The Vulnerable Citizen

Indonesian Chinese and Their Identity

David S. Widihandojo



Indonesian Chinese have always been a small minority. Estimated to number six million in 1998, they have probably never accounted for more than three per cent of the total population. In the country where ethnic diversity is so pronounced, the Indonesian Chinese have nevertheless stood out as a distinctive ethnic group, and its presence is strongly felt because of its business activities. There is no doubt that the Indonesian Chinese exercises an influence beyond its numerical strength, however, it is still far from controlling the economy of the country. The economic status of the Chinese minority is the most significant element in "the Chinese problem". The indigenous Indonesian frequently considers the Chinese have been dominating the Indonesian economy. While, the Chinese do not deny that they are strong in business, they do not think that they dominate the Indonesian economy. They feel that they are only "the milk-cow" of the state-bureaucrats and "scapegoat" for any social problems.

Indonesian Chinese are not a transient immigrant minority indeed they are a settled population. The majority must have been at least third-generation inhabitants. It is also widely believed that two-thirds of them are mixed Chinese and indigenous ancestry[1]. In a legal sense, they are Indonesian citizen (WNI-Warga Negara Indonesia). However, many Indonesians, even state officials, today still regard Indonesian Chinese politically, culturally and socially as foreign as any other real foreigners. Most of Indonesian national leaders think of the Indonesian nation as comprising of various indigenous Indonesian ethnic groups, and ethnic Chinese are perceived as a foreign group. Until today, only a few Indonesian political parties are prepared to accept the Chinese as full members.

This xenophobic framework is also reflected in the 1945 Constitution, the term ‘native Indonesian’ (orang Indonesia asli) is provided upon citizenship. Consequently, citizenship is conferred automatically upon indigenous Indonesian and is unavailable to other groups, unless they are satisfied certain further conditions. Furthermore, the term WNI is an artificial and legalistic flavour. In everyday speech, someone is referred to as a WNI, it is commonly understood that he/she is of foreign Chinese origin and not indigenous. This expression itself underlined the alien-ness of the Indonesian citizen Chinese in Indonesian eyes. Similarly, in the Dutch colonial era, the Chinese, even they were Dutch subject and hold Dutch citizenship card in their pocket, were officially described as ‘Foreign Asiatic’.

If the term ‘Indonesian Citizen/WNI’ is narrowed in this way, the term ‘National’ is often narrowed in other direction. In the official speech, those who speak of national economy (ekonomi nasional) are usually means an economy particular for indigenous Indonesian rather than economy for society as a whole. Consequently, many economic policies are understood exclusively for indigenous Indonesian. The writing of Indonesian history is also narrowed in the same way, however, there is abundant evidence that Partai Tionghoa Indonesia (Indonesian Chinese Party) fully identified with the struggle for Indonesian independence and lined itself up with the other co-operating nationalist parties of 1930s.[2] Many Indonesians assert that the Chinese gave no support to the Indonesian struggle. Of course, there were Indonesian Chinese, same as indigenous Indonesian, who loyal to the Dutch administration. However, in fact, Indonesian Chinese actively supported the Republic, a few of them even becoming cabinet ministers.

Then, who are the Indonesian Chinese? It is clear that legal criteria do not correspond with social realities. Even, a simple racial criterion, such as China-born descendants of earlier immigrants through the male line is not sufficed. Skinner pointed out that because of considerable intermarriage and assimilation; this would ‘exclude many persons in Java who are uniformly considered Chinese and include those are considered themselves and by local people to be indigenous Indonesian’.[3] In other word, Skinner excluded a definition based on cultural criteria because of the extent to which many Indonesian Chinese have abandoned traditional Chinese cultural. In this work, I use Coppel's framework that the Indonesian Chinese as persons of Chinese ancestry who either function as members of, and identify with, Chinese society, or are regarded as Chinese by indigenous Indonesian and given special treatment as a consequence. It should be stressed that this definition includes a number of Indonesians, whom has close links with Chinese society or has Chinese physical appearance, which has been treated as socially and politically significant or relevant.[4]

The myth of uniformity and changelessness of Indonesian Chinese dies hard, however, there are abundant evidence of their cultural diversity and capacity for acculturation to local ways of life and beliefs. The Indonesian Chinese are not homogeneous, even on their arrival, although the majority came from Fukien and Kwangtung provinces. The diversity of the immigrants was compounded by the variable degree to which their descendants were influenced by Indonesian cultures. Skinner suggested that there was ‘the locally rooted Chinese population in which adults as well as children are Indonesian-born, the orientation toward China is attenuated, and the influence on Indonesian culture is apparent’.[5] Thus, although outsiders frequently see the Chinese in Indonesia is a homogenous group, the community is in fact highly diverse. Therefore, the "Chinese problem" in Indonesia is extremely complicated. It is part of human problem in Asia, which needs to be approached with more reason.

Regarding with what so called ‘the Chinese problem’ in Indonesia, I have used the history of Indonesia to illustrate the dynamics of policy in the respective periods under consideration. I view that it is the process within the society and the intervention of the state, which gives shape to the specific form of Chinese-indigenes relationship in Indonesia. This perspective demands that the present relationship should be studied in its historical and social context. The particular form in which the relationship takes is conditioned by a complex variety of factors, including the nature of the pre-colonial social structure, the impact of colonialism upon economy and society, the formation and disintegration of classes under colonial rule, and the nature of political conflict in the post-colonial period.

The Legacy of the Past

By the sixteenth century, internationalism and free trade were distinguishing features of Southeast Asian trade with Malacca as the main entrepot.[6] Traders representing all religions and nationalities, such as Chinese, Indians, Arabs and Javanese were welcome to do business as long as they paid the tolls and obeyed the local laws. This pattern of international trade was based on specialisation according to each island’s comparative advantages, for instance, pepper was traded from Sumatra; rice, salt, cotton and textiles from Java; nutmeg, maize, and cloves from Maluku.

Javanese merchants, particularly from the north coast of Java had taken a substantial role in Southeast Asian trade in the sixteenth and seventeenth centuries.[7] By the seventeenth century, a Javanese entrepreneurial class had emerged in a number of areas including Pekalongan, Solo, Jogjakarta, and Kudus. Their businesses covered silver manufacturing, batik printing, cigarette manufacturing. Probably, the largest entrepreneurial community was in the north coast. The north coast was a coastal society, lying open to the sea and so had commercial power, because of access to international trade in the region. The north coast Javanese princes were involved in trade by controlling strategic commodities, such as rice and spices, and by imposing tolls.

At this time, the Chinese traders occupied a dominant position. Inter-marriage between the Chinese and the Javanese was not unusual because emigration of Chinese women was extremely rare. Chinese men assimilated into the indigenous society naturally. After his visit to Java in the early seventeenth century, Ong Tae Hee, a Chinese officer, reported to the Chinese emperor.

The Chinese do not recognize our philosophy anymore. They do not speak Chinese. They do not eat our food and do not use our apparel. They have become Javanese. They read Javanese and learn their philosophy, and called themselves Muslim.[8]

The Chinese also had access to power. Dutch historians, De Graaf and Pigeaud, pointed out that the founder of the dynasty of Demak, an Islamic kingdom in the north coast of Java in the fifteenth century, was a Chinese, Cek Kok Po who adopted the Javanese name Raden Patah. Under his rule, the Demak kingdom controlled the rice trade along the north coast. His successor, Cu-Cu, known by the Javanese name, Trenggana, expanded the kingdom to East and West Java, and in 1527 subjugated the Majapahit kingdom of East Java.[9] It is reported that the Regent (Bupati) of Bangil was Chinese.[10] The principal Chinese of Central Java, Captain Tan Jin Sing (1760-1831), who adopted the Javanese name, Kanjeng Raden Tumenggung Secodiningrat, was appointed by Sultan Hamengkubuwono II as the Regent (Bupati) of Jogjakarta, a key position in the Javanese feudal bureaucracy.[11] It is probable that in this period in the north coast, a domestic business class, derived from state bureaucrats and foreign traders, mainly Chinese, started to form.

