Indonesia is a large, sprawlingcountry of some two million square kilometres  (736,000 square miles), about 3 times the size of Texas. Bali in Indonesia has many fine beaches, this is one of them.

Indonesia Travel Resource

Destinations

Travel Tips

This website will attempt to shed some light on the country of Indonesia in South East Asia for those travelers thinking of going there on holiday or people who aren't tourists but simple want to learn more about this amazing country and what it has to offer the world.

Overview

Indonesia is the sleeping giant of Southeast Asia. With 18,110 islands, 6,000 of them inhabited, it is the largest archipelago in the world. With well over 230 million people, Indonesia is the fourth most populous country in the world, after China, India and the U.S. — and is by far the largest in Southeast Asia. Indonesia also has the largest Muslim population in the world.

Indonesia markets itself as the ultimate in diversity, and the slogan is quite true, although not necessarily always in good ways. Indonesia's tropical forests are the second-largest in the world after Brazil, and are being logged and cut down at the same alarming speed. While the rich shop and party in Jakarta and Bali, after decades of economic mismanagement, 53% of the population earns less than US$2/day. Infrastructure in much of the country remains rudimentary, and travelers off the beaten track (pretty much anywhere outside Bali) will need some patience and flexibility.

The Indonesian people, like any people, can be either friendly or rude to foreigners. Most of the time, though, they are incredibly friendly to foreigners who make it off the beaten track. This is important, particularly after the incidents of terrorism which have occurred in the country in the 2000s. The Bali bombing in 2002, and the devastating attacks on international hotels in 2005 and 2009 sound a note of warning to visitors to Indonesia, to be on their guard.

Holidays and Events

Multicultural Indonesia celebrates a vast range of religious holidays and festivals, but many are limited to small areas (eg. the Hindu festivals of Bali). The following covers public holidays applied nationwide regardless of their belief.

The most significant season of the year is the Muslim fasting month of Ramadhan. During its 30 days, devout Muslims refrain from passing anything through their lips (food, drink, smoke) between sunrise and sunset. People get up early to stuff themselves before sunrise (sahur), go to work late, and take off early to get back home in time to break fast (buka puasa) at sunset. Non-Muslims, as well as Muslims travelling (musafir), are exempt from fasting but it is polite to refrain from eating or drinking in public. Many restaurants close during the day and those that stay open (e.g., hotel restaurants) maintain a low profile, with curtains covering the windows. During Ramadhan, all forms of nightlife including bars, nightclubs, karaoke and massage parlours close by midnight, and (especially in more devout areas) quite a few opt to stay closed entirely. Business travellers will notice that things move at an even more glacial pace than usual and, especially towards the end of the month, many people will take leave.

The climax at the end of the month is the two days of Idul Fitri (also known as Lebaran), when pretty much the entire country takes a week or two off to head back home to visit family in a ritual is known locally as mudik, meaning going home. This is the one time of year when Jakarta has no traffic jams, but the rest of the country does, with all forms of transport packed to the gills. All government offices (including embassies) and many businesses close for a week or even two, and traveling around Indonesia is best avoided if at all possible.

Other Muslim holidays include Idul Adha (the sacrifice day), Isra Mi'raj Muhammad SAW, Hijra (Islamic new year) and Maulid Muhammad SAW. Christian holidays include Christmas, Ascension Day, Good Friday, while the Hindu New Year of Nyepi (March-April) bring Bali to a standstill and Buddhists get a day off for Waisak (Buddha's birthday), celebrated with processions around Borobudur. Non-religious holidays include New Year (1 Jan), Imlek (Chinese New Year) in Jan-Feb and Independence Day (17 Aug).

The dates of many holidays are set according to various lunar calendars and the dates thus change from year to year. The Ministry of Labor may change the official date of holidays if they are close to the weekend. There is another official day off for workers, called cuti bersama (taking days off together), which is sometime close to the Idul Fitri holidays.

