The 19th century is known in the history as a period when Dutch made significant geographical expansion in the archipelago. Driven mostly by the so-called new imperialism mentality, European countries were competing for colonies outside the Europen continent for both economic and status motives. One important motive for the Dutch to expand its territory in the archipelago – apart from financial benefits, was to prevent other European countries from taking parts in the region. Shortly after the Dutch Indies began to take the shape of a present Indonesia, the crown announced instalation of a new policy. 'The Ethical Policy' was claimed to raise the living standards of the native population, but brought a significant side effect. Its educational ingreddient brought the awakening of Indonesian nasionalism by providing Indonesians the intelectual tools to organize and articulate their objections to colonial rule. For the very first time people began to develop a nationl conciousness as 'Indonesians'.
The Dutch were powerful enough to curb Indonesian nationalism by arresting its leaders and suppressing the nationalist organizations but never were they able to eliminate nationalist sentiment. The struggle between the Dutch colonial government and the Indonesian nationalist movement was well under way when the Japanese occupied the Indies in 1942. They remained until the end of World War II in August 1945.
On August 17 of 1945, Sukarno and Mohammad Hatta proclaimed the independent Republic of Indonesia with Sukarno as president and Hatta as vice president. At the time of Indonesia's proclamation of independence in 1945, President Sukarno defined an ideological base for the state - the "Panca Sila" (meaning 'five virtues'), to be followed by all citizens and sworn by the social organizations. Main principles imposed were the adoption of Indonesian "Bahasa" language and the acceptance of one among five religions: Islam, Catholicism, Protestantism, Hinduism and Buddhism, forbidding the animist cults and other traditional practices. Thus "Panca Sila" was assumed as an instrument of governmental control and a mean to javanize the diverse cultures.
At first independent Indonesia was a parliamentary democracy. However in February 1957 President Sukarno introduced a new political system, which he called 'Guided Democracy'. The power of parliament was reduced and his own power was greatly increased. His opponents formed a separate 'parliament' called the PRRC (the Revolutionary Government of the Republic of Indonesia). However the army remained loyal to Sukarno and he stayed in power.
Suharto, Indonesia's second president, came to power amid a period of exceptional crisis and started an era, known as The New Order. It was authoritarian, but at the same time more successful in bringing stability to the nation. Unlike Guided Democracy, its economic achievements were enormous and the well-being of the majority of Indonesians visibly improved. On the other hand, the state’s heavy involvement in banking and industry, especially the petroleum and natural gas sectors, worked against competition and encouraged corruption on a large scale Suharto provided strong leadership, but he did not support wise internal transition and, in his last years, stick by all means to power and favored family and friends.
The Asian financial crisis, which broke out in mid-1997, paralyzed the Indonesian economy with the rupiah losing 80% of its value against the US dollar at the peak of the turmoil. On May 21, 1998, Soeharto resigned after 32 years in power and was replaced by B.J. Habibie following bloody violence and riots. Indonesia held its first democratic election in October 1999, which put the country on the way towards a truly democratic and modern Republic as it is today.
In the 21st century, Indonesia appears as a country of endless possibilities and with a very dynamic development trajectory Uniting diverse cultures and ethnicities, Indonesia became a hot hub in the region for international investments, new technologies projects and business ideas exchange. The same way is an optimal place to learn, observe and gain a valuable insight into its socio-economic and cultural heritage.