The division between indigenous Indonesian and Chinese had been exaggerated by the Dutch colonial administration which created and supported the ideology that stressed the idea that service on behalf of the state was a noble profession for Javanese who were otherwise identified as being, by nature, unfit as businessperson. Van Deventer, a Dutch official, stated,

Real thrift is foreign to the modern-day Javanese, money rolls through their fingers, or burns in their hands; the Chinese is thrifty, frugal cautious at the same time. In the matter of free will, of the spirit of enterprise, the Native of Java has not come far either; his nature is rather docile. Carefree also is the nature of the ordinary Javanese; they live from hand to mouth, and would rather think as little as possible about tomorrow; this source of a cheerful outlook on life, however, stands in sharp contrast with the inborn notion of the Chinese that people, as much as possible through material appearances, must uphold the sacred honour of their ancestors. Already in this one cardinal notion the Chinese possesses a mighty incentive to drive him to work, while the spirit of the Javanese knows nothing of this sort.[12]

If a coalition between the Chinese and indigenous Indonesian was formed, the colonial administration took action to eradicate the threat, even if this meant massacring thousands of lives, as occurred in the massacre of the Chinese in Batavia in October 1740. By 1740, there were about 15,000 Chinese within Batavia’s walls, representing at least, seventeen per cent of the population. In the city’s environs (outside the walls) about 26 per cent of the population was Chinese.[13] They constituted an important part of Batavia’s economy, particularly as wholesalers, sugar millers, shopkeepers, artisans etc. Those Chinese grew rich and assimilated into the indigenous noble community, through marriage and business, resulting in a significant domestic bourgeoisie. In this climate integration between indigenous political power and Chinese economic power, began to form. The colonial administration perceived this coalition as a threat to their position because the rich traders collaborated with indigenous rulers who held political power. To restrain the increasing influence of the Chinese, the colonial administration took steps to restrict the number of Chinese migrants, but this did little to rectify the problem, because the Chinese easily circumvented the regulation with the help of ‘corrupt and greedy officials’,[14] and newcomers continued to arrive. After recognising that the regulation was useless, the colonial administration took action. The head of the Chinese community, Captain Nie Hoe Kong, and all of his family, were imprisoned without reason.

In early September 1740, widespread rumours percolated through the European community at Batavia, that the Chinese were threatening to rebel. Rumour had it that the Chinese were armed and collaborated with indigenous gangs from outside Batavia. At the end of September 1740, Governor-General Adriaan Van Valckenier (1737-41) ordered all Chinese houses in town to be searched for arms. On 9 October 1740, fire broke out and all control was lost. Dutch soldiers and citizens rushed out into the streets, entered the houses of the Chinese, robbing and killing men, women, children, babies, prisoners, even Chinese patients in the hospital, about 10,000 Chinese were butchered.[15] Heuken graphically described the scene,

‘Blood was everywhere and the canals full of corpses. Large sections of the city lay in ashes and over 10,000 were dead. The old city of Batavia never recovered from this blow. The golden days had passed for good.’[16]

Only making additional payments to the Dutch troops to return to duty eventually stopped the looting. There was clear evidence of the involvement of the colonial administration. Later, Governor-General Van Valckenier admitted that ‘a massacre of the Chinese would not be unwelcome’.[17] The survivors moved to the north coast and allied with the Javanese princes. The war, between a coalition of Chinese and Javanese trader princess against the alliance between the Javanese king of Mataram and the Dutch, lasted almost seventeen years without interruption. In 1757, the war was over. The remaining allied forces continued to rule in some enclaves in Java. The Dutch were exhausted by this war. They turned their attentions to open tea, coffee and rubber plantations.

After the war, the colonial administration imposed a regulation that forcing the Chinese to live in a specific area, called pecinan (China-town), and prohibiting them from travelling without a government permit. By this regulation, the Chinese were effectively ghettoised and completely segregated from indigenous Indonesia. Furthermore, the colonial administration divided the society into three separate groups, the European, the foreign Asiatic and the indigenous Indonesian. The division was not only based on ethnicity, but also on division of labour and wealth. The European controlled the lucrative large-scale export-import trade; the foreign Asiatic, mostly Chinese, kept the intermediate trade and the small-scale trade remained in the hands of indigenous Indonesian. Consequently, the average income per capita in 1928 was: European, 4.439 guilders, foreign Asiatic, 298 guilders and indigenous Indonesian, 61.4 guilders.[18] These groups had different legal rights and privileges. The differences in income, ethnicity and culture created barriers against the coalition of groups in the society, assimilation would therefore a drop in social status and the loss of some privileges in law. Even if, the desire to assimilate were there, the colonial administration took action. In one case, the Chinese who had so completely assimilated into indigenous population of a village in Cirebon residency, that ‘the only thing which recalled their Chinese origin was their queue’, were forcibly removed into China-town (pecinan) and made to identify themselves as Chinese.[19]

The colonial administration also restricted any involvement of indigenous people in big or middle business activities. In the early eighteenth century, it was common for the wealthy Javanese, usually from the noble class, involved in business as supplier of coffee, indigo, rice, spices etc. Many of them had become rich, such as in 1707; a Javanese merchant of Cianjur paid 10,000 guilders for a new cart with Persian horses. The Colonial administration saw the involvement of Javanese in business as serious threat. De Haan states, ‘if the Javanese have money and power, soon they will threaten us [the Dutch]’.[20] Under this perceived threat, then, the colonial administration applied a regulation in which all business with indigenous businessperson must be done in barter-style using Dutch products, such as textiles and consumer goods, as collateral. Meanwhile, the Dutch still paid their Chinese agents with money. In other cases, the colonial administration had also exercised tougher measures, such as in East Java; the majority of indigenous middlemen were forced to cease operating their businesses, which the Chinese appropriated, and quickly becoming the new compradors.[21] The VOC officials at Batavia ordered the shipping of Chinese slaves to Maluku in order to replace the indigenous middlemen in the plantation, and to act as middlemen between the Dutch and the indigenous smallholders or traders. The reason was that the Chinese were ‘hard workers, smart and powerless’.[22] Given these circumstances the Dutch did not need to worry that the Chinese might challenge them.

By these measures, the colonial administration attempted to restrict the development of indigenous business class and replaced them with the Chinese. This also illustrated that the Dutch colonial administration actively discouraged the crossing of ethnic boundaries, and that the colonial administration played central role in ensuring that a stable local-born Chinese society was formed and were not absorbed by the indigenous population.

Along with the awakening of Indonesian nationalism in the first decade of the twentieth century, in Kudus, a town in the north-coast of Java, many well-known indigenous businesspersons were born. Of these, Sirin, Muslich, Atmowijoyo, Nawawi, Ashadi, Rusjdi, Ma’aroef and Nitisemito, are notable. All of them are cigarette manufacturers. It is quite difficult to estimate the precise wealth of these men, however, it is clear from their life styles that they were very wealthy, indeed, even in comparison with Europeans or foreign Asians. In the 1920s, they had several cars, lived in mansions with large gardens, had luxurious villas in the country or at the seaside, and they were able to finance their children’s tertiary education abroad. They employed around 65,000 workers, in industries that consumed 12,000 tons of cloves to produce 20,000 million cigarettes annually. The amount of cloves required totalled more than half of the world’s production for the same period.[23] The Encyclopedie van Nederlandsch Indie remarked,

The native trade in textiles and agricultural produce in tobacco and livestock is unusually developed. Where elsewhere in Java the second level and often the third level trade is in the hands of Chinese and Arabs, both of these groups are here driven out by the natives.[24]

In an economy mainly controlled by the Dutch and the Chinese, Kudus appeared to be one of the enclaves of successful indigenous entrepreneurship. Undoubtedly, along with the awakening of Indonesian nationalism, the Kudus experience contributed to the core idea of the indigenisation of the economy.

