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Under the influences of Hinduism and Buddhism, several kingdoms formed on the islands of Sumatra and Java from the 7th to 14th century. The arrival of Arab traders from Gujarat, India, later brought Islam, which became the dominant religion in many parts of the archipelago after the collapse of Hindu and Buddhist kingdoms.

When the Europeans came in the early 16th century, they found a multitude of small states. These were vulnerable to the Europeans, who were in pursuit of dominating the spice trade. In the 17th century, the Dutch emerged as the most powerful of the Europeans, ousting the Spanish and Portuguese (except for their colony of Portuguese Timor on the island of Timor). The Dutch influence started with trading by the Dutch East India Company (VOC), a private enterprise, which gradually expanded its region of influence and its grip on political matters. Following the dissolution of the VOC in 1799, as well as the political instability from the Napoleonic Wars, the East Indies were awarded to the United Kingdom of the Netherlands in 1815. From this time onward, the East Indies were officially ruled as colonies of the Dutch crown.

Under the nineteenth-century Cultivation System (Cultuurstelsel), large plantations and forced cultivation were established on Java, finally creating the profit for the Netherlands that the VOC was unable to produce. In a more liberal period of colonial rule after 1870 the Cultivation System was abolished, and after 1901 the Dutch introduced the Ethical Policy, which included limited political reform and increased investment in the colony.

During World War II, with the Netherlands under German occupation, in December 1941 Japan began a five prong campaign towards Java and the vital fuel supplies of the Dutch East Indies. Though Japan captured Java by March 1942, it was unable to find any national leader willing to cooperate with the Japanese government against the Dutch, eventually the Japanese commander ordered that Sukarno be released from his prison island and in July 1942 Sukarno arrived in Jakarta. Sukarno, with colleagues, cooperated with the Japanese occupiers. In 1945, with the war drawing to a close, Sukarno was made aware of an opportunity to declare an independence. Upon lobbying, Japan agreed that Sukarno established a committee to plan for independence. Sukarno, and Mohammad Hatta, declared independence on 17 August.

In an effort to regain control of their previously occupied colonies, the Allies sent in their armies, together with the Netherlands' Army. Indonesia's war for independence lasted from 1945 until 27 December 1949, when, under heavy international pressure, the Netherlands acknowledged Indonesia's independence. Sukarno became the country's first president, with Mohammad Hatta as the first vice president. See Indonesian National Revolution. It was not until 16 August 2005 that the Dutch government recognised 1945 as the country's year of independence and expressed its regrets over the Indonesian deaths caused by the Netherlands' Army.

The 1950s and 1960s saw Sukarno's government aligning itself first with the emerging non-aligned movement and later with the socialist bloc. The 1960s saw Indonesia in a military confrontation against neighboring Malaysia, and increasing frustration over domestic economic difficulties.

Army general Suharto became president in 1967 with the excuse of securing the country against an alleged Communist coup attempt against a weakening Sukarno. In the aftermath of Suharto's rise, hundreds of thousands people were killed or imprisoned in a backlash against alleged Communist supporters. Suharto's administration is commonly called the New Order era. Suharto invited major foreign investment into the country, which produced substantial, if uneven, economic growth. However, Suharto enriched himself and his family through widespread corruption and he was forced to step down amid massive popular demonstrations and a faltering economy by the Indonesian Revolution of 1998.

In the period of 1998 to 2001, the country had three presidents: Bacharuddin Jusuf (BJ) Habibie, Abdurrahman Wahid and Megawati Sukarnoputri. In 2004 the largest one-day election in the world and Indonesia's first direct Presidential election was held and was won by Susilo Bambang Yudhoyono.

Parts of northern Sumatra, particularly Aceh, were devastated by a massive earthquake and tsunami on 26 December 2004.
Last edited by Anna (12:44, 06 January 2006)