Despite 50 years of promoting Bhinneka Tunggal Ika ("Unity in Diversity") as the official state motto, the concept of an "Indonesian" remains artificial and the country's citizens divide themselves along a vast slew of ethnicities, clans, tribes and even castes. If this wasn't enough, religious differences add a volatile ingredient to the mix and the vast gaps in wealth create a class society as well. On a purely numerical scale, the largest ethnic groups are the Javanese (45%) of central and eastern Java, the Sundanese (14%) from western Java, the Madurese (7.5%) from the island of Madura, and Coastal Malays (7.5%), mostly from Sumatra. This leaves 26% for the Acehnese and Minangkabau of Sumatra, the Balinese, the Iban and Dayaks of Kalimantan, and a bewildering patchwork of groups in Nusa Tenggara and Papua — the official total is no less than 3000!

For most part, Indonesia's many peoples coexist happily, but ethnic conflicts do continue to fester in some remote areas of the country. The policy of transmigration (transmigrasi), initiated by the Dutch but continued by Suharto, resettled Javanese, Balinese and Madurese migrants to less crowded parts of the archipelago. The new settlers, viewed as privileged and insensitive, were often resented by the indigenous populace and, particularly on Kalimantan and Papua, led to sometimes violent conflict.

One particularly notable ethnic group found throughout the country are the Indonesian Chinese, known as Tionghoa or the somewhat derogatory Cina. At an estimated 6-7 million they make up just 3% of the population but continue to wield a disproportionate influence in the economy, with one famous — if largely discredited — study of companies on the Jakarta Stock Exchange concluding that as many as 70% of its companies (and, by extension, the country) were controlled by Chinese. They have thus been subject to persecution, with Chinese forcibly relocated into urban areas in the 1960s, forced to adopt Indonesian names and bans imposed on teaching Chinese and displaying Chinese characters. Anti-Chinese pogroms have also take place, notably in the 1965-66 anti-Communist purges after Suharto's coup and again in 1998 after his downfall, when over 1100 people were killed in riots in Jakarta and other major cities. However, the post-Reformasi governments have overturned most of the discriminatory legislation, and Chinese writing and Chinese festivals have made a tentative reappearance.

There is no one unified Indonesian culture as such, but the Hindu culture of the former Majapahit empire does provide a framework for the cultural traditions of the central islands of Sumatra, Java and Bali. Perhaps the most distinctively "Indonesian" arts are wayang kulit shadow puppetry, where intricately detailed cutouts act out scenes from the Mahabharata and Ramayana and other popular folk stories, and its accompaniment the gamelan orchestra, whose incredibly complex metallic rhythms are the obligatory backdrop to both religious ceremonies and traditional entertainment. Indonesia is culturally intertwined with the Malay, with notable items such as batik cloth and kris daggers, and Arabic culture has also been adopted to some degree thanks to Islam.

Modern-day Indonesian popular culture is largely dominated by the largest ethnic group, the Javanese. Suharto's ban on Western imports like rock'n'roll, while long since repealed, led to the development of indigenous forms of music like dangdut, a sultry form of pop developed in the 1970s, and the televised pelvic thrusts of starlet Inul Daratista in 2003 were nearly as controversial as Elvis once was. Anggun Cipta Sasmi is a talented Indonesian singer who became a famous singer in France. Her single "La neige au sahara" became a top hit on the European charts in the summer of 1997.

Most Indonesian films are low budget B movies. "Daun di Atas Bantal" (1998) is an exception; it won the "best movie" award at the Asia Pacific Film Festival in Taipei, Taiwan (1998).

Indonesian literature has yet to make much headway on the world stage, with torch-bearer Pramoedya Ananta Toer's works long banned in his own homeland, but the post-Suharto era has seen a small boom with Ayu Utami's Saman breaking both taboos and sales records.