The first organisation, which involved indigenous entrepreneur, was Sarekat Dagang Islam (The Islamic Trading Society) founded by Raden Mas Tirtoadisuryo in order to cope with the economic pressure of the Chinese and the Dutch. The Muslim identity was used to distinguish between Indonesians and the Dutch or the Chinese. By using Islam as the determination of Indonesian identity, Tirtoadisuryo easily grabbed the support of most of indigenous people, particularly the Javanese, the West Sumatrans, Sundanese and Madurese. More importantly, he also activated the largest traditional religious organisations in Java, pesantren (Islamic boarding school) and their traditional leaders kyai. As a result, Sarekat Dagang Islam experienced spectacular growth, becoming the first Indonesian mass party and, by 1919, claiming about two million members.[25] Because of its spectacular growth, the organisation had to move its focus away from commercial activities and eventually changed its name to Sarekat Islam (The Islamic Society).

Most of the members were villagers who perceived Sarekat Islam as an independent political movement to counter monolithic colonial power structures. Sarekat Islam expressed group solidarity, motivated by hatred towards the Chinese and the Dutch. The following statement that appeared in Neraca [The Scales] clearly demonstrates their political concerns, ’In consideration of the fact that the majority of native people exist in miserable living conditions, the Central Sarekat Islam will continuously oppose any domination by sinful capitalism’.[26] The term ‘sinful capitalism’ is an interesting expression, with the distinction between sinful and non-sinful capitalism having never been clearly drawn. However, coterminous with an awakening Indonesian nationalism, it could be argued that all non-indigenous capital was sinful because it drained wealth from the archipelago. Given this scenario, therefore, indigenous capital was not sinful.

By 1911, grievances against Chinese had become the central feature of the policy of the Sarekat Islam Congress, with calls to exclude all Chinese from the movement. Meanwhile, the tension between the indigenous Indonesian and the Chinese grew steadily. In Surakarta and Jogjakarta, it was widely felt that the Chinese were gaining a firmer control over the batik industry, especially since Chinese agents controlled the supply of cambric, dyes, waxes and the marketing of the finished products. The economic competition with the Chinese was interpreted by militant members of the Sarekat Islam of Surakarta as a racial threat that had to be met by force. They began to attack Chinese in the street, burning their shops and warehouses. Consequently, on 10 August 1912, the Resident of Surakarta issued a decree banning the organisation. In Kudus, on October 1918, thousands of people attacked Chinese factories, shops, pawnshops and houses. More than fifty houses were destroyed, about eighty Chinese were killed, twenty-two rioters died and about one hundred were wounded.[27]

The source of the hatred was principally economic, centred on the entrance of the Chinese into the cigarette industry, which had previously been vested predominantly in the hands of indigenous entrepreneurs. This is apparent from the fact that of sixty-one revolters sentenced for their part in the riot, about twenty were manufacturers and a further eight were traditional religious leaders (kyai). Budiman and Ong remark that ‘many of the indigenous cigarette manufacturers were sentenced with being involved in the riot’.[28] There is clear evidence of the involvement of Sarekat Islam in the riot. The local vice-president and a high proportion of members were arrested with many leaders fleeing the town to escape arrest.

Thereafter, responding to the Kudus riot, Semaun, a young and brilliant Javanese railway worker, the leader of Sarekat Islam Semarang branch, revealed the ethnic tensions in colonial Indonesia as follows,

Nowadays, the life of the indigenes is worsening; they feel that they are getting poorer and poorer but they can see for themselves that other races [bangsa], for example the Chinese, are getting richer. The Chinese show off their wealth and contrast it with the poverty of the indigenes. The contrast between the poverty of the indigenes and the richness of other peoples caused the hatred of these indigenes toward the rich, of whom a large number are Chinese. The hatred of the poor indigenes toward their rich fellow indigenes disappeared because they belong to same race and same religion. What is left is only their hatred toward the rich Dutch and the rich Chinese. The hatred toward the rich Dutch was drowned because the Dutch are the rulers and they are very strong, but the hatred toward Chinese has no counterbalance.[29]

The Indonesian revolution was a critical period for the formation of Indonesian nationalists attitude toward the Chinese. Many Indonesians still assert that the Chinese gave no support to the Republic. However, Partai Tionghoa Indonesia (Indonesian Chinese Party) firmly identified with the struggle for Indonesian independence and fully lined itself up with the other nationalist parties. Indeed, many Indonesian Chinese did actively support the Republic, some of them even becoming cabinet ministers. Nevertheless, the anti-Chinese incident in Tangerang in May 1946 and in some areas controlled by the Republican forces brought about an exodus of Chinese from rural areas to more secure Dutch controlled areas. These incidents pushed many Chinese, who have been sympathetic to the Republican, to reject Indonesian citizenship by 1951, under the provisions of the Round Table Agreement, and chose to be Dutch subject.

The Rise of the Indigenist Policies

In 1945, in a legal sense, the independent Republic of Indonesia faced the prospect of shaping its own future. At this time the Republic was led by a tiny layer of urban society, they were well-educated politicians who spoke fluent Dutch and\or English and had backgrounds in government service. On the other hand, the majority of Indonesian people were still trapped in poverty; mostly illiterate and shackled by authoritarian feudal rule. The business class was weak and divided between the Chinese, who controlled substantial commercial networks, and the indigenes that had less extensive commercial networks.

The economy remained in the hands of non-Indonesian interests. Caltex, Shell and Stanvac dominated the oil industry and inter-island shipping was in the hands of the Dutch KPM [Koninklijke Paketvaart Maatschappij]. The Dutch and the British controlled plantations and banking industry. After the war, most plantations, industrial installations and infrastructure, such as roads, bridge, ports that is essential to boost exports, had deteriorated. The recovery of Indonesia’s economy was slow and therefore it is not surprising that inflation and the cost of living rose by about 100 per cent in the period between 1950 and 1957.

Mohammad Hatta, the Vice President, an influential figure during the Liberal period, generally proposed Indonesian economic policies 1950-57. His attitude towards foreign-descent minorities was reflected in his Manifesto Politik [Political Manifesto], where he declared,

‘In our internal policy we will implement sovereignty of our people by formulating the nationality regulations in making all peranakans, both Asian and European extraction, true Indonesians, that is, Indonesian patriots and Indonesian democrats.[30]

Hatta’s statement, however, clearly indicates that the government would accept Chinese, Arabs and Europeans as citizens of Indonesia. Later, this statement was interpreted to suggest that Hatta was proposing that Indonesian Chinese should be assimilated into the indigenous Indonesian population. In September 1956, Hatta guaranteed that the Chinese would have access to the same positions and have the same rights as indigenous Indonesians. Hatta’s intentions were clear when he wrote that the Indonesian Chinese, ‘no longer like to be called Chinese but only Indonesians.’ Furthermore, Hatta added that,

‘the course of history in Indonesia has gradually made them [the Chinese] real Indonesians. Only their names remind one of the country from which their ancestors came, their language and way of life are Indonesian.’[31]

Hatta was well known for his sympathy towards the indigenous entrepreneurial class. Arguing that small entrepreneurs could be helped through the establishment of cooperatives under state protection, he launched a cooperative movement to help small indigenous entrepreneurs and peasants become economically independent. In addition, he pointed out that it was the duty of the Indonesian Chinese to contribute their economic expertise to promote Indonesia’s exports, and urged them to take indigenous Indonesians as business partners. Hatta strongly opposed racial discrimination against the Chinese. As he commented the Assaat movement,

If the Assaat Movement aimed at protecting weak national business against foreign business, especially the Chinese, I would agree with that and would be ready to help. But I disagree with racial discrimination because this is against our constitution, which does not allow us to discriminate one citizen against another. If this is continued, we will not be able to create a homogeneous nation, because the nation would be fragmented.[32]

