Integrated trade networks, however, were developing in this area starting from the early dawn of Asian history. Being connected to trade networks was an important asset for an empire to acquire wealth and commodities, necessary to become a powerful force. But the more global these trade networks in the archipelago became, the more foreign influences managed to enter; a development that would eventually lead to the colonial state.

The existence of written sources is what separates history from prehistory. As few written sources dating from before 500 AD have been preserved, the history of present Indonesia starts rather late. It is assumed that most writings were done on perishable material and - in combination with the tropical humid climate and low-quality conservation technique standards at the time - this means that historians have to rely on inscriptions on stone and the study of remnants of ancient temples to trace the archipelago's earliest history. These two approaches provide information regarding the old political structures as both literature and the construction of temples were samples of high culture reserved for the ruling elites.

A remarkable matter related to the history of Indonesia is that it generally centers on the western part of the archipelago (in particular on the islands of Sumatra and Java). As most of the eastern part of the archipelago has been on the fringes of economic activity throughout history (located further away from main trade routes), it consequently has been on the fringes of politics as well; a situation that continues up to the present day.

The Impact of Hinduism and Buddhism in Indonesia

The earliest inscriptions found in the archipelago are known as the Kutai-inscriptions and originate from East Kalimantan, dated around 375 AD when the Kutai Martadipura kingdom ruled. These inscriptions were written in Sanskrit (the liturgical language of Hinduism) using the Pallava script, a script developed in Southern India around the third century AD. In these inscriptions three rulers of Kutai Martadipura are mentioned and they describe a ritual that is characteristic of archaic Hinduism. About one century later, the first (known) stone is inscripted on Java. This inscription, also in Sanskrit, states king Purnavarman of the Tarumanagara kingdom (fourth to seventh century) in West Java and associates him with a Hindu deity (Vishnu). Together, these inscriptions show evidence of major influences from Indian Hinduism within the ruling elites of the first known indigenous ancient kingdoms in the archipelago.

However, trade contacts between present-day India and the archipelago are known to have been established centuries prior to the Kutai inscriptions. The Strait of Malacca, a sea lane linking the Indian Ocean with the Pacific Ocean, has been the main shipping channel for seaborne trade between China, India and the Middle East since human memory. A large part of Sumatra's coastline is conveniently located next to this sea lane causing merchants between India and China to stop over here or on the other side of the Strait (present-day Malaysia) to wait for the right monsoon winds that would carry them further.

But it is assumed that Hinduism and Buddhism were not spread to the archipelago by these Indian traders. More likely, kings and emperors in the archipelago were drawn to the prestige of the Brahmans (the Hindu priestly class which forms the highest ranking of the four social classes). These Brahmans, supposedly, introduced a new religion to the archipelago which enabled the indigenous kings to identify themselves with a Hindu deity or a Buddhist Bodhisattva (which is an enlightened mystical being), thereby replacing the ancestor worship that was adhered to previously. This new religious doctrine, therefore, implied more prestige for the kings. Empires in the archipelago that copied such Indian concepts were found on the islands of Kalimantan, Java, Sumatra and Bali.

Due to the strategic position of Sumatra's and Malaysia's coastline next to the Strait of Malacca it is hardly surprising that we find the first major influential state in Indonesian history on the coastal area of Sumatra, and stretching a wide geographical area around the strait. This state was called Srivijaya and ruled the trade routes connecting the Indian Ocean, the South Chinese Sea and the Spice Islands of the Moluccas between the 7th and the 13th century. Srivijaya will also be remembered as Southeast Asia's center for Buddhist studies with a major emphasis on the study of the Sanskrit language. From Chinese sources it is known that many Chinese Buddhist monks stayed in Srivijaya for more than a decade to pursue their study.

