In his presidential address introducing the Draft State Budget (RAPBN) before the House of Representatives (Dewan Perwakilan Rakyat, DPR) on 6 January 1997, President Soeharto stated that 1997–98 would be “the years of politics”. Such a characterization was probably due to the fact that during these years Indonesia would face two significant political events, namely, the general election to elect members of the DPR held in May 1997, and the presidential election to be held in March 1998. In this context, the general election was of particular interest to both the government and society. For the former, the general election served as a useful vehicle by which the New Order sought to demonstrate the continued acceptance by society of, at least in the formal sense, its right to rule as a legitimate government. For many in society, the general election brought about an unusual opportunity for them to participate directly in a major national political event.

1997 was also an unfortunate year for Indonesia. In addition to the outbreak of a series of riots from the beginning of the year, it was also marked by a number of “disasters” such as the fiasco over the Busang gold concession, the worst drought in many years, forest fires, and a financial crisis which led to the closing down of sixteen privately owned banks. The Indonesian Government, through Co-ordinating Minister for People's Welfare Azwar Anas, declared on 14 September 1997 that Indonesia was under a state of national disaster. Even though the declaration came as a response to the growing concerns both in Indonesia and in the neighbouring countries, especially Singapore and Malaysia, over forest fires which occurred in many parts of Indonesia, it reflected the general situation in the country. Indeed, at his end-of-year speech, President Soeharto admitted that 1997 was “the year of sadness” for Indonesia.

Both “politics” and “sadness” seemed to have dominated Indonesia's domestic developments in 1997. Many events resulted in a sense of despair, confusion, and uncertainty on the part of the people at large.