Liberal democracy period in Indonesia

The era of Liberal Democracy (Indonesian: Demokrasi Liberal) in Indonesia began on August 17, 1950 following the dissolution of the federal United States of Indonesia less than a year after its formation, and ended with the imposition of martial law and President Sukarno's decree regarding the introduction of Guided Democracy on July 5, 1957. It saw a number of important events, including the 1955 Bandung Conference, Indonesia's first general and Constitutional Assembly elections, and an extended period of political instability, with no cabinet lasting as long as two years.

With the unifying struggle to secure Indonesia's independence now over, divisions in Indonesian society began to appear. Regional differences in customs, morals, tradition, religion, the impact of Christianity and Marxism, and fears of Javanese political domination, all contributed to disunity. The new country was typified by poverty, low educational levels, and authoritarian traditions. Various separatist movements opposed the Republic of Indonesia: the militant Darul Islam ('Islamic Domain') proclaimed an "Islamic State of Indonesia" and waged a guerrilla struggle against the Republic in West Java from 1948 to 1962; in Maluku, Ambonese formerly of the Royal Netherlands East Indies Army proclaimed an independent Republic of South Maluku; and rebellions in Sumatra and Sulawesi between 1955 and 1961.

The economy was in a disastrous state following three years of Japanese occupation then four years of war against the Dutch. In the hands of a young and inexperienced government, the economy was unable to boost production of food and other necessities to keep pace with an increasing population. Most of the population was illiterate, unskilled, and suffered from a dearth of management skills. Inflation was rampant, smuggling cost the central government much needed foreign exchange, and many of the plantations had been destroyed during the occupation and war.

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