Fall of Suharto
The fall of Suharto refers to the resignation of Indonesian President Suharto on 21 May 1998, ending his 32‑year authoritarian rule under the New Order regime following nationwide protests and severe economic collapse. His vice president, B. J. Habibie, assumed the presidency, launching a period of political reform known as Reformasi, which significantly transformed Indonesia's political institutions and ushered in democratic transition.
The fall of Suharto followed the 1997 Asian financial crisis, which triggered mass unrest and exposed rampant corruption under his administration. Student-led protests—sparked by events such as the July 1996 PDI office raid and the Trisakti shootings in May 1998—escalated into riots targeting the government and ethnic Chinese communities, particularly in Jakarta, Medan, and Surakarta.
The resignation precipitated the overthrow of the New Order's centralized power structure and began a Reformasi era characterized by institutional overhaul, increased civil liberties, and regional decentralization. Reforms included legal restructuring, electoral democracy and media liberalization. Indonesia's transition is frequently cited as a model of bottom-up democratic transformation in Southeast Asia.
Historical background
Dissent during the New Order
Having consolidated power in 1967 in the aftermath of the attempted coup in 1965 which was launched by middle-ranking officers in the Indonesian army and air force but officially blamed on the Communist Party of Indonesia resulting in purges, the government of Suharto adopted policies that severely restricted civil liberties and instituted a system of rule that effectively split power between the Golkar organisation and the military.In 1970, price rises and corruption prompted student protests and an investigation by a government commission. Suharto responded by banning student protest, forcing the activists underground. Only token prosecution of cases recommended by the commission was pursued. The pattern of co-opting a few of his more powerful opponents while criminalising the rest became a hallmark of Suharto's rule.
Suharto stood for election by the People's Consultative Assembly every five years, beginning in 1973. According to his electoral rules, three entities were allowed to participate in the election: two political parties and Golkar. All other political parties were amalgamated into either the Islam-based United Development Party or the nationalist Democratic Party of Indonesia. Golkar, Suharto's primary political vehicle, was officially not a political party. All senior civil servants were obliged to join employee associations linked to Golkar, while senior bureaucrats were banned from joining political parties. In a political compromise with the powerful military, Suharto banned its members from voting in elections but set aside seats in the legislature for their representatives. Suharto was unopposed in every election in which he stood.
In May 1980, a group called the Petition of Fifty demanded greater political freedoms and accused Suharto of misinterpreting the Pancasila state ideology. It was signed by former military men, politicians, academics and students. The Indonesian media suppressed the news, and the government placed restrictions on the signatories, some of whom were later jailed.
Following the end of the Cold War, Western concern over communism waned, and the West was less willing to tolerate Third World anti-Communist dictatorships. Consequently, Suharto's human rights record came under greater international scrutiny. In 1991, the murder of East Timorese civilians in a Dili cemetery, also known as the "Santa Cruz Massacre", caused US attention to focus on its military relations with the Suharto regime and the question of Indonesia's occupation of East Timor. In 1992, this attention resulted in the Congress of the United States passing limitations on IMET assistance to the Indonesian military, over the objections of US President George H. W. Bush. In 1993, under President Bill Clinton, the US delegation to the United Nations Human Rights Commission helped pass a resolution expressing deep concern over Indonesian human rights violations in East Timor.
The first cracks emerge
In 1996, the Indonesian Democratic Party, a legal party that had been used by the New Order as a benign prop for the New Order's electoral system, began to assert its independence under Megawati Sukarnoputri, the daughter of Indonesia's founding father, Sukarno. In response, Suharto attempted to foster a split over the leadership of the PDI, backing a co-opted faction loyal to deputy speaker of Parliament Suryadi against supporters of Megawati. After the Suryadi faction announced a party congress to sack Megawati would be held in Medan on 20–22 June, Megawati proclaimed that her supporters would hold demonstrations in protest. The Suryadi faction went through with the sacking, and the demonstrations manifested themselves throughout Indonesia.Megawati's supporters then took over the PDI headquarters in Jakarta. On Saturday 27 July, a mob including soldiers in civilian clothing and thugs from the army-associated Pemuda Pancasila organization forcibly entered the building. According to the National Human Rights Commission, five people were killed, 149 injured and 74 missing – mostly from those arrested by the military. The attack was followed by two days of rioting, in which youths burned at least six buildings, including that of the Ministry of Agriculture. The political tensions in Jakarta were accompanied by anti-Chinese riots in Situbondo, Tasikmalaya, Banjarmasin, and Makassar ; while violent ethnic clashes broke out between the Dayak and Madurese in West Kalimantan in 1997 during the Sanggau Ledo riots.