The 1950s marked the commencement of ‘the Indonesianisation policy’ in the economy, covering sectors such as trade, finance, agricultural estates, public utilities, manufacturing, mineral production and transportation. The prime targets were Europeans, particularly the Dutch, but soon, the Indonesian Chinese encountered a similar fate. The first discriminatory measures against non-indigenes, in general, and Indonesian Chinese, in particular, occurred in early 1950 after the establishment of Republik Indonesia Serikat [the Republic of the United States of Indonesia]. In April 1950, Djuanda, the Minister of Prosperity, announced that the Indonesian government would protect national importers so they could compete with foreign businessperson. Thereafter, the national importers were defined as indigenous Indonesian, or import firms whose capital was 70 per cent owned by indigenes. The government granted indigenous importers credit and exclusive licenses for the importation of certain goods, this policy was called the Benteng [fortress] policy. Throughout the history of Java, the Benteng strategy had been used to recapture territory occupied by enemies. According to the strategy, a circle of fortresses would be built around an occupied territory, with the circle gradually decreasing in size until the territory was recaptured. Thus, the term Benteng was no coincidence. Indigenous Indonesians wanted to recapture the lost territory, in this case the economy that was in the hands of Chinese or foreigners. Using the Benteng regulations, the indigenes Indonesian hoped to gradually regain complete control of the Indonesian economy. The purpose of the Benteng policy was to encourage the growth of an indigenous entrepreneurial class, which would begin, with ‘the relatively simple problems of the import trade, and then branch out into other undertakings’.[33]

Another indigenist policy, promulgated by the Ali Satroamidjojo government, involved the regulation to control the rice-mills. In the 1950s, the Chinese controlled most rice-mills, borne out by figures from the East Java province where, in 1952, the Chinese owned 138 out of 154 mills.[34] According to the regulations, no new licenses for running rice-mills would be issued for ‘foreigners’ (read: Indonesian Chinese) and the existing rice-mills should be transferred to Indonesian control. Not surprisingly, the Chinese community opposed this measure and in September 1954, Iskaq Tjokrohadisuryo, the Minister of Economic Affairs, announced that the regulation was intended to apply only to foreigners (read: Totok/Singkeh Chinese). This meant that the regulation only affected Totok Chinese who still held foreign citizenship.

The more radical campaign is the Assaat Movement. Assaat was a businessperson, turned politician, from West Sumatra. In early 1956, he organised a campaign, which demanded preferential economic treatment for indigenous Indonesians. He argued,

‘Native Indonesian citizens must receive special protection in all their endeavours in the economic field, from competition of foreigners in general and the Chinese in particular.’ [35]

In March 1956, at the Indonesian National Economic Congress in Surabaya, Assaat made an influential speech that demanded discrimination against all Chinese in Indonesia. He said,

’The Chinese as an exclusive group resist the entry of others, whether in the cultural, social, or, especially the economic sphere. In the economic sphere they are so exclusive that in practice they are monopolistic…. The power of the exclusivist and monopolistic Chinese in the economic field is far more dangerous for the progress of the Indonesian people…. We must face this danger together. The entire people and the government must face it consciously and systematically… Therefore, I urge the Congress to consider and eventually to accept three propositions as a basis for this struggle. They are:

  1. The power of the exclusive Chinese group in the economic field, especially in the trading sector, hinders the progress of Indonesian business in all sectors of economic life.

  2. In economic life it is not possible to differentiate between foreign Chinese and Chinese who are citizens of Indonesia according to the present citizenship regulations.

  3. Native Indonesian citizens must receive special protection in all their endeavours in the economic field, from the competition of foreigners in general and the Chinese especially.[36]

Obviously, Assaat intended to create a powerful indigenous business class at the expense of Chinese and foreign businessperson. This movement gained immense support from economically active Islamic nationalists. The majority of Indonesian leaders, however, were reluctant to give public support to Assaat’s proposal because of its possible disastrous impact on the Indonesian economy.

Nevertheless, in practice, the discriminatory measures against the Chinese continued, as demonstrated by the following example. In October 1956, in answering a written question from Sjech H. Djalaludin, a Member of Parliament from Nahdatul Ulama, the Ali government stated that priorities for granting licenses to new firms were as follows,[37]

  1. Enterprises 100 per cent managed and owned by indigenous Indonesian.

  2. Enterprises jointly managed and owned by Indonesian citizens of foreign descent and indigenous Indonesian on 50:50 bases.

  3. Joint enterprises of indigenous Indonesians, Indonesian citizens of foreign descent and foreigners.

  4. Enterprises 100 per cent managed and owned by Indonesian citizens of foreign descent.

  5. Foreign-owned enterprises that are in the category of domestic capital.

This regulation also prohibited the transfer of indigenous Indonesian enterprises to non-indigenous groups.

In May 1959, Rachmat Muljosemino, the Trade Minister who was also a member of NU and an ardent supporter of the Assaat Movement, issued a regulation to ban the involvement of ‘foreigners’ (read: Chinese) in rural business, requiring that their businesses must be nationalised (read: transferred to indigenous Indonesian) by 30 September of the same year.[38] The prime target of this regulation was the Totok Chinese who still held foreign citizenship. Before that date, in fact, the military commander had already declared rural areas closed to all Chinese, either foreigner or Indonesian.[39] Presidential Decree, no. 10, was issued on 16 November 1959, to reiterate the ban introduced by the former cabinet. ‘Foreigners’ were not allowed to engage in rural trade, or live in rural areas, and were ordered by law to transfer their businesses to Indonesians no later than 1 January 1960. It is reported that approximately four to five hundred thousand Chinese were affected by the regulation.[40] Presidential Decree no. 10 represented a significant departure from previous strategies to cut down the economic strength of the Chinese, since the ban was limited to foreign Chinese traders only, probably, based on the ‘consideration that the desired objective might not have been achieved if it applied to all Chinese’.[41]

The records of the Department of Immigration of Indonesia show that in 1960, 102,196 Chinese left Indonesia for China.[42] Relations between the People’s Republic of China and Indonesia deteriorated because of the Decree. The People’s Republic of China accused Indonesia of violating the Dual National Treaty that stated that the Indonesian government would protect the interest of Chinese nationals. In reply, the Indonesian government, through Foreign Minister Dr. Subandrio, argued that the action ‘was a necessary step toward the building of a socialist economy, and the protection of the national economy from the monopolistic economic activities of the overseas Chinese.’[43]

In order to defend the interests of the Chinese minority, the Indonesian Chinese, on 12 March 1950, established its own party, PDTI [Partai Demokrat Tionghoa Indonesia - Indonesian Chinese Democrat Party]. Subsequently, as discrimination against the Chinese increased, key figures in the party such as Yap Tjwan Bing, Tjoa Sie Hwie, Tjoen Tin Jan, Tan Po Goan and Tan Boen An, introduced an anti-isolationist argument.[44] They argued that if the Indonesian Chinese defended their interests through a minority party based on ethnic origin, they would be weak and isolated because the indigenous Indonesian would feel threatened, and in turn, increase discriminatory policies. These men argued that the Indonesian Chinese would gain more advantages if they struggled within the ethnic Indonesian structure. This argument was supported by most of the members, with the result that in 1953, Yap Tjwan Bing and Tjoa Sie Hwie joined PNI (Indonesian National Party), Tjoen Tin Jan moved to Partai Katholik (Catholic Party), and Tan Po Goan and Tan Boen An became members of PSI (Indonesian Socialist Party).[45]

As a substitute for PDTI, in March 1954, the Indonesian Chinese established Baperki [Badan Permusyawaratan Kewarganegaraan Indonesia - Indonesian Citizens Consultative Body]. Indonesian Chinese businessperson and politicians, however, dominated Baperki. Unlike PDTI, Baperki was a socio-political organisation, which did not limit its membership to Indonesian Chinese. For instance, the executive secretary of Baperki was Bujung Saleh, a well-known indigenous intellectual. Furthermore, the term Tionghoa or ‘Indonesian Chinese’ [peranakan Cina] was deleted from its statutes, and was replaced by the term Indonesian citizen [Warga Negara Indonesia - WNI].