The Culture

Wayang kulit shadow puppetry, SoloThere is no one unified Indonesian culture as such, but the Hindu culture of the former Majapahit empire does provide a framework for the cultural traditions of the central islands of Sumatra, Java and Bali. Perhaps the most distinctively "Indonesian" arts are wayang kulit shadow puppetry, where intricately detailed cutouts act out scenes from the Mahabharata and Ramayana and other popular folk stories, and its accompaniment the gamelan orchestra, whose incredibly complex metallic rhythms are the obligatory backdrop to both religious ceremonies and traditional entertainment. Indonesia is culturally intertwined with the Malay, with notable items such as batik cloth and kris daggers, and Arabic culture has also been adopted to some degree thanks to Islam.

Modern-day Indonesian popular culture is largely dominated by the largest ethnic group, the Javanese. Suharto's ban on Western imports like rock'n'roll, while long since repealed, led to the development of indigenous forms of music like dangdut, a sultry form of pop developed in the 1970s, and the televised pelvic thrusts of starlet Inul Daratista in 2003 were nearly as controversial as Elvis once was. Anggun Cipta Sasmi is a talented Indonesian singer who became a famous singer in France. Her single "La neige au sahara" became a top hit on the European charts in the summer of 1997.

Most Indonesian films are low budget B movies. "Daun di Atas Bantal" (1998) is an exception; it won the "best movie" award at the Asia Pacific Film Festival in Taipei, Taiwan (1998).

Indonesian literature has yet to make much headway on the world stage, with torch-bearer Pramoedya Ananta Toer's works long banned in his own homeland, but the post-Suharto era has seen a small boom with Ayu Utami's Saman breaking both taboos and sales records.

The Climate

Upon arrival and disembarking from the plane, you'll immediately notice the sudden rush of warm, wet air. Indonesia is a warm place. It has no spring, summer, fall, or winter, just two seasons: rainy and dry, both of which are relative (it still rains during the dry season, it just rains less). While there is significant regional variation, in most of the country (including Java and Bali) the dry season is April to October, while the wet season is November to March.

In the highlands temperatures will naturally be cooler, and there are even snow-covered peaks in Papua, whose mountains can soar above 5000 meters. Bring along a jacket if planning to visit eg. Mount Bromo on Java or Tana Toraja in Sulawesi.

Indonesia is the sleeping giant of Southeast Asia. With 18,110 islands, 6,000 of them inhabited, it is the largest archipelago in the world. With well over 230 million people, Indonesia is the fourth most populous country in the world, after China, India and the U.S. — and is by far the largest in Southeast Asia. Indonesia also has the largest Muslim population in the world.

Indonesia markets itself as the ultimate in diversity, and the slogan is quite true, although not necessarily always in good ways. Indonesia's tropical forests are the second-largest in the world after Brazil, and are being logged and cut down at the same alarming speed. While the rich shop and party in Jakarta and Bali, after decades of economic mismanagement, 53% of the population earns less than US$2/day. Infrastructure in much of the country remains rudimentary, and travelers off the beaten track (pretty much anywhere outside Bali) will need some patience and flexibility.

The Indonesian people, like any people, can be either friendly or rude to foreigners. Most of the time, though, they are incredibly friendly to foreigners who make it off the beaten track.

The Economy

Indonesia has a market-based economy in which the government plays a significant role. There are 139 state-owned enterprises, and the government administers prices on several basic goods, including fuel, rice, and electricity.

In the mid-1980s, the government began eliminating regulatory obstacles to economic activity. The steps were aimed primarily at the external and financial sectors and were designed to stimulate employment and growth in the non-oil export sector. Annual real gross domestic product (GDP) growth averaged nearly 7% from 1987-97 and most analysts recognized Indonesia as a newly industrializing economy and emerging major market. The Asian financial crisis of 1997 altered the region's economic landscape. With the depreciation of the Thai currency, the foreign investment community quickly reevaluated its investments in Asia. Foreign investors dumped assets and investments in Asia, leaving Indonesia the most affected in the region. In 1998, Indonesia experienced a negative GDP growth of 13.1% and unemployment rose to 15-20%. In the aftermath of the 1997-98 financial crisis, the government took custody of a significant portion of private sector assets via debt restructuring, but subsequently sold most of these assets, averaging a 29% return. Indonesia has since recovered, albeit slower than some of its neighbors, by recapitalizing its banking sector, improving oversight of capital markets, and taking steps to stimulate growth and investment, particularly in infrastructure. GDP growth has steadily risen this decade, achieving real growth of 6.3% in 2007 and 6.1% growth in 2008. While the government has reduced its 2009 growth forecast to 4.2%-4.7% given reduced global demand, the consensus forecast is for growth of 3.5%.

