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After Sultan Agung, the Sultanate of Mataram was declining due to power struggle within the sultanate. To make things worse, VOC (Dutch East India Company) exploited the power struggle to increase its control. At the peak of the conflict, the Mataram Sultanate was split in two based on the Treaty of Giyanti of February 13, 1755: Yogyakarta Sultanate and Surakarta Sultanate.
The Giyanti Treaty mentioned Pangeran Mangkubumi as Sultan of Yogyakarta with the title of Sampeyan Dalem Ingkang Sinuwun Kanjeng Sultan Hamengkubuwono Senopati Ingalaga Abdul Rakhman Sayidin Khalifatullah Panatagama(His Majesty, The Sultan-Carrier of the Universe, Chief Warrior, Servant of the Most Gracious, Cleric and Caliph that Safeguards the Religion).
During the era of Dutch occupation there are two principalities in the region, the Yogyakarta Sultanate (Kasultanan Yogyakarta) and the smaller Pakualaman Duchy / Principality (Kadipaten Pakualaman).
The Dutch Colonial Government in the past respected and referred to the authorities of those two principalities in carrying out their autonomous self government, arranged under a political contract. When the Indonesian independence was proclaimed, the ruler of both principalities, the Sultan of Yogyakarta and Prince of Pakualaman declared a statement that Yogyakarta Sultanate and Pakualaman Regency would become part of the Republic of Indonesia. Those two regions were unified to form the Yogyakarta Special Region and the sultan became the Governor of Yogyakarta and the Prince of Pakualaman as the vice-governor; both were responsible to the President of Indonesia. The Special Region of Yogyakarta was formally formed after the independence war ended and legalized on August 3, 1950.
In carrying out the local government administration it considers three principles: decentralization, deconcentration and assistance. The provincial government carries out the responsibilities and authorities of the central government, while on other hand carrying out its autonomous responsibilities and authorities. The Regional Government consists of the Head of the Region and the Legislative Assembly of the Region. Such construction guarantees good cooperation between the Head of Region and the Legislative Assembly of Region in order to achieve a sound regional government administration. The Head of the Special Region of Yogyakarta has got responsibility as the Head of the Territory and titled as a Governor.
The first Governor was the late Hamengkubuwono IX, Sultan of Yogyakarta and continued by HRH. Paku Alam VIII as acting governor until Hamengkubuwono X ascended in 1998. Unlike the other heads of regions in Indonesia, the governor of the Special Region of Yogyakarta has the privilege or special status of not being bound to the period of position nor the requirements and way of appointment. However, in carrying out their duties, they have the same authorizations and

source : www.en.wikipedia.org