You're not really wrong, they were indeed seen as one of the most secular and liberal societies in the region. After Suharto's autocratic rule was over in the late 90s, the country underwent a period of reformations and a largely successful transition to a functioning democracy with free and fair elections, more political and civil liberties, proliferation of independent media, decentralisation, and a largely tolerant, religiously-moderate society. All of that made it a leading (even if flawed) democracy in the region and Muslim world. Well, except Aceh, which is ruled under Sharia law, but that was an exception. However, the process started stagnating at some point, and now it appears it has been in decline for several years, with hardliner religious groups gaining more influence, and government utilising that to cement their own power. So in other words, another failure to separate religion and state.