In reaction to global financial turmoil and economic slowdown in late 2008, the government moved quickly to improve liquidity, secure alternative financing to fund an expansionary budget and secure passage of a fiscal stimulus program worth more than $6 billion. Key actions to stabilize financial markets included increasing the deposit insurance guarantee twentyfold, to IDR 2 billion (about U.S. $174,000); reducing bank reserve requirements; and introducing new foreign exchange regulations requiring documentation for foreign exchange purchases exceeding U.S. $100,000/month. As a G-20 member, Indonesia has taken an active role in the G-20 coordinated response to the global economic crisis.

Economic Policy: After he took office on October 20, 2004, President Yudhoyono moved quickly to implement a "pro-growth, pro-poor, pro-employment" economic program. He appointed a respected group of economic ministers who announced a "100-Day Agenda" of short-term policy actions designed to energize the bureaucracy. President Yudhoyono also announced an ambitious anti-corruption plan in December 2004. The State Ministry of National Development Planning (BAPPENAS) released in early 2005 a Medium Term Plan focusing on four broad objectives: creating a safe and peaceful Indonesia; creating a just and democratic Indonesia; creating a prosperous Indonesia; and establishing a stable macroeconomic framework for development. President Yudhoyono reshuffled his cabinet in December 2005, appointing former Finance Minister Boediono as Coordinating Minister for Economic Affairs and moving Sri Mulyani Indrawati from the National Development Planning Agency to the Finance Ministry. In May 2008, President Yudhoyono appointed Boediono as Governor of Bank Indonesia, the central bank. In June 2008, President Yudhoyono appointed Finance Minister Sri Mulyani Indrawati to also serve as Coordinating Minister for Economic Affairs.

The Yudhoyono administration targeted average growth of 6.6% from 2004-2009 to reduce unemployment and poverty significantly. Indonesia's overall macroeconomic picture is stable. By 2004, real GDP per capita returned to pre-financial crisis levels. In 2008, domestic consumption continued to account for the largest portion of GDP, at 61%, followed by investment at 27.7%, government consumption at 8.4%, and net exports at 0.6%. By all measures, investment realization has climbed in each of the past several years.

Following a significant run-up in global energy prices in 2007/2008, the Indonesian Government raised fuel prices by an average of 29% on May 24, 2008 in an effort to reduce its fuel subsidy burden. Fuel subsidies had been projected to reach Rp 265 trillion ($29.4 billion) in 2008, or 5.9% of GDP. The fuel price hikes, along with rising food prices, led consumer price inflation to a peak of 12.1% in September 2008. To help its citizens cope with higher fuel and food prices, the Indonesian Government implemented a direct cash compensation package for low-income families through February 2009 and an extra range of benefits including an expanded subsidized rice program and additional subsidies aimed at increasing food production. Subsequent declines in oil and gas prices allowed the government to reduce the prices for subsidized diesel and gasoline. As of March 2009, gasoline was selling for market rates but was subject to a subsidized price cap in the event of an increase in prices.

