ships began appearing in the region in the early sixteenth century and soon established a virtual monopoly over the archipelago's lucrative spice trade. They took control of the Moluccas (Maluku), which became known as the Spice Islands
, because of their wealth of pepper, nutmeg, cloves, mace, ginger and cinnamon.
Dutch forays into the Indonesian archipelago began at the very end of the 16th century, and by 1600 they had become the supreme European trading power in the region. In 1602, they founded the United Dutch East India Company (VOC) , with monopoly control over trade with the Moluccas. They then invaded and occupied the Banda Islands, part of the Moluccas, in 1603 - the first overtly aggressive act by the Dutch against their Indonesian hosts. Two years later, the VOC successfully chased the Portuguese from their remaining strongholds on Tidore and Ambon, and the Dutch annexation of Indonesia began in earnest. Trading vessels were now being replaced by warships, and the battle for the archipelago commenced.
By the end of the first decade of the seventeenth century, the VOC had begun to build a loose but lucrative empire , becoming the Dutch government's official representatives in the archipelago. At the helm of the VOC was the ruthless Jan Pieterzoon Coen, who set about raising the prices of nutmeg and clove artificially high by destroying vast plantations on the island, thus devastating the livelihood of Banda's already decimated population.
Coen then turned his attention to Java, and in particular Jayakarta (now Jakarta), which he wanted to become the capital of the ever-expanding VOC territories. When he built a fortress there, the local population responded angrily, upon which the Dutch retaliated by razing the city and renaming it Batavia . Further strategically important territories were acquired soon after, including Melaka (in modern-day Malaysia) and Makassar.
The plains of Central Java and the northern shores were by this time in the grip of the influential Islamic Mataram Empire (different from the Mataram, or Sanjaya, empire, which was Hindu), whose rulers were treated almost as deities by their subjects. However, the royal house was often riven with squabbles and during the early years of the eighteenth century the region was paralyzed by Three Wars of Succession . The last of these (1746-57) brought about the division of the empire into three separate sultanates, two at Solo and one at Yogyakarta, aided and abetted by the politically astute Dutch who then subjugated the entire territory.
Though they were now the first rulers of a united Java, the VOC began to see their fortunes dwindle in the face of huge competition from the British and French. In 1795 the Dutch government, investigating the affairs of the company that for 99 years had represented their interests in the Far East, found mismanagement and corruption on a grand scale. The VOC company was bankrupt, and eventually expired in 1799. The Netherlands government took possession of all VOC territories, and thus all of the islands we regard as Indonesia today formally became part of the Dutch colonial empire .