Susilo Bambang Yudhoyono, calling himself an "ordinary citizen from an ordinary family," was sworn in as the country's first popularly elected president Wednesday and pledged to lead a national campaign to fight corruption.
The former four-star general and chief security minister, who recently received his doctorate in economics, said he would work to revive Indonesia's struggling economy but warned the public not to expect too much too soon.
"The joyful day today is surrounded by a feeling of great optimism," said Yudhoyono, 55, in his inaugural address. "However, we should remember that we have to go through a difficult period, and we will face tough challenges."
The peaceful hand-over of power from outgoing President Megawati Sukarnoputri to Yudhoyono marked a historic moment for Indonesia, which declared its independence in 1945. Yudhoyono defeated Megawati by a landslide last month in the world's largest direct presidential election; on Wednesday, even some on the losing side praised the successful transition.
"The Indonesian people are very proud of this," Laksamana Sukardi, the outgoing state enterprises minister, said after attending the inauguration. "This is a milestone for our nation. There was a stereotype that Indonesians can't really do a democratic election. But you can see that Indonesians are very peaceful and democratic in nature."
Indonesia is the world's most populous Muslim country, and some see the development of democracy here as a model for other parts of the world, particularly Islamic nations in the Middle East.
"Our nation has become more mature in democracy," Yudhoyono said in his address. "Not only did we succeed in building a solid foundation as a great democratic country, but also, we became a role model for the world."
Expectations are high for the soft-spoken, charismatic Yudhoyono, who defeated Megawati with more than 60% of the vote.
But Yudhoyono, Indonesia's fourth leader in the six years since autocratic President Suharto was forced from office, faces monumental economic, social and environmental problems.
Islamic militants affiliated with the Al Qaeda network have staged dozens of terrorist attacks in Indonesia, including the 2002 Bali nightclub bombings that killed 200 people and the two suicide bombers. The government is also fighting separatist movements in the outlying provinces of Aceh and Papua.
Corruption is pervasive in the courts, law enforcement and other government institutions, helping to drive away foreign investment and jobs. Indonesia was tied for eighth place on a list of the world's most corrupt countries released Wednesday by Transparency International, a German-based government watchdog group. More than 40 million people are unemployed or underemployed.
Fuel subsidies, which have given Indonesians gas prices that are among the lowest in the world, have soared this year and will cost the government more than $6.6 billion.
Illegal logging has destroyed much of the rain forest in Sumatra and the Indonesian part of Borneo, bringing species such as the orangutan and Sumatran tiger to the brink of extinction. Burning of the forest to clear land for plantations is once again creating choking clouds of smoke that hang over neighboring Singapore and Malaysia.
In his address, delivered at the presidential palace to a group of television cameras, Yudhoyono said he would focus on achieving a higher economic growth rate, developing infrastructure and creating jobs, but he was short on specifics.
"The biggest challenge is to free the people from poverty, ignorance and underdevelopment, as well as the shackles that hamper the development of our people's capability," the president said.
Acknowledging that corruption was impeding the country's economic development, Yudhoyono indicated that he would make fighting graft his top priority in the short term. "The government will be active in carrying out a program to combat corruption that I myself will lead directly," said Yudhoyono, popularly known by his initials SBY.
Yudhoyono was sworn in before the People's Consultative Assembly, which until this year had the power to choose the president, as it did in Megawati's case. Some members complained that the president did not stay to give his inaugural speech but delivered it later in the day to the cameras.
Megawati, who has not congratulated Yudhoyono or met with him since his Sept. 20 victory, did not attend the inauguration -- she was home working in her garden.
Later in the day, according to the Detik news agency, she spoke with supporters and indicated that she still was having trouble accepting her loss. "We were not defeated," she said. "We had a lack of votes."
Just before midnight, Yudhoyono appeared publicly for the third time and announced his 34-member Cabinet. The move came nearly four hours later than scheduled, indicating that jockeying might have continued until the last minute.
Businessman Aburizal Bakrie, who ran unsuccessfully for the Golkar Party presidential nomination, was named chief economics minister.