Banking Sector: Indonesia currently has 124 commercial banks, of which 10 are majority foreign-owned and 28 are foreign joint venture banks. The top 15 banks control about 70% of assets in the sector. Four state-owned banks (Bank Mandiri, BNI, BRI, BTN) control about 37.4% of assets. The Indonesian central bank, Bank Indonesia (BI), announced plans in January 2005 to strengthen the banking sector by encouraging consolidation and improving prudential banking and supervision. BI hopes to encourage small banks with less than Rp 100 billion (about U.S. $11 million) in capital to either raise more capital or merge with healthier "anchor banks" before end-2010, announcing the criteria for anchor banks in July 2005. In October 2006, BI announced a single presence policy to further prompt consolidation. The policy stipulates that a single party can own a controlling interest in only one banking organization. Controlling interest is defined as 25% or more of total outstanding shares or having direct or indirect control of the institution. BI plans to adopt Basel II standards beginning in 2009 and to improve operations of its credit bureau to centralize data on borrowers. Another important banking sector reform was the decision to eliminate the blanket guarantee on bank third-party liabilities. BI and the Indonesian Government completed the process of replacing the blanket guarantee with a deposit insurance scheme run by the independent Indonesian Deposit Insurance Agency (also known by its Indonesian acronym, LPS) in March 2007. The removal of the blanket guarantee did not produce significant deposit outflows from or among Indonesian banks. Sharia banking has grown in Indonesia in recent years, but represents only 2.05% of the banking sector, about $4.1 billion in assets as of November 2008.

Exports and Trade: Indonesia's exports grew to a record $136.8 billion in 2008, an increase of 10% from 2007. The largest export commodities for 2007 were oil and gas (19.4%), minerals (18.8%), electrical appliances (13.27%), rubber products (6.8%), and textiles (3.6%). The top four destinations for exports for 2008 were Japan (12.8%), the U.S. (11.6%), Singapore (9.4%), and China (7.2%). Meanwhile, total imports rose to $128.8 billion in 2008. The U.S. trade deficit with Indonesia increased 1.9% in 2007 to $10.1 billion ($4.2 billion in exports versus $14.3 billion in imports).

Oil and Minerals Sector: Indonesia left the Organization of Petroleum Exporting Countries (OPEC) in 2008, as it had been a net petroleum importer since 2004. Crude and condensate output averaged 977,000 barrels per day (bpd) in 2008. In 2008, the oil and gas sector is estimated to have contributed $25.3 billion of government revenues, or 31.5% of the total. U.S. companies have invested heavily in the petroleum sector. Indonesia ranked eleventh in world gas production in 2007. In early 2007, Qatar passed Indonesia as the world's number one exporter of liquefied natural gas (LNG). Despite the declining trends, Indonesia's oil and gas trade balance remained positive at $2.3 billion for 2006 and $156 million in 2007, according to unofficial statistics.

Indonesia has a wide range of mineral deposits and production, including bauxite, silver, and tin, copper, nickel, gold, and coal. Although the coal sector was open to foreign investment in the 1990s, new investment was closed again after 2000. A new mining law, passed in December 2008, opened coal to foreign investment again. Total coal production reached 189.7 million metric tons in 2008, including exports of 140.3 million tons. Two U.S. firms operate two copper/gold mines in Indonesia, with a Canadian and a U.K. firm holding significant investments in nickel and gold, respectively. In 2007 Indonesia ranked fifth among the world's top gold concentrate producers. Since 1998, the number of new mines has declined compared with previous years.. This decline does not reflect Indonesia's mineral prospects, which are high; rather, the decline reflects earlier uncertainty over mining laws and regulations, low competitiveness in the tax and royalty system, and investor concerns over divestment policies and the sanctity of contracts.

Investment: President Yudhoyono and his economic ministers have stated repeatedly their intention to improve the climate for private sector investment to raise the level of GDP growth and reduce unemployment. In addition to general corruption and legal uncertainty, businesses have cited a number of specific factors that have reduced the competitiveness of Indonesia's investment climate, including: corrupt and inefficient customs services; non-transparent and arbitrary tax administration; inflexible labor markets that have reduced Indonesia's advantage in labor-intensive manufacturing; increasing infrastructure bottlenecks; and uncompetitive investment laws and regulations. In each of the past three years, the Government of Indonesia has announced a series of economic policy packages aimed at stimulating investment and infrastructure improvements and implementing regulatory reform. A new investment law was enacted in 2007, which contains provisions to restrict the share of foreign ownership in a range of industries. The government is considering a review of Indonesia's negative list, but proposed revisions had not been enacted as of March 2009.

