This is the second article in a series on the lessons of Singapore for South Africa. The first, introductory article can be read here.
The best lack all conviction, while the worst
Are full of passionate intensity.
WB Yeats, ‘The Second Coming,’ 1919.
To understand Singapore, and what made it so exceptional for its time, one needs some grasp of the developments in neighbouring Indonesia in the 1950s. Singapore’s path to independence as a sovereign nation in 1965 was a complicated one stretching back over a decade. Indonesia had, by contrast, achieved full independence or merdeka in 1949 under the leadership of Sukarno.
As one of the first of the new nations to emerge from the ruins of European empire, post-World War Two, Indonesia was an inspiration and an example to anti-colonial nationalist movements across Asia and Africa. The path taken by Indonesia after independence would also be one of the templates for ideas of “national democracy” that, with the encouragement of the socialist bloc, took hold across the Third World at the time. These ideas were incorporated into ANC ideology in the early 1960s (via the SACP) and remain with South Africa to this day.
Developments in Indonesia would be more closely and sceptically observed in Singapore. This was due to its proximity, and the impact that these had politically, economically, and militarily on its tiny neighbour. Intellectually too, the People’s Action Party, would learn from Indonesia. In contrast to many of their nationalist contemporaries the PAP ultimately chose to avoid rather than emulate Indonesia’s defining post-colonial policies. These are the subject of the next two articles in this series. ___STEADY_PAYWALL___
Indonesia has a shared history with South Africa as the Dutch East India Company (VOC) had founded the settlement of Batavia (modern day Jakarta) in 1619, a few decades before their establishment of a provisioning station in Cape Town in 1652. Both settlements were under VOC rule until the late eighteenth century when Batavia came under the Dutch Crown in 1800 and the British took over the Cape in 1806. By the twentieth century the Netherlands Indies had come to encompass a huge archipelago stretching from Sumatra in the West to Netherlands New Guinea in the East. The 1930 census put the population at 52 million predominantly Malay people, of whom the Javanese made up just over half the total (27 million.)
The two leading nationalist leaders of their generation were Sukarno, who was born in 1901, in Java, and Mohamed Hatta, who was born in 1902 in Sumatra. Both were clever well-educated men who were part of that tiny stratum of Indonesians who received an education in the Dutch schooling system. Sukarno attended the Europese Lagere School (the Dutch primary school) in Mojokerto, then the Hogere Burger School in Surabaya and graduated with an engineering diploma (with a focus on architecture) from the Technische Hogeschool in Bandung. He went on to practice as an architect in Bandung. Hatta meanwhile ultimately studied towards a doctoral degree in economics in the Netherlands.
In 1927 Sukarno had founded the Indonesian National Party (PNI) to campaign for independence for Indonesia. The party had attracted a wide following but dissolved itself following the arrest and imprisonment of Sukarno and other party leaders. In 1932 Hatta, who had been jailed, prosecuted, and then acquitted in the Netherlands for his pro-independence activities, returned to Indonesia and became leader of the New PNI, one of the two successor organisations to the original party.
In Indonesia, as elsewhere in Asia and Africa, the founding text of the anti-colonial movement was Vladimir Lenin’s 1917 pamphlet Imperialism, the Highest Stage of Capitalism (1917). Through his theory of imperialism Lenin had sought to explain why the proletarian revolution that Karl Marx had predicted in the Western industrialised nations had failed to materialise. Marx’s expectation, Ali Mazrui noted, was that as “the poor in the industrialized countries would get poorer and the rich richer – until the point of revolutionary explosion was reached”.
“Yet it became increasingly clear that the poor of the Western countries, far from getting poorer, were actually improving their standards of living at a significant rate. Why had the Western poor been betraying their destiny of worsening immiseration? The answer lay in imperialism. The exploitation of the British Empire saved the British worker at home from total poverty and helped to save Britain from a proletarian revolution.”
Imperialism was defined as the “barefaced exploitation and the most inhumane oppression” of the peoples of the colonies and dependent countries, the purpose of which was to squeeze “out super-profits”. The Communist movement believed that once the national liberation movements in the “oppressed nations” succeeded in overthrowing this system of exploitation and oppression, the long-awaited “crisis of world capitalism” could finally be realised.
This theory would exert a distinct and powerful emotional appeal to leaders of the nascent anti-colonial nationalist movements in Asia and Africa. This was not least because it seemingly accounted for the material, institutional and technological advantages that the Europeans had enjoyed over all other of the world’s peoples, at the height of the Imperial Age, and on which their “lying and insulting doctrine of race superiority” had rested.