Fall of Suharto
Monetary and financial crisis
In the second half of 1997, Indonesia became the country hardest hit by the 1997 Asian financial crisis. The economy suffered a flight of foreign capital leading to the Indonesian rupiah falling from Rp 2,600 per dollar in August 1997 to over Rp 14,800 per dollar by January 1998. Indonesian companies with US dollar-denominated borrowings struggled to service these debts with their rupiah earnings, and many went bankrupt. Efforts by Bank Indonesia to defend its managed float regime by selling US dollars not only had little effect on the currency's decline, but also drained Indonesia's foreign exchange reserves. Weaknesses in the Indonesian economy, including high levels of debt, inadequate financial management systems and crony capitalism, were identified as underlying causes. Volatility in the global financial system and over-liberalization of international capital markets were also cited. The government responded by floating the currency, requesting International Monetary Fund assistance, closing some banks and postponing major capital projects.In December 1997, Suharto for the first time did not attend an ASEAN presidents' summit, which was later revealed to be due to a minor stroke, creating speculation about his health and the immediate future of his presidency. In mid-December, as the crisis swept through Indonesia and an estimated $150 billion of capital was being withdrawn from the country, he appeared at a press conference to assure he was in charge and to urge people to trust the government and the collapsing rupiah.
Suharto's attempts to re-instil confidence, such as ordering generals to personally reassure shoppers at markets and an "I Love the Rupiah" campaign, had little effect. Another plan was the setting up of a currency board, proposed by the then special counselor Steve Hanke from Johns Hopkins University. The next day, the rupiah went up by 28% against the US dollar on both the spot and one year forward market, hearing the proposed plan. However, these developments infuriated the US government and the International Monetary Fund. Suharto was told – by both the president of the United States, Bill Clinton, and the managing director of the IMF, Michel Camdessus – that he would have to drop the currency board idea or forego $43 billion in foreign assistance.
Evidence suggested that Suharto's family and associates were being spared the most stringent requirements of the IMF reform process, and there was open conflict between economic technocrats implementing IMF plans and Suharto-related vested interests, further undermining confidence in the economy. The government's unrealistic 1998 budget and Suharto's announcement of Habibie as the next vice president both caused further currency instability. Suharto reluctantly agreed to a wider-reaching IMF package of structural reforms in January 1998 in exchange for $43 billion in liquidity. However, the rupiah dropped to a sixth of its pre-crisis value, and rumours and panic led to a run on stores and pushed up prices. In January 1998, the government was forced to provide emergency liquidity assistance, issue blanket guarantees for bank deposits, and set up the Indonesian Bank Restructuring Agency to take over management of troubled banks in order to prevent the collapse of the financial system. Based on the IMF recommendations, the government increased interest rates to 70% pa in February 1998 to control high inflation caused by the higher prices of imports. However, this action restricted the availability of credit to the corporate sector.
Unrest, violence, and riots
Despite the worsening economic situation, during the 1998 General Session of the People's Consultative Assembly, Suharto was unanimously re-elected president, with vice president Try Sutrisno being replaced by minister and longtime confidant B. J. Habibie. Suharto's choice of Habibie was poorly received, causing the rupiah to continue its fall. All the while, he stacked the new Seventh Development Cabinet with several of his own family and business associates. The government's increase of fuel prices by 70% in May triggered rioting in Medan, North Sumatra. With Suharto increasingly seen as the source of the country's mounting economic and political crises, prominent political figures, including Muslim politician Amien Rais, spoke out against his presidency, and in January 1998, university students began organizing nationwide demonstrations.A demonstration at the Bandung Institute of Technology saw 500 demonstrators, and by March, larger demonstrations had occurred at other universities. Including the University of Indonesia and Gadjah Mada University. On 9 May 1998, a police officer, Dadang Rusmana, was reported to have been killed at a demonstration at Djuanda University. These demonstrators were protesting against massive price rises for fuel and energy, and were demanding that President Suharto step down.
On 9 May, Suharto left Indonesia for a Group of 15 summit in Cairo, Egypt. Meanwhile, at Jakarta's Trisakti University, university students planned to march towards the Parliamentary Complex, but security forces refused to allow them to leave the campus of the university. Students then conducted a sit-in outside the gates of the campus, there men in Mobile Brigade Corps uniforms appeared on the flyover overlooking Trisakti. They fired at the students, killing four, and injuring dozens more.
The student's deaths sparked mass violence and riots throughout Jakarta the following day, forcing Suharto to return on 14 May. Despite Suharto's return, riots occurred throughout the city. In Jatinegara, East Jakarta, a Matahari department store was barricaded and torched, killing around a thousand people. In Glodok, West Jakarta, mobs attacked Jakarta's Chinatown, with store owners being forced to pay local thugs to protect them from violence. Riots also occurred near the port of Tanjung Priok in Northern Jakarta, the city of Tangerang, Banten, and Kebayoran Baru in Southern Jakarta, with Chinese-owned property being the main targets. Over a thousand and as many as five thousand people died during these riots in Jakarta and other cities such as Surakarta. Many victims died in burning malls and supermarkets, but some were shot or beaten to death. The riots destroyed thirteen markets, 2,479 shop-houses, 40 malls, 1,604 shops, 45 garages, 383 private offices, nine petrol stations, eight public buses and minivans, 1,119 cars, 821 motorcycles, and 1,026 houses.
Indonesian Muslims who were considered to physically look Chinese were attacked by rioters, despite not identifying as Chinese at all and only being of distant Chinese descent. An Indonesian Muslim woman,
Ruminah, mentioned she had a single Chinese grandfather, yet she and her family faced constant harassment from neighbours due to their physical appearance and assumed ethnicity. She did not identify as Chinese or speak Chinese. In the riots, her hair salon was ransacked and one of her sons died in a fire at a mall.