On September 2, 2008, the DPR passed long-awaited tax reform legislation. The legislation reduced corporate and personal income tax rates as of January 1, 2009. Corporate income tax rates fell from 30% to 28% in 2009 and will decline to 25% in 2010, with additional reductions for small and medium enterprises and publicly listed companies. The legislation raises the taxable income threshold for individuals, cuts the maximum personal income tax from 35% to 30%, and provides lower marginal personal income tax rates across four income categories. Taxes on dividends will also fall from a maximum of 20% to a maximum of 10%. Long-planned labor reforms have been delayed.

The passage of a new copyright law in July 2002 and accompanying optical disc regulations in 2004 greatly strengthened Indonesia's intellectual property rights (IPR) regime. Despite the government's significantly expanded efforts to improve enforcement, IPR piracy remains a major concern to U.S. intellectual property holders and foreign investors, particularly in the high-technology sector. In March 2006, President Yudhoyono issued a decree establishing a National Task Force for IPR Violation Prevention. The IPR Task Force was intended to formulate national policy to prevent IPR violations and determine additional resources needed for prevention, as well as to help educate the public through various activities and improve bilateral, regional, and multilateral cooperation to prevent IPR violations. It has yet to fully realize these aims. In 2007, Indonesia was removed from the U.S. Trade Representative's "Priority Watch" list and placed on the "Watch" list.

Environment: President Yudhoyono's administration has significantly increased Indonesia's global profile on environmental issues, and U.S.-Indonesia cooperation on the environment has grown substantially. Indonesia is particularly vulnerable to the effects of climate change, which include rising sea levels and erosion of coastal areas, increased frequency and intensity of extreme weather events, species extinction, and the spread of vector-borne diseases. At the same time, Indonesia faces challenges in addressing the causes of climate change. Indonesia has the world's second-largest tropical forest and the fastest deforestation rate, making it the third-largest contributor of greenhouse gas emissions, behind China and the U.S. In December 2007, Indonesia hosted the 13th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC), and led efforts to highlight the importance of forests and deforestation in the climate debate.

In 2004, President Yudhoyono initiated a multi-agency drive against illegal logging that has significantly decreased illegal logging through stronger enforcement activities. The State Department and the U.S. Trade Representative negotiated with the Indonesian Ministries of Trade and Forestry the U.S. Government's first Memorandum of Understanding on Combating Illegal Logging and Associated Trade. Presidents George W. Bush and Yudhoyono announced the MOU during President Bush's November 2006 visit to Indonesia. Implementation of the MOU includes collaboration on sustainable forest management, improved law enforcement, and improved markets for legally harvested timber products. This effort will strengthen the enabling conditions for avoiding deforestation, specifically addressing the trade issues that are involved.

The U.S. Government contributed to the start of the Heart of Borneo conservation initiative to conserve a high-biodiversity, transboundary area that includes parts of Indonesia, Malaysia, and Brunei. The three countries launched the Heart of Borneo initiative in February 2007. The Governments of Indonesia and the U.S. are currently negotiating a Tropical Forest Conservation Act (TFCA) program. Under the program, a portion of the Government of Indonesia's debt to the U.S. Government may be reduced and redirected toward tropical forest conservation in Indonesia.

Indonesia is also home to the greatest marine biodiversity on the planet. President Yudhoyono called for a Coral Triangle Initiative (CTI) in August 2007. The Coral Triangle Initiative is a regional plan of action to enhance coral conservation, promote sustainable fisheries, and ensure food security in the face of climate change. In December 2007, the U.S. Government announced its support for the six CTI nations (Indonesia, Malaysia, Philippines, Timor-Leste, Papua New Guinea, and Solomon Islands). Since then, the United States has provided $8.4 million to this initiative. With projected funding of $32 million over five years, the U.S. is the largest bilateral donor to CTI, and President Bush endorsed the CTI proposal formally at the 2007 Asia-Pacific Economic Cooperation (APEC) Summit.

Indonesia will host the first-ever World Oceans Conference in Manado, North Sulawesi, May 11-15, 2009. The World Oceans Conference is also the venue for the Coral Triangle Initiative Summit, at which leaders from the six CTI nations will launch the CTI Regional Plan of Action. Top government officials and other leaders will discuss the scientific interplay between ocean degradation, climate and weather patterns, and fishing stocks.