In the 1930s the leaders of the nationalist movement in Indonesia sought to mobilise the population by blaming all their misery on capitalism and colonial exploitation (imperialism). Sukarno sought too to awaken nationalist consciousness among the Indonesian population by reminding them of their “great past, their dark present and the promise of a bright future.”
Through the 1930s the Dutch authorities had used various repressive measures to keep a lid on the nationalist movement, with Sukarno and Hatta being sent into internal exile. Dutch rule had however come crashing down with the Japanese invasion and occupation of Indonesia in 1942. The Japanese were initially welcomed as liberators by the Indonesian population. They released Sukarno and Hatta and other leaders of the anti-colonial nationalist movement and encouraged Indonesian nationalism as an aid to their war effort.
Almost all the European and most of the Eurasian population meanwhile were interned in concentration camps and the positions they had been forced to vacate filled by Indonesians. Following the Japanese surrender, but before the re-occupation of Indonesia by the Allies, the Indonesian nationalists led by Sukarno and Hatta declared independence and announced the formation of the Indonesian Republic on 17th August 1945. Sukarno became President and Hatta Vice-President. Towards the end of the year there followed a period of intense revolutionary nationalist violence in which thousands of Indo-Europeans, Chinese, Dutch, and local Indonesians were killed.
In the period between 1946 and 1949 there was a bitter war between returning Dutch forces and the Indonesian Republic, interspersed by various failed efforts to find a settlement. Finally, in November 1949 the Dutch had, under pressure from the Americans and United Nations Security Council, agreed to Indonesian independence.
The basic terms of the negotiated settlement were that in return for the granting of sovereignty to Indonesia the Dutch would receive guarantees protecting their economic interests and those of their citizens thenceforth. Nationalisation of Dutch owned enterprises was permitted in terms of the Financial and Economic Agreement (Finec) only if it was in Indonesia’s national interest and when mutually agreed upon by both parties. Compensation would be determined by a judge based on the real value of the concern being taken over.
The only part of the former Netherlands Indies to remain under Dutch control was Western New Guinea (“West Irian” to Indonesian nationalists), with its ethnically distinct population of Papuans (not Malays). The final status of this territory was to be the subject of further discussion. The Indonesians were also forced to accept liability for some of the debts incurred by previous Dutch administrations.
In an editorial welcoming the agreement the New York Times said that with the formation of the Republic of the United States of Indonesia “democratic peoples in every country can feel a vicarious thrill of pleasure. This contemporary world of ours has borne so much bitter fruit that it is good to see progress in at least one great field of government”. The newspaper added that it was “hard to believe that either the Dutch or the Indonesian peoples will overthrow this agreement, however unpalatable it may be to many of them. The settlement had to be a compromise, and the proof that it was one is the criticism now being levelled at both delegations for having surrendered.”
On his triumphant return to Jakarta to take office in late December 1949 President Sukarno preached a message of reconciliation to the massive crowds that greeted him. “We now are on peaceful terms with the Dutch and other foreigners. They are all our guests. Show hospitality to them. Now we are heading for reconstruction. Let us work and work and work.” A newspaper report stated that “worried minority groups, including the Dutch, Eurasians and Chinese, appeared less tense as a result of the goodwill displayed in President Sukarno’s speech.”
In terms of the Hague agreement the civil service of the Royal Netherlands Indies Government was taken over “lock, stock and barrel” by the new government, with Dutch, Eurasian and Indonesian officials continuing in office, but now serving Indonesian ministers. According to one estimate 17 000 Dutch nationals transferred across to the new Indonesian civil service.
In a January 1950 article in the Singapore Free Press on the prospects for the new nation Geoffrey Boland identified the three great challenges facing the new nation as the Communist movement, which would pursue a “united front” strategy through the 1950s, the “Darul Islam” Islamic insurgency then underway, and a lack of administrative capacity by the Indonesians themselves. (Latent ethnic and regional divisions, suppressed by the anti-colonial struggle, had yet to start fully re-asserting themselves.) In the latter regard the Dutch were still greatly needed, he wrote. If they adapted to the new situation, they could play a major stabilising role. This meant however that the Indonesian leaders needed to set aside narrow nationalism in the interests of the future of their new country:
“The Dutch over the last two years have restored the administrative machinery of Indonesia as a whole and it would be a tragedy if this were now to be swept away because the republic rejected the services and advice of experienced administrators just because they happened to be Dutch. The Indonesians on their part can steady the situation by making quite clear at the outset that they will not discriminate against a man, whether he be Dutch, Chinese or Eurasian.”