Hindu and Buddhist temple remnants dating from between the 8th and the 10th century indicate the ruling of two new dynasties in Central Java. These were the Sailendra-dynasty (who were adherents of Mahayana Buddhism and most likely the dynasty that built the famous Borobudur temple nearby present-day Yogyakarta around 800 AD) and the Sanjaya-dynasty (adherents of Hinduism that built the temple complex of Prambanan around 850 AD not far from - and as a reaction to - the Borobudur temple). The slow demise of Srivijaya and the rise of these new powerful kingdoms on Java meant that political power was gradually turning away from Sumatra towards Java.

But in the 10th century the lives of inhabitants in Central Java suddenly went unrecorded because of a lack of sources. It is assumed that a major volcano eruption shifted political power from Central to East Java where a number of new kingdoms developed.

Three of these deserve special attention due to their legacy, namely Kediri (around 1042 to 1222) for its inscriptions and literary legacy, and its successor Singasari (between 1222 and 1292) for introducing a new chapter into Indonesian history, namely the syncretism of Hinduism and Buddhism. This new chapter found its peak in the East Javanese kingdom of Majapahit (1293 to around 1500), perhaps the greatest kingdom in the history of the archipelago which had a geographical area resembling the present-day boundaries of Indonesia (although it is still debated among scholars how much sovereignty this kingdom actually enjoyed outside of Java and Bali). Majapahit with its flourishing arts and literature is still an important concept and cause of national pride for Indonesians today as it is regarded as the basis of the modern state of Indonesia. The nationalist movement in the 20th century used this concept to justify both independence and the validity of territorial borders. Indonesia's national motto Bhinneka Tunggal Ika, meaning 'Unity in Diversity', originates from an Old Javanese poem written during the rule of Majapahit.

The Arrival of Islam in Indonesia

Although constituting a Hindu-Buddhist kingdom, Islamic influences were present as high up as the ruling elite of Majapahit. There probably has been an Islamic presence in maritime Southeast Asia from early on in the Islamic era when Muslim traders came to the archipelago, made settlements on the coastal areas, married local women and enjoyed respect due to their wealth acquired through trade. Some local rulers were probably drawn to this new faith and considered it to be advantageous to adopt the same faith as the majority of the traders. The establishment of Islamic kingdoms was the next (logical) step. It is assumed that subjects of these kings followed suit by converting to Islam.

Inscriptions on gravestones suggest that early on in the 13th century there existed an Islamic kingdom in the northern part of Sumatra called Pasai or Samudera. This kingdom is regarded to be the first Islamic kingdom in the archipelago. From northern Sumatra, Muslim influences subsequently spread eastwards through trade. On the northern coastline of Java multiple Islamic cities arose during the course of the 14th century. However, it is unlikely that some of the Javanese courtiers of Majapahit in East Java adopted the Islamic faith because of trade. They probably felt far more superior to the social class of traders. More likely this Javanese nobility was influenced by learned Muslim mystics (Sufis) and holy men claiming to possess supernatural powers.

In the late 14th and early 15th century the influence of Majapahit in the archipelago began to decline due to conflicts of succession and the rising powers of Islamic empires. A new trading state, Malacca, was one of these new powers. It developed on the coastal area in present-day Malaysia and was conveniently located on the narrowest part of the Strait of Malacca. This state became an enormously successful port with advantageous facilities in a wide trade network stretching from China and the Moluccas in the far east to Africa and the Mediterranean in the far west. Although initially Malacca was a Hindu-Buddhist state, it quickly transformed into a Muslim sultanate (probably due to trade-related reasons).

The historical link between trade and Islam is also visible in the developments on the island of Ternate in the present-day province of Maluku in eastern Indonesia. Ternate (similar to nearby located Tidore) became a wealthy region due to the production of cloves. From Java - and through trade - Islam spread to this region, resulting in the establishment of a sultanate in the late 15th century. This sultanate managed to rule a large part of eastern Indonesia but its position would be undermined by the Dutch in the 17th century.