History of Indonesia

By the time of the Renaissance, the islands of Java and Sumatra had already enjoyed a 1,000-year heritage of advanced civilization spanning two major empires. During the 7th-14th centuries, the Buddhist kingdom of Srivijaya flourished on Sumatra. At its peak, the Srivijaya Empire reached as far as West Java and the Malay Peninsula. Also by the 14th century, the Hindu Kingdom of Majapahit had risen in eastern Java. Gadjah Mada, the empire's chief minister from 1331 to 1364, succeeded in gaining allegiance from most of what is now modern Indonesia and much of the Malay archipelago as well. Legacies from Gadjah Mada's time include a codification of law and an epic poem. Islam arrived in Indonesia sometime during the 12th century and, through assimilation, supplanted Hinduism by the end of the 16th century in Java and Sumatra. Bali, however, remains overwhelmingly Hindu. In the eastern archipelago, both Christian and Islamic proselytizing took place in the 16th and 17th centuries, and, currently, there are large communities of both religions on these islands.

Beginning in 1602, the Dutch slowly established themselves as rulers of Indonesia, exploiting the weakness of the small kingdoms that had replaced that of Majapahit. The only exception was East Timor, which remained under Portugal's control until 1975. During 300 years of rule, the Dutch developed the Netherlands East Indies into one of the world's richest colonial possessions.

During the first decade of the 20th century, an Indonesian independence movement began and expanded rapidly, particularly between the two World Wars. Its leaders came from a small group of young professionals and students, some of whom had been educated in the Netherlands. Many, including Indonesia's first president, Soekarno (1945-67), were imprisoned for political activities.

The Japanese occupied Indonesia for three years during World War II (1942-1945). On August 17, 1945, three days after the Japanese surrender to the Allies, a small group of Indonesians, led by Soekarno and Mohammad Hatta, proclaimed independence and established the Republic of Indonesia. They set up a provisional government and adopted a constitution to govern the republic until elections could be held and a new constitution written. Dutch efforts to reestablish complete control met strong resistance. After four years of warfare and negotiations, the Dutch transferred sovereignty to a federal Indonesian Government. In 1950, Indonesia became the 60th member of the United Nations.

Shortly after hostilities with the Dutch ended in 1949, Indonesia adopted a new constitution, providing for a parliamentary system of government in which the executive was chosen by and accountable to parliament. Parliament was divided among many political parties before and after the country's first nationwide election in 1955, and stable governmental coalitions were difficult to achieve. The role of Islam in Indonesia became a divisive issue. Soekarno defended a secular state based on Pancasila, five principles of the state philosophy--monotheism, humanitarianism, national unity, representative democracy by consensus, and social justice--codified in the 1945 constitution, while some Muslim groups preferred either an Islamic state or a constitution that included a preambular provision requiring adherents of Islam to be subject to Islamic law. At the time of independence, the Dutch retained control over the western half of New Guinea (known as Irian Jaya in the Soekarno and Soeharto eras and as Papua since 2000) and permitted steps toward self-government and independence.

Negotiations with the Dutch on the incorporation of Irian Jaya into Indonesia failed, and armed clashes broke out between Indonesian and Dutch troops in 1961. In August 1962, the two sides reached an agreement, and Indonesia assumed administrative responsibility for Irian Jaya on May 1, 1963. The Indonesian Government conducted an "Act of Free Choice" in Irian Jaya under UN supervision in 1969 in which 1,025 Papuan representatives of local councils agreed by consensus to remain a part of Indonesia. A subsequent UN General Assembly resolution confirmed the transfer of sovereignty to Indonesia. Opposition to Indonesian administration of Papua gave rise to small-scale guerrilla activity in the years following Jakarta's assumption of control. In the more open atmosphere since 1998, there have been more explicit expressions within Papua calling for independence from Indonesia.