Writing in the same newspaper later that month Lachie McDonald said that it was the view among leading members of the British community in Indonesia that it would be “most unwise to try replacing Dutch officials hurriedly in order to make room for party followers. Any economic breakdown or any mismanagement of the canal and irrigation systems serving the rice growers would be fine ammunition for the Communists.” He noted however that it was “distressing to find nearly all young Indonesians with a smattering of education today chasing jobs as clerks, or commissions in the new army.”
The nationalist government soon started overriding the federal character of the new state, foisted on them by the Hague Agreement. A unitary state model under a parliamentary system was adopted in August 1950 and the United States of the Republic of Indonesia renamed the Republic of Indonesia. The provisional constitution adopted in August 1950, which replaced the 1945 version, drew heavily on the UN Charter of Human Rights. It stated that “all are entitled to equal protection against any discrimination and against any incitement to such discrimination” and that “Everyone has the right to own property individually as well as in association with others. No one shall be arbitrarily deprived of his property.” Parliament was composed of representatives of the disbanded Indonesian Republic and United States of Indonesia, with national elections to be held later. Over the next five years Indonesia would be governed by several unstable and shifting cabinet governments.
In the early years, the government nationalised a number of Dutch-owned enterprises by consent. This included the Java Bank, which become the central bank of Indonesia, the railways on Java and a number of Dutch electricity and gas companies. A new national airline was set up replacing the Dutch owned one, but an effort to purchase Indonesia’s main inter-island shipping line, KPM, was not successful.
Initially the centrepiece of the Indonesian government’s efforts to promote “indigenous Indonesian” advancement in the economy was through the preferential granting of import licenses and cheap credit. In terms of the Benteng programme instituted in 1950 the Indonesian government chose to maintain the system of import licensing that had been adopted during the Great Depression to the benefit of the big Dutch trading houses, and instead turn it to the advantage of indigenous businessmen. The government decreed that certain categories of goods – such as flour, textiles, stationery, caustic soda, tyres, and so on – could be imported by Benteng businessmen. It also allocated precious foreign exchange to these businessmen for this purpose. By 1954, 2 211 individuals had registered with the programme, with Benteng importers receiving 76,2% of all foreign exchange credit that year.
The other main route of Indonesian advancement in the early years after independence was the civil service. The government had greatly expanded school education and the number of pupils in senior secondary schools (grades 10 to 12) had increased from 4 400 in 1940 to 69 000 in 1956. There was however no expanding industrial economy able to absorb such school leavers. Instead, as Leslie Palmier noted, “all the pressure for employment of the newly educated has been directed at the government service, which has become enormously inflated as a result: it grew from 140 000 pre-war to 700 000 in 1955 alone.” In this great rush for positions the incumbent Dutch and Eurasian officials were marginalised or pushed out, retaining a place only where rare and essential technical skills were required. By 1955 there were only about 3 000 Dutch nationals still employed by the Indonesian government.
By 1955 it was already clear that the promise of liberation was not being realised. The Indonesian nationalists had claimed that once Indonesia was freed of the exploitative foreign rulers the population would enjoy a rapid improvement in their quality of life. But six years after independence the opposite was happening. The government had run up huge budget deficits, there was high inflation, and the government’s administration, purged of most of its Dutch managerial skill, had become inefficient and dishonest. Corruption within the civil service was widespread, the product of poor accounting practices, inadequate salaries, and the extensive opportunities for graft created by an onerous regulatory system.
Although strict criteria were ostensibly supposed to apply in the Benteng programme in practice it failed to foster a self-standing business class and increasingly became a vehicle for politically driven patronage and self-enrichment. The licenses seldom went to genuine businessman, able to run the operations effectively, but rather to politically connected individuals who felt themselves entitled to these lucrative concessions as part of the spoils of the revolution. Since they did not have a grasp of the basics of the import business they had to rely, in one way or another, on existing import companies owned by ethnic Chinese to do the actual work. In the run up to the 1955 elections the allocation of import licenses became a means by which the Indonesian nationalist parties sought to finance themselves and buy political support.
The nationalist parties steadily undermined their standing through their corruption and inability to govern cleanly and effectively. The Communists, with their dynamic, apparently fanatical, well-organised and self-sacrificing cadres, took the gap. They had gained control of the major trade union federation, the SOBSI, which had a total membership of some 2.5 million people. As the journalist Guy Harriott noted, in a series of reports on Indonesia for Singapore’s The Straits Times in mid-1955, they were “using this control in a skilful enough campaign of economic sabotage, with particular concentration on the big foreign-owned rubber and tea estates which earn the bulk of Indonesia’s foreign exchange. Rolling strikes, slow down of output… and the deliberate encouragement of ‘squatting’ on plantations are their main weapon.” The main problem facing Indonesia however was weak and corrupt (non-Communist) administration. “Lack of honesty in public life, lack of a responsible Government and a national disinclination for hard work have brought [the] Indonesian economy to a parlous state”, Harriott wrote.