One of the most influential Chinese politicians at the time was Siauw Giok Tjhan, president of Baperki. Siauw favoured pluralism and shared a non-racial concept of the Indonesian nation, which regarded racial exclusiveness as a legacy of colonialism.[46] In this way Siauw managed to move the focus away from the discussion on racial exclusiveness, or racial prejudice, to the urgently felt need to establish an Indonesian socialist society in which there would be no exploitation. Siauw believed that if there were no exploited groups, group and racial conflicts would disappear. With this in mind, Siauw introduced ‘integrationist policy’ which encouraged Indonesian Chinese to integrate themselves into the struggle of the Indonesian people to achieve a non-exploitative socialist society.

Since early1960s, the army had collaborated with right wing forces to gradually establish its political dominance, which eventually resulted in civilian rule in Indonesia being replaced with an authoritarian-military dominion. Economic deterioration was a significant factor in the fall of the Soekarno government in 1966. Soekarno lost the support of the urban middle and upper class as well as the Armed Forces.

After the failure of the 30 September 1965 Coup, the army publicly blamed the PKI (the Indonesian Communist Party) for the coup attempt. This triggered an outbreak of violence against people associated with the PKI. The army supported the proclamation and collaborated with the zealots to identify PKI targets. Not only were PKI supporters eliminated, but other leftists were also killed. The Chinese, the most vigorous element in the Indonesian business class, were accused of supporting the Communist revolution and were victimised by both soldiers and civilians. In February 1967, regional military authorities took independent action against the Chinese. In East Java and West Sumatra, the military authorities prohibited the Chinese from any economic activities, and many Chinese were killed or jailed without reason.[47] Shops, factories, houses and warehouses were smashed, burned and robbed. On the West Kalimantan pogrom of 1967, a British journalist reported,’…dozens of war painted Dayaks marched in triumph to the Kalimantan military commander with the heads of their Chinese victims ceremoniously impaled on their spears, and then asked to be paid for helping him fight the communist’.[48] The 1965-1967 pogroms left a national death toll, which is never likely to be known with certainty, although it is widely accepted that at least one million people died.

The New Order Accommodation

At the heart of the bloodstained and turbulent events that led to the establishment of the authoritarian-military regime, which called itself the New Order, stood the previously unrecognised General Soeharto. Soeharto, like Soekarno, was of Javanese ethnic origin, but unlike Soekarno, Soeharto was indeed a ‘true Javanese’, in the sense of his apparent cool-headedness and phlegmatic attitude. When Soeharto challenged, it seemed that Soekarno underestimated his adversary, indeed, Soeharto proved to be a formidable opponent, and an able politician who was too elusive for President Soekarno who ultimately succumbed.

In order to control the society, President Soeharto established an authoritarian-corporatist style of political representation under state management with a bureaucratic machine reaching into the smallest hamlets in the country, the legacy of which remains today. Deeply involved in attempting to control political life, the State weakened political participation by channelling political energy into state-sponsored organisations. State intervention also went beyond the political spectrum and intervened directly into the market. For instance, the Indonesian Chamber of Commerce became a formalistic organisation, headed by government appointees, including retired military officers, retired state bureaucrats or businessperson with close connections to top state bureaucrats. As a consequence of this political framework, clientelistic patterns or personal relationships between state bureaucrats and businessperson were, and have continued to be, the dominant pattern.

The regime was strongly committed to economic development. Supported by lucrative oil income, the regime financed massive projects, building infrastructure and industry throughout the country. Indonesian industrialisation began in earnest soon after the New Order came to power. Indeed, the New Order was successful in reducing the annual inflation rate from 650 per cent in 1966 to 15 per cent in the 1970s. Further, the New Order adopted reform measures, which were consistently favoured by the World Bank and the International Monetary Fund. A group of Indonesian economists and technocrats known as the ‘Berkeley Mafia’ was crucial to these new policies. In early 1967, the Foreign Capital Investment Legislation was promulgated. Oil production, which provided the most significant revenue in financing the development, grew at about 20 per cent per annum between 1968 and 1970. From 1966 to1968, the average annual growth rate of the manufacturing sector was 6.02 per cent, accelerating to 12.44 per cent during the following three years.[49]

Rapid economic growth in the 1970s appeared to be associated with the expansion of the role of the New Order state. It was not the private sector, nor multi-national capital that led the process, but the deliberate efforts of the interventionist state. Although foreign investment was formally invited, it could not play a significant role because of highly protectionist walls. Between 1967 and 1980, foreign investment occupied only 3.10 per cent of total investment. The state dominated over 55 per cent of total investment and the remainder was domestic private investment. It is clear that the state controlled most of the economy and guided it firmly.

The New Order state also introduced an import substitution strategy. Between 1966 and 1968, a wide range of locally made consumer goods and durable products gradually replaced imported goods. The firms that produced these products were supported by highly protective import substitution policies. These policies aimed at creating an independent national economy, which was closely related to the attempt to create a national capitalist class. The ideology behind the policy derived from a nationalist position which argued that the growth of the economy should be sustained by the growth of the domestic market, that the companies should be owned by local people and that profits should be invested in the home country rather than being sent to other countries.

The New Order, however, had very close links with indigenous business interests and was sensitive to the resentment of indigenous businessperson. Yet, they abandoned any radical indigenist policies and consistently maintained economic stability. New Order State policy in relation to the development of small indigenous businessperson was ambiguous. The problems lay not only in the poor implementation of the indigenist policy which was exacerbated by corruption, incompetence and confusion over the policies and lack of coordination between institutions, but more importantly, in the essence of the state policies itself. Since the state had adopted economic growth oriented policy and established coalition with the Chinese to utilise domestic capital. The economy was under the dominion of state bureaucrats and Chinese businessperson, clearly disadvantaging the indigenous entrepreneurial society. However, this does not mean that the state was not supportive of indigenous business interests, for the New Order state was sensitive to this particular problem. Indeed, a significant indigenous bourgeoisie from bureaucrats’ families was nurtured at the expense of other indigenous entrepreneurs.

Under the New Order, the indigenist policies had taken the form of management education and credit assistance, exclusively for indigenous businesspersons. The failure of indigenous business was perceived as being due to personal weaknesses on the part of indigenous businessperson, such as lack of management skills, lack of entrepreneurial spirit and lack of working capital. With this perception firmly entrenched, the government investigated various policies for helping indigenous entrepreneurs. The term ‘weak economic group’ [golongan ekonomi lemah] was coined for firms in which the indigenes owned at least fifty per cent of the shares and occupied the majority of the management positions. Also in this category were companies in which investment capital was less than twenty-five million Rupiah for trading and service companies and one hundred million Rupiah for construction and industrial companies. Credit was provided through such institutions as PT Askrindo, PT Upprindo, PT Bahana and state banks. In fact, the credit granted to small indigenous businessperson accounted for only a small amount of the total available credit. In the 1979/80 fiscal years, the total bank credit was Rp. 2.5 trillion, but the credit given to indigenous businessperson was only Rp. 591.5 billion, with the remainder, going to big business. Shin Yoon Hwan found that in the first four years of implementation, credit was awarded to 377,529 projects for a total of Rp. 203,285 million. Thus, on an average, each project counted for only about Rp. 500,000 (about US$1,000).[50] It is doubtful that the programme would have created a significant difference in the context of Indonesian capitalism, with only US$1,000 per case for fixed investment and working capital. By the end of 1978, the total cumulative value of indigenist credit represented only 6.4 per cent of the total cumulative value of approved domestic investment. Other programs were nothing more than showcases. After six years of implementation, only ninety projects of small indigenous business management were assisted by PT Bahana and by PT Upprindo.

Regarding the Chinese issue, the New Order regime had also played an ambiguous policy. On one side, in a legal sense, they issued a series of tough measures against Chinese interest, put a ban on using any Chinese characters, ban on Chinese cultural performance and closing Chinese schools. There was also restriction on the number of Chinese students in the public schools and the Chinese is forbidden to have land in the rural areas. However, on the other side, since the regime had adopted an economic growth oriented policy, they establish a coalition with the Chinese to utilise domestic capital.