Unsuccessful rebellions on Sumatra, Sulawesi, West Java, and other islands beginning in 1958, plus a failure by the constituent assembly to develop a new constitution, weakened the parliamentary system. Consequently, in 1959, when President Soekarno unilaterally revived the provisional 1945 constitution that provided for broad presidential powers, he met little resistance. From 1959 to 1965, President Soekarno imposed an authoritarian regime under the label of "Guided Democracy." He also moved Indonesia's foreign policy toward nonalignment, a foreign policy stance supported by other prominent leaders of former colonies who rejected formal alliances with either the West or Soviet bloc. Under Soekarno's auspices, these leaders gathered in Bandung, West Java, in 1955 to lay the groundwork for what became known as the Non-Aligned Movement. In the late 1950s and early 1960s, President Soekarno moved closer to Asian communist states and toward the Indonesian Communist Party (PKI) in domestic affairs. Though the PKI represented the largest communist party outside the Soviet Union and China, its mass support base never demonstrated an ideological adherence typical of communist parties in other countries.

By 1965, the PKI controlled many of the mass civic and cultural organizations that Soekarno had established to mobilize support for his regime and, with Soekarno's acquiescence, embarked on a campaign to establish a "Fifth Column" by arming its supporters. Army leaders resisted this campaign. Under circumstances that have never been fully explained, on October 1, 1965, PKI sympathizers within the military, including elements from Soekarno's palace guard, occupied key locations in Jakarta and kidnapped and murdered six senior generals. Major General Soeharto, the commander of the Army Strategic Reserve, rallied army troops opposed to the PKI to reestablish control over the city. Violence swept throughout Indonesia in the aftermath of the October 1 events, and unsettled conditions persisted through 1966. Right-wing gangs killed tens of thousands of alleged communists in rural areas. Estimates of the number of deaths range between 160,000 and 500,000. The violence was especially brutal in Java and Bali. During this period, PKI members by the tens of thousands turned in their membership cards. The emotions and fears of instability created by this crisis persisted for many years as the communist party remains banned from Indonesia.

Throughout the 1965-66 period, President Soekarno vainly attempted to restore his political stature and shift the country back to its pre-October 1965 position. Although he remained President, in March 1966, Soekarno transferred key political and military powers to General Soeharto, who by that time had become head of the armed forces. In March 1967, the Provisional People's Consultative Assembly (MPRS) named General Soeharto acting President. Soekarno ceased to be a political force and lived under virtual house arrest until his death in 1970.

President Soeharto proclaimed a "New Order" in Indonesian politics and dramatically shifted foreign and domestic policies away from the course set in Soekarno's final years. The New Order established economic rehabilitation and development as its primary goals and pursued its policies through an administrative structure dominated by the military but with advice from Western-educated economic experts. In 1968, the People's Consultative Assembly (MPR) formally selected Soeharto to a full five-year term as President, and he was reelected to successive five-year terms in 1973, 1978, 1983, 1988, 1993, and 1998. In mid-1997, Indonesia suffered from the Asian financial and economic crisis, accompanied by the worst drought in 50 years and falling prices for oil, gas, and other commodity exports. As the exchange rate changed from a fixed to a managed float to fully floating, the rupiah (IDR or Rp) depreciated in value, inflation increased significantly, and capital flight accelerated. Demonstrators, initially led by students, called for Soeharto's resignation. Amid widespread civil unrest, Soeharto resigned on May 21, 1998, three months after the MPR had selected him for a seventh term. Soeharto's hand-picked Vice President, B.J. Habibie, became Indonesia's third President. President Habibie reestablished International Monetary Fund (IMF) and donor community support for an economic stabilization program. He released several prominent political and labor prisoners, initiated investigations into the unrest, and lifted controls on the press, political parties, and labor unions.

In January 1999, Habibie and the Indonesian Government agreed to a process, with UN involvement, under which the people of East Timor would be allowed to choose between autonomy and independence through a direct ballot held on August 30, 1999. Some 98% of registered voters cast their ballots, and 78.5% of the voters chose independence over continued integration with Indonesia. Many people were killed by Indonesian military forces and military-backed militias in a wave of violence and destruction after the announcement of the pro-independence vote.