For the Dutch and British economists, bankers, and businessmen whom Harriott spoke to the situation was “desperate but not critical.” They based their relative optimism on various factors. These included the fact that Indonesia had huge natural resources, which gave it the potential to be “one of the richest countries in the world”; exports of rubber and petroleum were above pre-war levels, the big-foreign owned plantations, despite their problems, were still productive and profitable; and the country was close to gaining self-sufficiency in rice production, the staple food of the population. Moreover, there seemed to have recently been an injection of realism into the Government’s socialist policies, with further nationalisations having been put on hold. Vice President Hatta told Harriott that while it would be easy enough to nationalise the buildings in possession of the big foreign companies, “could we nationalise also their ability in organisation, leadership and experience?” He added:
“We have already learned to our cost by bitter experiences in the recent nationalisation of some big enterprises that this can be unprofitable to the people. To be sure, within a short term the principal part of our export-import trade and goods distribution should properly be in Indonesian hands. But the way to get them into our hands must be carefully considered. The necessary skilled labour must be trained, not only theoretically, but practically. Moreover, we need foreign capital and must produce the conditions – and the guarantees – which will attract its investment.”
The main emotional outlet for many Indonesian nationalist politicians and intellectuals at their self-inflicted failures was a brooding hatred of the Dutch, and resentment at the leading role they continued to play in the economy. This would find its lightening rod in the refusal by the government of the Netherlands to hand over West Irian to Indonesia.
By the mid-1950s the relatively advantaged “alien” minorities – the Dutch, Indo-Europeans and Chinese – had adapted to the new order. In 1956 there were some 70 000 or so Dutch nationals still living in Indonesia, down from a high of 230 000 in 1940. These were often people of mixed race whose European ancestors had arrived generations before. Though they had Dutch citizenship they knew of no other home than Indonesia. There were also over two million ethnic Chinese who made up most of the “local” productive bourgeoisie.
In an article headed “Sunset of the Dutch in Indonesia” the New York Times correspondent Robert Alden noted that the role being played by the Dutch was largely an innocent one. “They are fearful of Indonesian authority and they well know that the time of Dutch autonomy and rule is over. Responsible Indonesian leadership is quite aware of this” he wrote, “and also aware that without the foreign companies, especially the Dutch, the rubber trees would not be tapped, the oil would not flow, and the inter-island shipping would come to a halt. These leaders know that, for the time being at least, Dutch business, technical, and banking know-how are necessary to perform vital functions in the new republic.”
It was clear though that the situation on the ground was turning sour. Indonesia’s nationalists continued to loudly denounce the Dutch, describing them as the worst of all colonial masters and perpetually reiterating all the inequities of their rule. Alden wrote: “At times, this continued harking back to the past has all the overtones of a Peter Pan fantasy. Confronted by a multitude of problems that abound in the new republic, there are some important leaders who never seem to grow up. They keep reliving the days of the revolution” and blaming the Dutch for all the country’s misfortunes.
In the face of the decline of the quality of state administration and its demonization by the nationalists and their communist allies, Dutch nationals saw little future for themselves or their children and were emigrating by the thousands. Alden concluded by suggesting that over time the Dutch Indonesian relations should become more normal. “As the memory of the bloody revolutionary period fades, and the Indonesian Government becomes better able to master its problems, frictions will be removed and bitterness forgotten. Certainly, the reduction in size of the Dutch population will remove many sources of irritation.”
On the question of the best response to the initial failures to deliver on the vision of the nationalist movement, a split had opened up, embodied by the different approaches of Hatta and Sukarno. Though both shared the same underlying Marxist ideology Hatta was described as a “moderate” and the unofficial leader of the “constructional revolutionaries.” This group saw the need to attract foreign capital and for reforms to correct the early errors of independence, for which they accepted responsibility. Their approach was to incrementally build up the country’s natural resources and industry, to train “young people in the technical fields and improve the standards of our people.” This would have the effect, in practice, of progressively diminishing Dutch influence. They also recognised the critical role Dutch nationals and companies continued to play in the economy in the short to medium term, their taxes still contributing the bulk of tax revenues to the new republic.