On 16 June 1968, in Jakarta, the Soeharto government established a mechanism for mobilising domestic Chinese capital, in the form of the Indonesian Business Centre.[51] Its members were Chinese businesspersons and high-ranking government officers. Major-General Suhardiman headed the Presidium and the other members were two Indonesian Chinese businesspersons; Hamid (Ong Ah Lok) and Sulindro (Ma Shih Ling). In the 1970s, the Indonesian Business Centre coordinated most domestic Chinese investment and represented the government in negotiation with Chinese businessperson from other Asian countries. Detailed data on the activities of the Indonesian Business Centre is unavailable since it has kept a low profile and acts behind the scene. Nevertheless, Suhardiman and his group have continued to play a crucial role in shaping state decisions. For instance, in the early 1980s, Suhardiman led a group of key officials from Kadin [Kamar Dagang Indonesia - Indonesian Chamber of Commerce] on a visit to the People’s Republic of China. This was a starting point for the normalisation of relations between Indonesia and the People’s Republic of China.

In July 1968, the Domestic Capital Investment Legislation [UU PMDN - Undang-Undang Penanaman Modal Dalam Negeri] was issued, with the main target being Chinese capital, Sarbini, the head of the legislation committee, explained,

I was the head of the team, which drafted the PMDN law of 1968. I worked on it mainly with Soedjatmoko. Our thinking was simple. In order to develop we needed to mobilize capital. In the spirit of a kind of deregulation, we put forth the 1968 law. We were aware that there was a lot of Chinese capital outside the country. With the 1968 law, we made formal for domestic investors the same incentives and protection enjoyed by foreigners under Wijoyo’s 1967 PMA law.[52]

Since the mid 1970s, the chief beneficiaries of economic expansion have been mostly Chinese urban upper and middle classes, and wealthy landowners, with the largely Islamic indigenous entrepreneurial society failing to gain any benefits. The bulk of government projects and credits have fallen into the hands of the Chinese businessperson, acting as the business partners of the bureaucrats. This practice is known as percukongan. According to Hawkins, in the early 1970s, 90 per cent of project aid ended up in the hands of the cukong, ‘who had privileged access to government contracts, investment credits and other funds’.[53]

In Indonesia, industrial policy was and continues to be the domain of high-level state bureaucrats. There is no evidence that the cukong were able to determine national policy-making processes, such as national industrial policy, including industrial priorities and budgetary allocations. Even, if the cukong had close connections with the powerful generals. He was only able to influence particular discrete decisions, for instance the allocation of licenses, credits or contracts.

The opportunities, which were available to those Chinese businesspersons attracted criticism, particularly from their indigenous competitors and from the press and this criticism was directly levelled at the cukong. Indigenous Indonesian, cynically, described the cukong as Chinese businessperson who had a special relationship with Indonesian officials and who manipulated their Indonesian partners. They, however, believed that the cukong were more powerful and had stronger capabilities to manipulate their partners. The Chinese tended to say that they were only ‘the milch-cow’ of the officials. As one Chinese entrepreneur complained,

Doing business in Indonesia does not really need good business skills. We are not shrewd merchants compared with the Singaporean or the Taiwanese. Our success is due to 20% for business skills and 80% bribery. We are only their (the government officers’) milch-cows![54]

Criticism of the cukong focused on the unfair advantage they gained because of their close relationships with influential public figures. Chinese businessperson was given preferential treatment for contracts, licences and credit, in return for ransom paid to the officers involved. In answering the criticism, the government consistently defended itself by saying that domestic capital had to be utilised or it would fly to other countries. Consequently, the indigenous outcry had fallen on deaf ears.

Historically, collaboration between indigenous power holders and the Chinese businessperson was not unusual. The fact that the state-bureaucratic class had nurtured the indigenous bourgeoisie was also significant. While the indigenous officials held power and facilities, they needed business partners who were not associated with particular political groups. However, the indigenous bourgeoisie was often associated with a particular political group, which could present a threat to officials. In contrast, the Chinese were in a vulnerable position, and therefore it was much safer to have Chinese rather than indigenous partners. The Chinese gained state support, which was essential for capital accumulation.

The cukong pattern was vital to the emergence of Indonesian capitalism and the practice of collusion could be seen as a primitive form of capital accumulation, which occurred in the early stage of capitalism. The cukong pattern, nevertheless, retained the substance of primitive capital accumulation as mentioned by Marx.[55] The difference between the cukong pattern and Marx’s primitive capital accumulation lay in the level of sophistication and the far shorter period required to transform primitive accumulation to industrial accumulation. Through the cukong pattern, the political power of the state and the economic power of the most vigorous element in the domestic bourgeoisie were integrated to back up capital accumulation. The New Order fostered the pattern by promoting a nationalist ideology and by using nationalism to legitimate the collusion. Consequently, the pattern became an effective and sophisticated device for expropriating wealth. Excessive profits from every corner of the country were transferred to a small powerful elite in Jakarta. The by-product of the system was to create a national industry.

During the economic boom of the 1970s, indigenous entrepreneurs began to make demands, which resulted in the revival of the indigenist policy, though on a far smaller scale than the sweeping Benteng program of the 1950s. The catalyst was the January 1974, so-called, Malari Affair, which made an issue of foreign capital domination and the corrupt association between state bureaucrats and Chinese businessmen. Responding to the critics, the National Economic Stabilization Board [Dewan Stabilisasi Ekonomi Nasional] issued guidelines to restrict foreign investment and speed up the transfer of shares from foreign investors to their indigenous partners. These changes proved quite effective in silencing the critics who had argued that state bureaucrats were not responsive to indigenous businessperson. However, a closer look at the changes indicates that they advanced indigenous interests in only a superficial way. Robison stated that it was not the indigenous petty capitalist who benefited, but rather the larger domestic capitalist and state owned capital.[56] Winters found that the government itself backed down on its enforcement of the fifty-one per cent transfer of foreign equity to Indonesians within ten years, because,

The shortage of indigenous capital, and skills and the absence of a stock exchange or other institutions capable of mobilizing capital meant that the guidelines remained guidelines and could not be implemented as the government would wish.[57]

Ethnic tensions culminated in an outburst of violence against the Chinese in 1980. On November 1980, thousands of workers and students attacked the Chinatown districts in Solo, Semarang and Kudus. This riot subsided by the end of November, but troops were placed on full alert until the end of January 1981. The government never announced the total number of casualties. The cause of the riot was economic. The demonstrators’ slogan attacked the role of the cukong and the unfairness in the distribution of government projects. The demonstrators also distributed pamphlets entitled ‘Social Revolution’, the main theme of which was that only by revolution would the indigenous become masters in their own country. The six student leaders who organised the demonstrations were all imprisoned without fair trials. Four of them were the sons of small indigenous businessperson.[58]

In the first week of December 1980, Hipmi [Himpunan Pengusaha Muda Indonesia - Indonesian Young Businessperson’s Association], an indigenous association, issued a statement that declared that the cause of the riots was unfairness in issuing government projects, licences and credits, and called on the government to change the system.[59] In January 1981, Subiyanto, the Head of BKPMD [Badan Koordinasi Penanaman Modal Daerah - Regional Investment Coordination Board] of Central Java, announced that BKPMD Central Java would assist in the transfer of 50 per cent of the stock of Chinese investments to small, indigenous businessperson.[60] This policy satisfied the indigenous militants, however, it was never carried out effectively. After two years of implementation, only four small Chinese firms had transferred the requisite stock to their indigenous counterparts.[61]

The most shocking anti-Chinese riot broke out on May 13, 1998 in Jakarta and Solo. The rioters robbed and burned Chinese houses, shops, factories, and warehouses. Moreover, they also attacked the Chinese in the street and rapped the Chinese women. The May 1998 Affair represented a significant departure from previous riot, since the riot shocked the Chinese community in the world, and resulted in a wave of serious protest from the Chinese communities in the US, Europe and some Asian countries to the Indonesian government.

