Modern Times

Indonesia is currently celebrating its 62nd year of being a nation. Indonesians recognize their independence from the Dutch starting on Aug 17, 1945, when Soekarno proclaimed independence for Indonesia. Indonesia’s modern history after Independence is particularly relevant since the trends and policies set during this time period have shaped present day Indonesia and its people.

After independence in 1949 Indonesia faced a variety of problems, ranging from intangible issues like inflation, corruption, and religious dissent, to problems caused by physical damage from the war for independence. Islamic groups, the Communist Party, and the army each worked to achieve their own agendas, further dividing the nation. An unstable, and often changing, parliamentary style democracy operated in Indonesia until President Soekarno, head of the main PKI party, rearranged the political system to focus more power in the hands of the president, his hands.

More years of instability persisted in Indonesia, with attempted coups, purges, and the eventual seizing of power in 1968 by the recently deceased Soeharto. Enforced political stability did occur during Soeharto’s rule, but this was largely due to decreases in political freedoms that were backed up by military force. While Soekarno was unsympathetic to Western economic power, Soeharto instituted what he called “The New Order.” With open arms Soeharto welcomed foreign investment and privatization of natural resources. By 1996, the Gross Domestic Product grew to US$200 billion and those living in absolute poverty were now just 16% of the population, compared to 40% twenty years earlier. Profits from oil substantially contributed to this upturn in economy. While poverty decreased, disparity of wealth dramatically increased, coincidentally so did corruption. Soeharto’s reign also included many dark chapters in human rights abuse and misuse of power.

The 1997 Asian currency crisis devastated Indonesia. Banks folded, millions became unemployed, and debt/inflation swelled. Much of the loans Indonesia took out during the Soeharto rein were not well spent, which has left the country suffering from a crippling international debt to organizations like the IMF (International Monetary Fund), and little to show for the money. Amid riots, and bloodshed, Soeharto was forced to step down in May 1998, thus ending his 32 year rule (see a video of the riots below).