Indonesia's first elections in the post-Soeharto period were held for the national, provincial, and sub-provincial parliaments on June 7, 1999. Forty-eight political parties participated in the elections. For the national parliament, Partai Demokrasi Indonesia Perjuangan (PDI-P, Indonesian Democratic Party of Struggle, led by Megawati Soekarnoputri) won 34% of the vote; Golkar ("Functional Groups" party) 22%; Partai Kebangkitan Bangsa (PKB, National Awakening Party, linked to the conservative Islamic organization Nadhlatul Ulama headed by former President Abdurrahman Wahid) 13%; and Partai Persatuan Pembangunan (PPP, United Development Party, led by Hamzah Haz) 11%. The MPR selected Abdurrahman Wahid as Indonesia's fourth President in November 1999 and replaced him with Megawati Soekarnoputri in July 2001.

The constitution, as amended in the post-Soeharto era, provides for the direct election by popular vote of the president and vice president. Under the 2004 amendment, only parties or coalitions of parties that gained at least 3% of the House of Representatives (DPR) seats or 5% of the vote in national legislative elections were eligible to nominate a presidential and vice presidential ticket.

The 2004 legislative elections took place on April 5 and were considered to be generally free and fair. Twenty-four parties took part in the elections. Big parties lost ground, while small parties gained larger shares of the vote. However, the two Soeharto-era nationalist parties, PDI-P and Golkar, remained in the lead. PDI-P (opposition party during the Soeharto era) lost its plurality in the House of Representatives, dropping from 33% to 18.5% of the total vote (and from 33% to 20% of the seats). The Golkar Party (Soeharto’s political party) declined slightly from 1999 levels, going from 22% to 21% of the national vote (from 26% to 23% of DPR seats). The third- and fourth-largest parties (by vote share) were two Islamic-oriented parties, the United Development Party (PPP) (8% of the votes, 10.5% of the seats) and National Awakening Party (PKB) (10.5% of the vote, 9.45% of the seats). Susilo Bambang Yudhoyono’s nationalist Democratic Party (PD) won 7.45% of the national vote and 10% of the DPR seats, making it the fourth-largest party in the DPR. Seven of the 24 parties won no DPR seats; six won 1-2 seats, and the other six won between 2%-6% of the national vote (between 5-52 DPR seats).

The first direct presidential election was held on July 5, 2004, contested by five tickets. As no candidate won at least 50% of the vote, a runoff election was held on September 20, 2004, between the top two candidates, President Megawati Sukarnoputri and retired General Susilo Bambang Yudhoyono. In this final round, Yudhoyono won 60.6% of the vote. Approximately 76.6% of the eligible voters participated, a total of roughly 117 million people, making Indonesia's presidential election the largest single-day election in the world. The Carter Center, which sent a delegation of election observers, issued a statement congratulating "the people and leaders of Indonesia for the successful conduct of the presidential election and the peaceful atmosphere that has prevailed throughout the ongoing democratic transition."

National legislative elections will be held on April 9, 2009, and presidential elections will be held in July 2009. In 2009, new electoral rules require that a party win 2.5% of the national vote in order to enter parliament. A total of thirty-eight national and six local (Aceh only) parties will contest the 2009 legislative elections. At least 171 million voters are registered to vote in these elections. Also in 2009, the threshold was revised so that only parties or coalitions of parties that gained at least 20% of the House of Representatives (DPR) seats or 25% of the vote in the 2009 national legislative elections would be eligible to nominate a presidential and vice presidential ticket. In the presidential elections, if no candidate receives more than 50% of the vote, the top two candidates will compete in a second round in September 2009. Indonesia will inaugurate the president by October 20, 2009.

Natural disasters have devastated many parts of Indonesia over the past few years. On December 26, 2004, a 9.1 to 9.3 magnitude earthquake took place in the Indian Ocean, and the resulting tsunami killed over 130,000 people in Aceh and left more than 500,000 homeless. On March 26, 2005, an 8.7 magnitude earthquake struck between Aceh and northern Sumatra, killing 905 people and displacing tens of thousands. After much media attention on the seismic activity on Mt. Merapi in April and May 2006, a 6.2 magnitude earthquake occurred 30 miles to the southwest. It killed more than 5,000 people and left an estimated 200,000 people homeless in the Yogyakarta region.

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