Territorial consolidationThe first regular contact between Europeans and the peoples of Indonesia began in 1512, when Portuguese traders, led by Francisco Serrão, sought to monopolize the sources of nutmeg, cloves and cubeb pepper in Maluku. Dutch and British traders followed.
In 1602 the Dutch established the Dutch East India Company (VOC) and became the dominant European power. Following bankruptcy, the VOC was formally dissolved in 1800, and the government of the Netherlands established the Dutch East Indies as a nationalized colony.
From the arrival of the first Dutch ships in the late sixteenth century, to the independence of Indonesia in 1950, Dutch control over the Indonesian archipelago was always tenuous. Although Java was dominated by the Dutch, many areas remained independent throughout much of this time including Aceh, Bali, Lombok and Borneo. There were numerous wars and disturbances across the archipelago as various indigenous groups resisted efforts to establish a Dutch hegemony. It was not until the early 20th century, that Dutch dominance was extended across to the future territory of modern-day Indonesia.
From about 1840, Dutch national expansionism saw them wage a series of wars to enlarge and consolidate their possessions in the outer islands. Although Indonesian rebellions broke out, direct colonial rule was extended throughout the rest of the archipelago from 1821 to 1910 and control taken from the remaining independent local rulers. The Bird's Head Peninsula (Western New Guinea), was brought under Dutch administration in 1920. This final territorial range would form the territory of Indonesia.
Ethical PolicyIn 1901, Queen Wilhelmina announced that the Netherlands accepted an ethical responsibility for the welfare of their colonial subjects that could be summarized in the 'Three Policies' of Irrigation, Transmigration and Education. Upgrading the infrastructure of ports and roads in East Indies was a high priority for the Dutch, with the goal of modernizing the economy, facilitating commerce, and speeding up military movements. The government policy on education, however, brought the Western political ideas of freedom and democracy. During the 1920s and 30s, this small elite began to articulate a rising anti-colonialism and a national consciousness. However, the Dutch colonial government strongly repressed all attempts at change and suppressed the Indonesian nationalist movement. Political freedoms under the Dutch were limited at best.
In October 1908, the first native emancipation movement was formed, Boedi Oetomo, which followed by the establishment of first nationalist mass movement, Sarekat Islam, in 1912. It brought the Indonesians together, using the banner of Islam in opposition to Dutch rule, however, it had not nationalist agenda, and was often more anti-Chinese than anti-Dutch. In contrast, the Communist Party of Indonesia (Indonesian: Partai Komunis Indonesia, PKI), formed in 1920, was a fully-fledged independence party inspired by European politics. In 1926, it attempted a revolution throughout Indonesia through isolated insurrections across Java that panicked the Dutch, who arrested and exiled thousands of communists, effectively neutralizing the PKI for the remainder of the Dutch occupation.
In approximately 1920 that the word "Indonesia" came into its modern usage. Created by English ethnologists, George Windsor Earl and James Richardson Logan, in 1850s to classify the ethnic and geographic area, "Indonesia" was used upon by the nationalists as a word to imagine a unity of peoples of the archipelago. On October 28, 1928, the name "Indonesia" gained more political significance when the native pro-independence nationalist youth acknowledged Indonesia as one motherland, one nation, and uphold Indonesian language, that based on Bazaar Malay language, as the language of unity.In the 20th century the colony gradually developed as a state distinct from Metropolitan Netherlands with treasury separated in 1903, public loans being contracted by the colony from 1913, and quasi-diplomatic ties were established with Hejaz to manage the Hajj pilgrimage from the Dutch East Indies. In 1922 the colony came on equal footing with the Netherlands in the Dutch constitution, while remaining under the Ministry of Colonies.
A proto-parliament, the Volksraad (Indonesian: Dewan Rakjat; People's Council), was established in 1916 and convened in 1918. The Volksraad was limited to an advisory role and only small portions of the indigenous population were able to vote for its members. Nevertheless, the Volksraad used as the medium of political struggle by the Indonesian nationalist to achieve the goal of independence or, at least, a self-government.