The deteriorating social and economic conditions in the 1998 pushed the Chinese capital abroad. It is reported that only in a month at least 80 billion US Dollar was transferred abroad. However, the massive movement of Chinese capital in the period is not calculable, it is certain that the Chinese capital was indeed diverted. Therefore, the economic crisis in Indonesia is much worsening. Frantically, the government formed a commission to persuade the Chinese to invest their capital in Indonesia. Nevertheless, it is worthless effort, as until the present day capital flight continues.

Post-New Order: A Full Acceptance?

Since Soeharto was overthrown in May 1998 until today is a turbulent era in Indonesian history. After enjoying high growth for two decades, Indonesia has been directly battered by Asia’s economic turmoil, and until the present day, it is still the farthest from recovery. Indonesian currency has suffered the most vertiginous fall into the abyss of devaluation. It has been depreciated more than 600 per cent against US Dollar, and it seems to be no end in sight. This is resulted in the soaring up of inflation by more than 80 per cent.

Indonesia’s economy has taken a hard fall and no stratum in the society has escaped the pain. Indonesians which more than two hundred millions have seen their income per capita drop from US$ 1.200 to US$300. Prices are shooting up more than 60 per cent. Parents complain that they cannot afford milk powder for their babies and even medicines are hard to find. The prices of items regarded as necessities for the poor, such as kerosene, the poor’s cooking fuel, have gone up significantly. As a result, the impoverished households have no way of paying the steeply rising prices for necessities such as rice, sugar, cooking oil, flour, corn, soya-beans, soaps etc. For other players in the economy, corporations have no way of repaying the US$70 billions foreign loans and a great deal of businesses have simply ceased. This is resulted in the bankruptcy of companies and banks in the country and the increasing numbers of the unemployed. The risk is clear: millions of people are newly unemployed and at least over the next few months untold millions more stand to lose their jobs.

The prolonged economic crises have struck Indonesia since the last four years have a very deep impact on the lives of the people. Not surprisingly, resentment has burgeoned. Many recent incidents seem to have had an ethnic or religious flavour. Not only riots growing bigger, they are also growing more frequent. Ethnic riots scar the streets. The riots seem to be a product of fear, economic frustrations and a breakdown of law and order.

Nevertheless, after more than thirty years of state dominion, the endeavour of the Reformist to deregulate the economy has been widely supported by Indonesian tired of state domination in every aspect of life. A more outward-looking economy has been created, with more participants in the policy system, increasing the need for bargaining and compromise. This is an unavoidable accompaniment of reformation. More importantly, such developments offer the prospects of greater political pluralisation in Indonesia, as the economy becomes more industrialized, more complex and increasingly more integrated into the international market, and as the foreign investor, the important element in the business community, demands a more stable investment climate rather than powerful political patronage.

Regarding the Chinese issue, the attitude of Wahid government is much more liberal, and has tendency to accept the Indonesian Chinese with full acceptance. This is shown with his decision to abolish regulations discriminated against the Chinese. Therefore, public anti-Sinicism is far more moderate. The stories of Chinese tycoons and political leaders have become common in newspapers and magazines. Today, the Chinese cultural performance is common in public. The Chinese language course has been mushrooming in the cities. The Chinese New Year is the most vigorous and joyful celebration in the cities, with parties and dragon dances in the streets.

Another significant change occurred with a lessening of ethnic division in the business community, as large number of Indonesian join the business and gained lucrative positions. As a result, this sector is no longer the domain of the Chinese Indonesian. This move in public opinion can be illustrated by the sparked public anger towards the bureaucrats and their patrons, including the cukong. Most of the critics, instead, were demanding a clean government rather than racial prejudice against Chinese. These critics wanted the elimination of collusion between state bureaucrats and businesspersons.


The dynamic relationship between the Indonesian Chinese and the indigenous Indonesian is not simply a racial conflict. While race remains a crucial factor, other issues, including conflict of interest between different element in the business class and contending policy advocates, have also important. Throughout the course of Indonesian history, the relationship was formed within a range of complex allowances and amalgams in which the state and its officials played a central role.

It is the economic competition as being at the root of tension between Chinese Indonesian and indigenous Indonesian. This is shown with the riot in Kudus and Solo and the founding of Sarekat Dagang Islam. Nevertheless, this is perennial social conflict since the colonial administration introduced the segregation racial policy.

The New Order regime was deeply concerned with forming a more integrated and solid national business class in order to ensure the country’s economic stability and growth. Furthermore, the New Order pushed for the cultural integration of Indonesian Chinese and the indigenous Indonesian, legitimated business, promoted capitalist ideology and prevented class conflict by strengthening patrimonial ties between the businesspersons and the bureaucrats. While to some extent this move satisfied the hard-liners amongst the indigenous Indonesian, it was at the same time an attempt to create a more stable environment for capital accumulation. Since the regime had adopted an economic growth policy, the economy was under dominion of state bureaucrats and Chinese businessperson, clearly disadvantaging the indigenous entrepreneur.

The Wahid administration is much more liberal, and has strong tendency to accept the Indonesian Chinese with full acceptance. The Chinese, as a small minority, has a tendency to come to terms with the power. Since anti-Chinese prejudice and conflicting interests persist. There is perennial dilemma that too great identification with the power, which at a given time may spell disaster for the minority when the power is overthrown. Consequently, after along years of discrimination and repression, the position of Indonesian Chinese as citizen of Indonesia is still vulnerable.

Therefore, as a small ethnic minority, the Indonesian Chinese have a little choice but to try to come to terms with the social and political situation of the day. In order to avoid discrimination, it is not enough for the Indonesian Chinese simply to be good citizens, given the negative attitude towards the Chinese as a whole. The situation demands that the Indonesian Chinese should demonstrate their loyalty to and identification with Indonesia. It also requires the Indonesian Chinese actively involve in the struggle of the Indonesian to oppose discrimination and to fight for the equal rights of all citizen. Since Indonesian social and political life is an arena, in which there are competing forces that the Chinese have to take into account and to which they have to adjust.


  1. Williams, Lea, A. Overseas Chinese Nationalism: The Genesis of Pan Chinese Movement in Indonesia 1900-1916. Glencoe: Free Press, 1960, pp. 9-10.

  2. Suryadinata, L. Political Thinking of the Indonesian Chinese 1900-1977. Singapore: Singapore University Press, 1979: chapter 3

  3. Skinner, G. W. ‘The Chinese Minority’, in McVey, Ruth, T. Indonesia. (New Haven, Conn., 1963) p. 97.

  4. Coppel, C. A. Indonesian Chinese in Crisis. Kuala Lumpur: Oxford University Press, 1983, p.5.

  5. Skinner, ‘The Chinese,’ p.103

  6. H. W. Dick, ‘Interisland Trade, Economic Integration, and the Emergence of the National Economy’, in Booth, O’Malley and Weidemann (eds), Indonesian Economic History in The Dutch Colonial Era, Yale University Southeast Asian Studies, 1990: pp.297-321.

  7. Major studies dealing with this period include J. C. Van Leur, Indonesian Trade and Society, The Hague: W. Van Hoeve Publishers Ltd, 1967, particularly chapters 3 and 4; A. Reid, ‘An "Age of Commerce in Southeast Asian History", Modern Asian Studies, 24, 1, 1990: pp.1-30; H. Dick, ‘Interisland Trade’, 1990; J. Villiers, ‘Trade and Society in the Banda Islands in the Sixteenth Century’, Modern Asian Studies, 15, 4, 1981: pp.723-50.

  8. Onghokham, Rakyat dan Negara, Jakarta: Sinar Harapan, 1983, p. 30.

  9. H. J. De Graaf and Th. G. Pigeaud, Kerajaan-Kerajaan Islam Di Jawa: Peralihan Dari Majapahit Ke Mataram, Jakarta: Pustaka Utama Graffiti, 1989: pp. 41-51.

