Istana Negara and Istana Merdeka are two palaces in the same complex located between Veteran street and North Medan Merdeka street in Central Jakarta, they have a total area of 68,000 m². Within the State Palace complex also stood several buildings used for state activities.
The two main buildings in the State Palace complex are the Istana Merdeka, which faces south towards the National Monument (Monas), and Istana Negara, which faces north towards the Ciliwung River. The Istana Negara side has a Bina Graha that was formerly used as the President's Office. The west wing of Istana Negara and Merdeka has a Wisma Negara.
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The palace now known as Istana Negara (State Palace) was originally built as the residence for a Dutch businessman, J. A. van Braam. Rijswijk and Molenvliet (presently known as Harmoni), the location chosen as the time was the most exclusive neighborhood in Weltevreden area, the New Batavia. During its early years, only the mansion stood in this complex. The mansion was built in 1796 facing north toward Ciliwung river bank, during the era of Pieter Gerardus van Overstraten as Governor-General of the Dutch East Indies, and completed in 1804.
In 1820, this mansion was rented and then sold to the Dutch Colonial Government in 1821. The government used this building as the center of all administration and as the official residence of the Governor-General during a stay in Batavia, in occasion of events such as the Indies Council Meeting held every Wednesday. The Governor-Generals preferred to live in Bogor Palace in Bogor, due to the cooler and more adaptable temperatures in the hillsides of Bogor.
The mansion of van Braam was bought due because of a need for the Dutch government to centralize power. However, Daendels Palace (currently Ministry of Finance) in Lapangan Banteng (formerly known as Waterloo Square) was not completed yet. Upon the completion of Daendels Palace, plans to centralize power changed, and the mansion of van Braam officially became the residency of the governor-general, and Daendels Palace housed administrative buildings. Hotel van den Gouverneur-Generaal (Hotel of the Governor-General) became the official name of the van Braam mansion.
During the Colonial era, important events took place in this building. Some of which include the declaration of the cultuurstelsel system by the Governor Graaf van den Bosch, and the ratification ceremony of the Linggarjati Agreement on March 25, 1947.
During mid-19th century, the palace does not suffice the accommodation of its administrative purposes, and under orders from J.W. van Lansberge, a new building that today become the Merdeka Palace was built within the complex in 1873 during the Governor General Loudon administration, and finished in 1879 during Governor General Johan Willem van Landsbarge administration. This neoclasical building, designed by Drossares, was built in southern part of the complex directly facing Koningsplein (now Merdeka Square). The new Governor General palace at Koningsplein was also known as Istana Gambir (Gambir Palace).