BRIDGES TO NEW BUSINESS 00 lindbladvoorwerknieuw.indd 1 24-3-2009 11:26:48 This monograph is a publication of the research programme ‘Indonesia across orders; The reorganization of Indonesian society’ The programme was realized by the Netherlands Institute for War Documentation (NIOD) and was supported by the Dutch Ministry of Health, Welfare and Sport Published in this series by Boom, Amsterdam: - Hans Meijer, with the assistance of Margaret Leidelmeijer, Indische rekening; Indië, Nederland en de backpay-kwestie 1945-2005 (2005) - Peter Keppy, Sporen van vernieling; Oorlogsschade, roof en rechtsherstel in Indonesië 1940-1957 (2006) - Els Bogaerts and Remco Raben (eds), Van Indië tot Indonesië (2007) - Marije Plomp, De gentleman-bandiet; Verhalen uit het leven en de literatuur, Nederlands- Indië/Indonesië 1930-1960 (2008) - (forthcoming) Remco Raben, De lange dekolonisatie van Indonesië Workshop proceedings, published in Indonesia: - Freek Colombijn, Martine Barwegen, Purnawan Basundoro and Johny Alfian Khusyairi (eds), Kota lama, kota baru; Sejarah kota-kota di Indonesia / Old city, new city; The history of the Indonesian city before and after independence.Yogyakarta: Ombak (2005) - ‘Indonesianisasi dan nasionalisasi ekonomi’, Special issue of Lembaran Sejarah; Jurnal Sejarah dan Ilmu-Ilmu Sosial Humaniora 8-2 (2005) In the same series will be published by KITLV Press, Leiden: - Freek Colombijn, with the assistance of Martine Barwegen, Under construction; Urban space and housing during the decolonization of Indonesia 1930-1960 - Robert Bridson Cribb, The origins of massacre in modern Indonesia; Legal orders, states of mind and reservoirs of violence 1900-1965 - Els Bogaerts and Remco Raben (eds), Beyond empire and nation; The decolonization of African and Asian societies 1930s-1960s Other titles are in preparation 00 lindbladvoorwerknieuw.indd 2 24-3-2009 11:26:48 Indonesia across Orders j. thomas lindblad BRIDGES TO NEW BUSINESS The economic decolonization of Indonesia KITLV Press Leiden 2008 00 lindbladvoorwerknieuw.indd 3 24-3-2009 11:26:48 Published by: KITLV Press Koninklijk Instituut voor Taal-, Land- en Volkenkunde (Royal Netherlands Institute of Southeast Asian and Caribbean Studies) P.O. Box 9515 2300 RA Leiden The Netherlands website: www.kitlv.nl e-mail: [email protected] This book is volume 245 in the Verhandelingen Series of the Koninklijk Instituut voor Taal-, Land- en Volkenkunde KITLV is an institute of the Royal Netherlands Academy of Arts and Sciences (KNAW) Cover: Creja ontwerpen, Leiderdorp ISBN 978 90 6718 290 4 © 2008 Koninklijk Instituut voor Taal-, Land- en Volkenkunde No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission from the copyright owner. Printed in the Netherlands 00 lindbladvoorwerknieuw.indd 4 24-3-2009 11:26:48 Contents Preface vii Abbreviations xi I Introduction 1 Key concepts 2 International dimension 6 Historiography 8 Outline 9 Sources 11 II From colonial to national economy 13 The plural economy 15 Seeds of transition 24 Early Indonesianisasi 29 Post-colonial trends 36 III Occupation and revolution 47 Nipponization 48 Pioneering with Japanese consent 54 Indonesians struggling to survive 57 Dutch struggling to return 64 IV A new dawn in business 75 Industrialization 76 Banking in a state of flux 85 Small-scale entrepreneurship 88 Indigenous conglomerates 92 Chinese conglomerates 98 V Voluntary nationalization 103 A symbol of sovereignty 104 Flying the national flag 113 More state involvement 118 VI Economic nationalism 125 Conflicting priorities 126 00 lindbladvoorwerknieuw.indd 5 24-3-2009 11:26:49 vi Contents The policy that backfired 129 Auxiliary policies 136 Squeezing the Chinese 139 VII Indonesianisasi 149 Changing conditions 150 Dutch corporate adjustment 158 The record of oligopolists 161 Achievements under pressure 166 A comparative perspective 171 VIII Take-over and nationalization 177 The road to take-over 178 Running somebody else’s business 186 Under new ownership 194 Konfrontasi 203 Final settlement 207 IX Conclusion 209 Appendices 1 Cabinets and political parties, 1945-1959 223 2 Foreign trade, 1940-1960 224 3 Exchange rates, 1950-1960 227 4 Labour conflicts, 1950-1957 228 Bibliography 229 Index 249 00 lindbladvoorwerknieuw.indd 6 24-3-2009 11:26:49 Preface Indonesia is very much alive in the Dutch psyche. Not only do many Dutch people have roots in the former colony, but there is also a seemingly bound- less interest in the colonial past, particularly in the events leading to Indonesia becoming a sovereign nation. In 2002 the Dutch government decided to support a large-scale historical research programme aimed at enhancing the understanding of this transition. This