Reformasi and Modern Indonesia (1998–Present)

Indonesia's modern political system was born in the chaos of 1998. The fall of President Suharto, after 32 years in power, opened a brief and unstable window during which the country rewrote its constitution, reformed its armed forces, devolved enormous power to its districts, and held its first free elections in more than four decades. Twenty-five years on, the Reformasi era is widely treated as a success — but it is a fragile one.

The end of the New Order

Suharto's regime, known as the Orde Baru or New Order, had ruled Indonesia since 1967 on a platform of anti-communism, military dominance, economic growth, and the suppression of dissent. For most of the 1980s and early 1990s it delivered impressive macro numbers: GDP growth averaged about 6%, poverty rates fell sharply, and Indonesia was held up as a developmental success.

The 1997 Asian financial crisis broke the regime. The rupiah collapsed from about Rp 2,400 to the dollar in mid-1997 to over Rp 16,000 by early 1998. Inflation surged, imported food prices doubled, banks failed, and millions of people lost their jobs. IMF intervention came with austerity conditions that made the crisis worse in the short run.

In May 1998 fuel and food riots in Jakarta and other cities turned into mass anti-Chinese violence, with terrible consequences for the ethnic Chinese minority. Student protests occupied parliament. Sections of the army and cabinet quietly withdrew their support. On 21 May 1998, Suharto resigned. His vice president, B.J. Habibie, was sworn in as caretaker.

The Reformasi reforms (1998–2004)

The next six years are referred to collectively as Reformasi — reform. The changes were structural and far-reaching.

The constitution. The 1945 constitution was amended four times between 1999 and 2002. Presidential terms were limited to two five-year terms. Direct presidential elections were introduced. The judiciary was formally separated from the executive. A constitutional court was created. The military's reserved seats in parliament were abolished.

The military. The Dwifungsi doctrine — by which the army had a permanent political role as well as a defence one — was formally abandoned. Police were separated from the armed forces. The territorial command structure remained in place, but officers were withdrawn from cabinet and parliamentary seats.

Decentralisation. A 1999 law radically devolved authority and budget to district and provincial governments. The change was so abrupt that some observers called it the largest decentralisation effort in modern history. Many districts were ill-equipped to handle the new responsibilities, but the political effect was significant: power moved out of Jakarta.

Elections. Free, multiparty elections were held in 1999, the first since 1955. Direct presidential elections began in 2004. Direct gubernatorial and mayoral elections rolled out shortly after.

East Timor. Habibie unexpectedly offered East Timor a referendum on independence in 1999. The territory voted overwhelmingly for independence; the post-referendum violence by pro-Indonesia militias was severe but the political path forward was sealed. East Timor became fully independent in 2002.

Aceh. A long-running insurgency in Aceh province ended with the 2005 Helsinki peace agreement, which granted Aceh substantial autonomy in exchange for the disarmament of GAM (the Free Aceh Movement). The deal followed the December 2004 Indian Ocean tsunami, which killed roughly 170,000 people in Aceh alone and shifted political dynamics on the ground.

The four post-Reformasi presidents

Indonesia has had five elected presidents since 1998.

B.J. Habibie (1998–1999): Vice-president to Suharto, caretaker after his fall. Oversaw the initial reforms and the East Timor referendum.

Abdurrahman Wahid, "Gus Dur" (1999–2001): The first president elected under the new system. A revered Nahdlatul Ulama cleric known for tolerance and eccentricity. Impeached in 2001 over a financial scandal that was probably more political than substantive.

Megawati Sukarnoputri (2001–2004): Sukarno's daughter, vice-president to Gus Dur, then president after his impeachment. Lost the first direct presidential election in 2004.

Susilo Bambang Yudhoyono, "SBY" (2004–2014): A former general turned reformist politician. Two terms of macroeconomic stability, anti-corruption progress, and middle-class growth. His tenure is widely viewed as Indonesia's golden post-1998 period.

Joko Widodo, "Jokowi" (2014–2024): The first president from outside the political and military elite — a former furniture exporter and mayor of the small city of Solo, then governor of Jakarta. His two terms focused on infrastructure (toll roads, dams, the new capital city Nusantara), poverty reduction, and bureaucratic reform. His final years drew criticism for democratic backsliding, particularly the rollback of the anti-corruption commission's independence and constitutional manoeuvres around his son's eligibility for office.

Prabowo Subianto (2024–present): A retired lieutenant general from the Suharto era — and a former son-in-law of Suharto himself — who had run unsuccessfully for the presidency in 2014 and 2019 before winning in 2024 with Jokowi's eldest son as running mate. His government has continued Jokowi's infrastructure agenda while expanding state intervention in industry.

Where Indonesia is now

By the late 2020s Indonesia is the world's third-largest democracy by population, the largest economy in Southeast Asia, and a G20 member with a young population, growing manufacturing base, and abundant natural resources. The political system is stable, elections are competitive, and civil society is active.

The persistent worries are familiar: corruption remains widespread; the gap between Jakarta and the outer islands is large; tolerance for religious minorities and dissident voices has weakened in some regions; the rollback of independent institutions during the late Jokowi years raises questions about democratic durability. The Reformasi system is twenty-five years old and showing signs of wear, but it is still the system the country lives under.

Where to see this history

• Tugu Tani / Sarinah area, Jakarta — the centre of the 1998 student protests; nearby is the building where the parliamentary occupation took place.
• Trisakti University, west Jakarta — site of the May 1998 shootings of four students that triggered the final wave of protest.
• Aceh — the tsunami museum in Banda Aceh covers both the natural disaster and the peace process.
• Nusantara, East Kalimantan — the new capital city under construction since 2022; a Jokowi-era project intended to relocate the seat of government from sinking, congested Jakarta to Borneo.