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  Indonesia Report: Overview

Indonesia map/washingtonpost.com staff
(washingtonpost.com)
(Updated: June 1999)
Indonesia's political fortunes shifted significantly in October 1965, following a leftist coup attempt against President Sukarno, the republic's first leader. Within days, leaders of the coup were executed by the army, but its aftermath brought a wave of violence. Rightist gangs, encouraged by military commanders, killed tens of thousands of alleged communists. By 1966, an estimated 500,000 people had been killed in the unrest.

The events of 1965 and 1966 left President Sukarno severely weakened. In 1966, he was forced to transfer key political and military powers to then General Suharto, who had led the military defeat of the coup. In 1967, the legislative assembly named Suharto acting president, removing Sukarno from power.

With the backing of the military, Suharto quickly proclaimed a "New Order" in Indonesian politics, concentrating on policies of economic rehabilitation and development. Using advice from Western-educated economists, Indonesia grew steadily, transforming itself from an agricultural backwater to a highly diversified manufacturing and export-driven state. Per-capita income levels rose from $70 in 1966 to $900 in 1996, while the proportion of the population living below the poverty line declined from 60 percent to an estimated 11 percent over roughly the same period.

Indonesia at a Glance

People: 204 million. It is the fourth most-populous country after China, India, and the United States. About one-third of its people live in urban centers.

Ethnic groups: Javanese 45%, Sudanese 14%, Madurese 7.5%, Malay 7.5%, Chinese 3%

Religion: 87% Muslim. Indonesia is the largest Muslim nation. 9.6% Christian; 1.9% Hindu.

Adult literacy: 83%

Life expectancy: Male, 60 years; Female, 64 years.

Income: $3,300 per capita annual income in 1996, adjusted for purchasing power. About 8% of population lives on $1 or less a day.

Industries: Oil, gas, food processing, textiles, cement, light industry.

Chief crops: Rice, cocoa, peanuts.

Other resources: Rubber, timber.

Land: A sprawling archipelago, extending more than 3,000 miles along the equator. About half of its 13,500 islands are inhabited; 60% live on volcano-studded Java.

SOURCE: World Almanac, World Bank, news services, Europa Handbook

The government instituted further economic reforms in the early 1980s, liberalizing trade and finance and expanding foreign investment and deregulation. Trade and investment boomed as a result; Indonesia's economy grew more than 7 percent annually from 1985 to 1996.

Suharto, his family, and his friends benefited greatly from the economic expansion. Critics claim the president regularly used his position to provide subsidies and regulatory relief for the companies of his children and friends. Suharto's family controls an empire valued anywhere from $16 billion to $35 billion in industries ranging from hotels and transportation, to banks and automobiles.

The country's economic prosperity, however, did little to affect the political freedom of the average Indonesian. Beginning with the 1965 coup, Suharto's security forces jailed hundreds of activists for speaking out against the government; many were eventually tortured and killed in prison.

In the mid-1970s, Suharto moved quickly to stop what he saw as a leftist move to make the colony of East Timor independent after Portugal abandoned the territory. Fearing creation of a state that could destabilize surrounding provinces, Suharto sent in troops to crush the movement and annexed East Timor. Thousands of people died during the fighting or later starved to death.

The United States cut off some military assistance to Indonesia in response to a November 1991 shooting incident in East Timor, involving security forces and peaceful demonstrators. In 1996, government forces swept through East Timor again, this time after a series of guerrilla attacks on security personnel. The government takeover of Indonesian Democratic Party's East Timor headquarters in July of that year triggered serious rioting in Jakarta. Human rights officials say that 5 died and 149 were injured in the attack. Twenty-three people were reported missing.

Despite the corruption and human rights abuses, Suharto continued to stay in power into 1998. His grip on power started deteriorating the year before, when Thailand announced the devaluation of the baht in July 1997, a move that caused the value of Indonesia's currency – the rupiah – to drop as much as 80 percent at one point. Foreign investors fled and many companies, adversely affected by the currency devaluation, went bankrupt. Like other Asian countries, Indonesia's banks were hit especially hard; by January 1998, 16 banks had their operations suspended.

As the country negotiated with the International Monetary Fund over the terms of its $43 billion bailout package in early 1998, riots began to erupt over rising food prices, gradually intensifying despite violent police efforts to put them down.

In March, Suharto was reelected to a seventh term by the People's Consultative Assembly, a legislative body largely appointed by the president himself. Student protests broke out, and calls mounted for him to step down.

In May, riots and looting turned violent as tens of thousands of students demonstrated in Jakarta and other parts of the country. Hundreds perished in clashes with security forces in Jakarta. In a show of resistance, students occupied the country's parliament grounds, demanding the president's resignation. On May 21, Suharto bowed to the pressure and resigned, naming the Vice President B.J. Habibie as his successor.

Within days, Habibie pledged to lift restrictions on political parties and hold open elections as part of a package of reform measures intended to liberalize life in Indonesia and revive political activity that had been stifled for more than four decades.

The moves, however, did little to quell the unrest. Throughout the summer of 1998, student demonstrators continued to demand the resignation of President Habibie, claiming that the government had done little to stem the country's economic crisis or spiraling high prices. Habibie called for parliamentary elections in June 1999.

In November 1998, massive student-led protests for greater democracy in Jakarta turned violent after a harsh crackdown on demonstrators killed at least five students and two others. Rioting ensued as demonstrators burned shops across the city and set cars ablaze. At least 16 were killed over a period of several days.

Soaring inflation, unemployment and poverty rates led to continued unrest into 1999. In January, Muslims and Christians battling with flaming arrows, rocks, machetes, and clubs killed dozens in eastern Indonesia during riots lasting several days.

Violence proved to be particularly bad in East Timor, the impoverished Portuguese colony invaded by Indonesia in 1975 and annexed the following year. With opposition to Indonesia's presence growing in the territory, Habibie called for an August 8, 1999 referendum on the territory's future. The vote will decide whether East Timor will become an autonomous state or go its own way as an independent nation.

In June 1999, millions of Indonesians headed to the polls across the country for national elections. Early reports suggested few instances of violence and no major cases of fraud. – Tim Ito, washingtonpost.com staff

© Copyright 1998 The Washington Post Company

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