The Arrival of Europeans in Indonesia

Stories about Malacca's wealth reached as far as Europe and tempted the Portuguese, who were making technological advances in navigation, to sail to this part of the world in order to have more influence on the global spice trade network (and would make their yields higher). In 1511 Malacca was conquered by a Portuguese fleet under the leadership of general Afonso de Albuquerque. This conquest, however, had far-reaching consequences for the trade routes. Malacca, once a wealthy port, quickly perished under the rule of the Portuguese who never succeeded in monopolizing Asian trade. After the conquest, traders immediately began to avoid Malacca and went to take their business to several other ports instead. Johor (Malaysia), Aceh (Sumatra) and Banten (Java) were states that began to dominate spice trade due to the shift in trade routes.

The Dutch were also keen on establishing a firm grip on the spice trade network in Southeast Asia. Their first expedition reached Banten in 1596 but was accompanied by hostilities between the Dutch and the indigenous population. After arriving back in the Netherlands, the expedition still showed a good profit which demonstrated that expeditions to the Southeast Asian region were in fact money-makers.

Multiple expeditions organized by several Dutch companies went to the archipelago causing a negative impact on profits. Competition for spices was driving prices up in the archipelago while supply-increase was driving prices down in Europe. This made the Dutch government decide to merge the competing companies into one entity called the United East India Company (Vereenigde Oost-Indische Compagnie, abbreviated VOC). It received far-reaching sovereign powers to monopolize the Asian spice trade as well as to exclude other European competitors. It decided to have its headquarters not in the Moluccas (the heart of the spice-producing islands) but more strategically nearby the Strait of Malacca and the Strait of Sunda. The VOC's choice fell on present-day Jakarta. In 1619 Governor-General Jan Pieterszoon Coen established Batavia on the ashes of the town Jayakerta which was demolished because of its hostile attitude towards the Dutch. Batavia offered good commercial prospects evoking the immigration of many people (especially Chinese) to this expanding city.

Towards Colonial Rule of Indonesia

Meanwhile, Islamic states continued to develop in the archipelago. In Aceh (Sumatra) Sultan Iskandar Muda established a major power early in the 17th century, which controlled the pepper and tin reserves. However, he never succeeded in establishing hegemony around the Strait of Malacca as Johor and the Portuguese were strong competitors. After Iskandar Muda's reign, Aceh experienced a long period of internal disunity ceasing it to be a significant force outside the northern tip of Sumatra.

In Central Java two new strong Islamic powers emerged in the second half of the 16th century. These were the districts of Pajang and Mataram that, after a prolonged struggle, managed to stop the political dominance of the coastal areas in northern Java. Mataram would become the most powerful and the longest lasting of the modern Javanese dynasties, with the reign of Sultan Agung as political pinnacle. Agung ruled from 1613 to 1646 and managed to conquer almost the entire surface of Java, except for the kingdom of Banten in West Java and the city of Batavia. Dutch control of Batavia was a thorn in the eye of Agung who wanted to control the whole surface of the island. On two occasions he sent his army to conquer this Dutch city but failed both times.

The VOC quickly extended its power in the archipelago and obtained control over the production of cloves and nutmeg on the Banda Islands (Moluccas) by using extreme measures such as genocide. It kept on expanding its network of trading posts throughout the archipelago. Cities and ports that played central roles in this Dutch trade network were Surabaya (East Java), Malacca (West Malaysia) and Banten (West Java).

Although the statutes of the VOC initially did not allow it to interfere with the internal politics of indigenous states, it became deeply entrenched in the politics of Mataram in Central Java. After Sultan Agung's death Mataram had quickly deteriorated and succession disputes emerged around the end of the 17th century and early 18th century. The Dutch played a divide and conquer game which eventually resulted in the division of the kingdom of Mataram in four parts with its rulers becoming subservient to the Dutch power. Although the position of the Dutch was still weak outside the island of Java, these political developments on Java can be considered as the initial stages of Dutch colonialism in the archipelago.  

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