Sukarno though was described as the leader of the “emotional revolutionaries” or ultra-nationalists. He was regarded as the father of the new nation, was a spell-binding orator, enjoyed the support of the masses, and was driven by a pathological hatred of the Dutch. He was also completely indifferent to mundane economic concerns, his obsession was the continued fight against “imperialism” and “colonialism”. In his address to the Bandung conference on 18 April 1955 Sukarno stated that colonialism was not simply a matter of external European rule, which would end with independence:
“Colonialism has also its modern dress, in the form of economic control, intellectual control, actual physical control by a small but alien community within a nation. It is a skilful and determined enemy, and it appears in many guises. It does not give up its loot easily. Wherever, whenever, and however it appears, colonialism is an evil thing, and one which must be eradicated from the earth.”
Sukarno thus wanted his country to be completely cleansed of the Dutch presence, and West Irian to be handed over to Indonesia. In this project the ultra-nationalists enjoyed the support of Indonesia’s growing Communist Party, the PKI. At the time the PKI defined “Dutch imperialism” as the “main enemy of the Indonesian people, from the viewpoint of the extent of its domination in various spheres, particularly in the economic sphere.”
The immediate objective of the Communist-controlled “united national front” then was the liquidation of “Dutch imperialism” in particular, and the expulsion of “Dutch imperialists” and the confiscation and nationalisation of their property. In their propaganda the Communists claimed that the Dutch were “still exploiting the wealth of the country to the economic advantage of the Netherlands. ‘With every breath they take,’ one Communist slogan has it, ‘the Dutch are taking a rupiah out of our country’.”
In tracing the path taken by Indonesia through the first years after independence a South African is struck by an eerie sense of familiarity: After a long and bitter struggle an accord was finally reached granting the nationalists political power in return for agreeing to protect the economic interests of the Dutch and their descendants. The nationalist leaders initially adopted a reconciliatory posture, albeit through gritted teeth, towards their historic adversaries. Various protections for the now politically powerless racial minorities were written into the constitution. Great optimism was expressed in the American press at the prospects for this new democracy.
Yet neither “national liberation” nor the end of the political conflict brought the economic recovery that either side had hoped for. There was a huge scramble for positions in the state by members of the nationalist movement and precious managerial and technical skill was lost in the process. Government overspending, ineffective administration, and efforts to force the creation of an “indigenous” Indonesian business class through licensing measures, all hastened economic decline. The absence of growth meant the economy was not able to absorb newly educated youth into productive employment. The realisation that economic spoils – in the forms of state positions and licenses – were not being fairly allocated resulted in the first fractures emerging within the ‘new’ nation.
Economic and nationalist frustration at these initial failures led to growing envy and resentment against the remaining Dutch population and the prominent role they continued to play in the economy. The parlous economic situation did not create a political groundswell for reform but rather the opposite. It was exploited by radical elements to sharpen the contradictions and bring the so-called revolutionary moment closer.
Within the nationalist movement there was a divide that opened. On the one hand there were the moderates who recognised, on a cerebral level, the need for reform, and the important role that the Dutch played in the economy. They were lacking in conviction. By contrast the ultra-nationalists were full of passionate intensity as they sought to keep the nation united by mobilising against external enemies, old and new, and bring the national revolution to completion, regardless of the economic consequences.
This was Indonesia’s situation 65 years ago. It is, in many basic respects, the situation South Africa finds itself in today. The future that Indonesia under Sukarno proceeded to choose for itself, and how this helped shape the ideology of the African National Congress, is the subject of the next article in this series.
The following article in this series can now be read here.
 Ali Mazrui, “Nkrumah: The Leninist Czar”, Transition, no. 26, 1966, p. 13
 Rose, Mavis. Indonesia Free: A Political Biography of Mohammad Hatta (Classic Indonesia Book 24). Equinox Publishing. Kindle Edition.
 Giebels, L.J. Sukarno, A Biography. Fosfor. Kindle Edition.
 New York Times November 3, 1949
 “Indonesia throng acclaims Sukarno”, New York Times, 29 December 1949
 Kian Wie Thee, Indonesia's Economy Since Independence, pg. 7
 Kian Wie Thee, Indonesia's Economy Since Independence, pg. 25
 Kian Wie Thee, Indonesia's Economy Since Independence, pp. 31-32
 Lois Mitchison, “The Dutch in Indonesia: Needed but disliked”, The Manchester Guardian, 11 February 1955
 Kian Wie Thee, Indonesia's Economy Since Independence, (Institute of Southeast Asian Studies: Singapore, 2012) pp 31-34
 The New York Times, 8 January 1956
 D.N. Aidit, The Road to People's Democracy For Indonesia: General report to the Vth National Congress of the CPI, March 1954, Problems of the Indonesia Revolution, D.N. Aidit. Published by DEMOS – 1963 (see here)
 The New York Times, 8 January 1956