Bacharuddin Jusuf Habibie was born in Pare-Pare, South Sulawesi, to Alwi Abdul Jalil Habibie and R. A. Tuti Marini Puspowardojo. He studied at the Bandung Institute of Technology for one year. Although BJ. Habibie himself was born in South Sulawesi, B.J. Habibie's parents didn't come from this region. His father was a Gorontalo agriculturist and his mother was a Yogyakarta noblewoman, who met when both of them were studying in Bogor.
In 1950, when Habibie was fourteen, he became acquainted with Lieutenant Colonel Suharto. The future Indonesian President was then stationed in Makassar to put down a separatist rebellion and lived in a house across the road from the Habibie family's. Suharto quickly became a family friend. He was present during the death of Habibie's father and became an intermediary when one of his soldiers wanted to marry Habibie's sister.
During 1955-1965, he studied aerospace engineering at the RWTH Aachen University, Germany, receiving Diploma (Germany's First degree certificate which is equivalent to Master in most countries) in 1960 and doctorate in 1965. He then worked for Messerschmitt-Bölkow-Blohm in Hamburg. It might have been due to his time spent in Europe that made him interested in the Leica line of cameras. While working in Messerschmitt-Bölkow-Blohm, Habibie conducted many research assignments, producing theories on thermodynamics, construction, and aerodynamics, known as the Habibie Factor, Habibie Theorem, and Habibie Method.
In 1974, Suharto sent Ibnu Sutowo to Germany to meet Habibie and convince him to come back to Indonesia. Habibie was convinced and returned to Indonesia, taking the position of Technological Adviser to the President.
From 1978 to 1998 Habibie served as Minister of Technology and Research in Suharto's Cabinet. He pushed for a leapfrog strategy of development, which he hoped would bypass the foundational low-skill technology stages to turn Indonesia into an industrialized nation. Despite national and international opposition (which preferred agricultural investments to technological investments) to this;he once famously announced that "I have some figures which compare the cost of one kilo of airplane compared to one kilo of rice. One kilo of airplane costs thirty thousand US dollars and one kilo of rice is seven cents. And if you want to pay for your one kilo of high-tech products with a kilo of rice, I don't think we have enough."
Habibie had considerable power as Minister of Technology. His long acquaintance with Suharto combined with Suharto's own desire that Indonesia master technology as part of its development meant that Habibie was able to get extra fundings from the budget for his projects at the expense of other ministers' project. In 1989, Suharto increased Habibie's power, putting him in charge of strategic industries.
When Habibie came back to Indonesia in 1974, he was also made CEO of a new state owned enterprise called PT. Nurtanio. By the early 1980s it had made considerable progress, specializing in making helicopters and small passenger planes. In 1995, Habibie succeeded in flying a N-250 (dubbed Gatotkoco) commuter plane. He was assited in his efforts by A.B. Wolff, former Chief of Staff of the Dutch Airforce.
In developing Indonesia's Aviation Industry, Habibie adopted an approach called "Begin at the End and End at the Beginning". In this method, things such as basic research became the last things that the workers at IPTN focused on while actual manufacturing of the planes was placed as the first objective. In 1985, PT. Nurtanio changed its name to Indonesian Aviation Industry (IPTN) and is now known as Indonesian Aerospace Inc. (Dirgantara).
The 1998 People's Consultative Assembly (MPR) General Session was to be held in the midst of the Asian Financial Crisis and many were hoping for Suharto to take serious steps to take the country out of trouble. In January 1998, after accepting nomination for a 7th term as President, Suharto announced the criteria for the person who he wanted as Vice President. Suharto did not mention Habibie by name but his suggestion that the next Vice President should have mastery over science and technology made it obvious who he wanted to nominate. The market reacted badly, causing the rupiah to further depreciate in value.
By May 1998, the increasing poverty caused by the Financial Crisis and political discontent had reached boiling point. On 13 May, the shooting of six students at Trisakti University in Jakarta, caused extreme anger which in turn caused widespread riots and lootings. There were now explicit calls for Suharto to step down as President of Indonesia. Suharto responded by saying on 19 May 1998 that if he stepped down, the Vice President would become President and in a not too subtle jab to Habibie, said that he was not sure whether the Vice President could solve the problems facing the country.
Habibie, who learned of Suharto's comments from television, was upset with his mentor and from then on was increasingly sympathetic to those who wanted Suharto to step down. While careful not to oppose him directly or support those who did, Habibie left the president in little doubt that he saw himself as Suharto's legitimate successor. Suharto, faced with dwindling civilian and military support, even among loyalists like Wiranto and Ginandjar Kartasasmita, decided to resign late on the evening of 20 May 1998.
The next morning, on 21 May 1998, Suharto publicly announced his resignation and Habibie was immediately sworn in as President. There was mixed reaction to Habibie's assumption of the Presidency. Hardline reformists saw Habibie as an extension of Suharto's regime while moderate reformists saw him as leading a transitional Government.
With the release of his 2006 book, Detik-Detik Yang Menentukan: Jalan Panjang Indonesia Menuju Demokrasi (Decisive Moments: Indonesia's Long Road Towards Democracy), there is speculation that Suharto had wanted Habibie to resign along with him. In Javanese style, Suharto hinted at this intention subtly. Habibie, despite having Javanese root from his mother, didn't take the hint and decided to take the office of the President. Because of this inability to read his intentions, Suharto showed nothing but contempt and never talked to Habibie again.
Since relinquishing the presidency, Habibie has spent more time in Germany than in Indonesia, however he has during Susilo Bambang Yudoyono's presidency been active both as a presidential adviser and through The Habibie Centre to ensure democratisation in Indonesia.
In September 2006, Habibie released a book called Detik-Detik Yang Menentukan: Jalan Panjang Indonesia Menuju Demokrasi (Decisive Moments: Indonesia's Long Road Towards Democracy). The book recalled the events of May 1998 which led to his rise to the Presidency. In the book, he controversially accuses Lieutenant General Prabowo Subianto, Suharto's son-in-law and the Kostrad Commander, of planning a coup d'etat against him in May of 1998.