programme, entitled ‘Indonesia Across Orders’ (Van Indië tot Indonesië), was officially launched in December 2002 in Amsterdam and officially concluded with a public presentation in January 2007 in The Hague. This monograph is one of a number of results of the pro- gramme. Generous financial support was provided by the Ministerie voor Welzijn, Volksgezondheid en Sport (Department of Welfare, Health and Sports). The entire research project was designed and administered by the Nederlands Instituut voor Oorlogsdocumentatie (NIOD, Netherlands Institute for War Documentation) in Amsterdam. The project’s aim was to provide a multi- faceted view of the process of emancipation from colonial rule, including aspects such as law and order, urban life and its symbols, labour relations, and economic decolonization. In addition, two issues specifically relating to the Japanese occupation and the Indonesian Revolution were focused on, namely war damage and reconstruction, and the issue of backpay to former colonial civil servants. The project on economic decolonization, entitled ‘Indonesianisasi and Nationalization’, was executed under the auspices of the International Institute of Asian Studies (IIAS) in Leiden. This book is the cul- mination of six years of work on that project. An important aspect of the research programme ‘Indonesia Across Orders’ was the close cooperation with Indonesian historians, who participated in part through the Lembaga Ilmu Pengetahuan Indonesia (LIPI, Indonesian Academy of Sciences). This resulted in a number of regional case studies undertaken by junior Indonesian historians, some of which had immedi- ate relevance to the research project ‘Indonesianisasi and Nationalization’, as well as a series of workshops and academic meetings, mostly in Indonesia. 00 lindbladvoorwerknieuw.indd 7 24-3-2009 11:26:49 viii Preface Indonesian interest in the main topics of ‘Indonesia Across Orders’ has been overwhelming, and there are plans to translate the monographs, this one included, into Indonesian. For three full years, from late 2002 until late 2005, the main research for the ‘Indonesianisasi and Nationalization’ project was carried out by myself and by my chief assistant Jasper van de Kerkhof in archives and libraries both in Indonesia and the Netherlands. Two international workshops were devoted to the topic of ‘Indonesianisasi and Nationalization’, the first in Yogyakarta on 18-19 August 2004, the second in Leiden on 18-19 November 2005, with pro- ceedings appearing in separate publications. There were many opportunities to present research findings while work was in progress. Presentations were given to a Dutch audience at NIOD in Amsterdam, at IIAS in Leiden, at the public presentation of the research programme in The Hague (11 January 2007), and at the Bronbeek Museum in Arnhem (22 April 2007). Presentations were given to an Indonesian audience during workshops in Jakarta, Surabaya (26-27 August 2004), and Padang (3-4 August 2005). Research findings were discussed during international conferences orga- nized by NIOD in Amsterdam (11-13 December 2003), the International Association of Historians of Asia (IAHA) in Taipei (6-10 December 2004), the International Convention of Asian Scholars (ICAS) in Shanghai (20-25 August 2005) and Kuala Lumpur (2-5 August 2007), the University of Auckland (1-3 February 2006), and the International Economic History Association (IEHA) in Helsinki (21-25 August 2006). Seminars on this topic were also offered at Leiden University, Gadjah Mada University in Yogyakarta, the Australian National University, and the University of Adelaide. I benefited immensely from the feedback received on these occasions. Most of the manuscript for the final book was compiled in 2006 during a six-month stay as a research fellow at the Research School of Pacific and Asian Studies at the Australian National University in Canberra. Revisions were finalized in mid-2007. Several institutions facilitated the preparation and completion of this book. With a minimum of bureaucracy and hierarchy, NIOD provided the ideal institutional setting for this research. With its unsurpassed combination of efficiency and informality, IIAS was a perfect host for the activities under- taken by Jasper van de Kerkhof and myself. LIPI in Jakarta rendered invalu- able support in helping me gain access to archival materials at Bank Indonesia and the Arsip Nasional Republik Indonesia (ANRI, Indonesian National Archives). The Research School of Pacific and Asian Studies at the Australian National University offered the most pleasant environment imaginable for focusing exclusively on writing. The Departments of History and Southeast Asian Studies of