indonesia, contact the 3E Accounting team and enquire about our Indonesia company incorporation services.


History of Indonesia