  10. G. R. Knight, ‘From Plantations to Padi-field: The Origins of the Nineteenth Century Transformation of Java’s Sugar Industry’, Modern Asian Studies, 14, 2, 1980: pp.177-204.

  11. T. S. Werdoyo, Tan Jin Sing: Dari Kapten Cina Sampai Bupati Yogyakarta, Jakarta: Intermasa, 1990.

  12. Brenner, S.A. ‘Competing Hierarchis: Javanese Merchants and the Priyayi Elite in Solo, Central Java’, Indonesia, 52, (1991), pp.55-84. This quote p. 66.

  13. Ricklefs, M.C. A History of Modern Indonesia Since 1300, 2nd ed. London: the Macmillan Press, 1993, p. 90.

  14. A. Heuken, Historical Sights of Jakarta, Singapore: Times Books International, 1989, p.47.

  15. Kemasang, Heuken, Ricklefs and Reid and Trocki estimated that the number of victims was about 10,000. See also, Reid and C. Trocki, ‘The Last Stand of Autonomous States in Southeast Asia and Korea, 1750-1870’, Asian Studies Review, 17, 2, November, 1993, pp.103-20; and Ricklefs, History, 1993, p. 90. Kahin estimated that 7000 Chinese were killed. See, G. McT. Kahin, Nationalism and Revolution in Indonesia, New York: Cornell University Press, 1970. Furthermore, he estimated that ‘about 20,000 unemployed and armed Chinese of West Java attacked Batavia’. According to Kahin, the population of Chinese throughout Java was about 100,000 in 1740. According to Raffles, who wrote an extensive study on Java, the number of Chinese in Batavia was 11,249 and throughout Java and Madura, with the exception of Batavia, was 17,843. See, T. S. Raffles; The History of Java, (Singapore: Oxford University Press, 1988): pp.241-86. It is probable that the number of Chinese was not numerous due to two reasons. Firstly, the migration of Chinese from mainland China had not reach a large number. They arrived in small boats as traders, and were usually men. The mass migration was organised by the Dutch, after the introduction of the Cultivation System in 1830 when cheap labour was needed for plantations and minings. Secondly, the living conditions of the Chinese were extremely humble. Raffles states, ‘The Chinese suffer more than any class of the people. The number of casualties among them, I am told, is incredible; and if one judge from the extent of their burial ground and the number of their tumuli, it cannot admit of a doubt’. (Appendix A, viii.) Thus, the number ‘20,000 Chinese soldiers’ stated by Kahin, probably, refers to the allied forces mounted by the Chinese and the Javanese princes of the north coast.
  16. Heuken, Historical Sights, 1989, p. 49.

  17. Ricklefs, The History, 1993, p. 90.

  18. Maddison, A. ‘Dutch Income in and from Indonesia 1700-1938’, Modern Asian Studies, 23, 4, October, (1989): pp.645-70.

  19. The Siauw Giap,’Group Conflict in a Plural Society’, Revue du Sudest Asiatique, 1966, p. 187.

  20. F. De Haan, Priangan: De Preanger Regentschappen On Der Het Nederlandsch Bestuur tot 1811, Vol. III, Batavia, 1912: p.502.

  21. Kemasang, A.R.T. ‘Overseas Chinese in Java and their Liquidation in 1740’, Southeast Asian Studies, XIX, 2, 19, (1990): pp.123-46.

  22. P. Meijer, Verzameling van Instructien, Ordonnacien en Reglementen voor do Regering van Nederlandsch Indie, vastgesteld in de Jaren 1609, 1617, 1632, 1650, 1807, 1815, 1818, 1827, 1830 en 1836, met de Onderwepen der Staaats Commissie van 1805 en Historische Aantekeningen, (Batavia, 1848): p.44.

  23. Castles, L.‘Cloves’, Bulletin of Indonesian Economic Studies, 2, 1, (1965): pp. 49-59.

  24. The English version is cited from L. Castles, Religion, Politics and Economic Behavior in Java: The Kudus Cigarette Industry, (Southeast Asian Studies, Yale University, 1967): p.85.

  25. M. C. Ricklefs, History, 1993, p. 166.

  26. The English version is cited from R. Van Niel, The Emergence of the Modern Indonesian Elite, (The Hague: W. Van Hoeve, 1970):p.135. The editor of the Neraca newspaper was Haji Agus Salim, the leading figure in Sarekat Islam. The newspaper presented social and political issues to readers.

  27. Castles, Religion, 1967, p. 62.

  28. Budiman and Onghokham, Rokok, 1987, p. 108.

  29. ‘Peroesoehan di Koedoes dan Hal-Hal jang Berhoeboengan Dengan Itoe, II’, Sin Po, November 12, 1918. The English version is quoted from Suryadinata, L. Pribumi, Indonesians, the Chinese Minority and China, (Singapore: Heinemann Asia, 1986): p.16.

  30. Suryadinata, Pribumi, p. 25.

  31. M. Hatta, ‘One Indonesian View of the Malaysian Issue’, Asian Survey, 5, 3, (March, 1965): pp.576-81. This quote p. 580.

  32. Pedoman, (July 1956), republished in Kompas, (20 February 1967).

  33. B. Higgins and J. Higgins, Indonesia: The Crisis of the Millstones, (Princeton: Van Nostrand, 1963): p. 91.

  34. Suryadinata, Pribumi, p. 132.

  35. Assaat, ‘The Chinese Grip on Our Economy’, in H. Feith and L. Castles (eds), Indonesian Political Thinking, 1945-1965, (Ithaca: Cornell University Press, 1970): p.346.

  36. Ibid., pp. 343-46.

  37. Sin Po, 17 October 1956. The English version is cited from Suryadinata Pribumi, p. 134.

  38. For the full text of the document, see, Lembaran Negara Republik Indonesia, 128, (1959).

  39. M. F. Somers, Peranakan Chinese Politics in Indonesia, (Ithaca: Modern Indonesia Project Cornell University, 1964): p. 197.

  40. Ibid.,p.207.

  41. Suryadinata, Pribumi, p. 135.

  42. G. W. Skinner, ‘The Chinese Minority’, in R. McVey, (ed.), Indonesia, (Yale University: Southeast Asian Studies, 1963): pp.97-117.

  43. Merdeka, (14 December 1959). The English version is cited from Suryadinata, Pribumi, p. 176.

  44. On the anti-isolationist argument see, ‘Dua Aliran’, Berita PDTI, (15 October 1953):pp.3-4; Tan Boen An, ‘Minoriteit Adalah Masalah Massa Yang Belum Selesai’, Nusaputra, 2, 9, (10 March 1952). See also, L. Suryadinata, Pribumi, pp. 64-5.

  45. Suryadinata, Pribumi, p. 65.

  46. About Siauw Giok Tjhan’s political ideas see, Siauw Giok Tjhan, Pantjasila Anti Rasialisme, (Jakarta: Baperki, 1962); Gotong Rojong Nasakom Untuk Melaksanakan Ampera, (Jakarta: Baperki, 1963).

  47. Sinar Harapan, (17 February 1967): p.2.

  48. Garth Alexander, Silent Invasion, London, 1973, p.3

  49. Thee Kian Wie and Y. Kunio, ‘Foreign and Domestic Capital in Indonesian Industrialization’, in Southeast Asian Studies, 24, 4, (March 1987): pp.327-49.

  50. Shin Yoon Hwan, ‘Demystifying the Capitalist State: Political Patronage, Bureaucratic Interest and Capitalist in-Formation in Soeharto’s Indonesia’, (Yale University: Ph.D. Thesis, 1989):pp.311-20. According to McLeod the amount was Rp. 900,000 per case. See R. H. McLeod, ‘Concessional Credit for Small Scale Enterprise: A Comment’, Bulletin of Indonesian Economic Studies, 19, 1, (April 1983): pp.83-9.

  51. L. Suryadinata, ‘Kebijakan Pemerintah Orde Baru Indonesia Terhadap Golongan Minoritas Indonesia’, Economica, 4, 3, (1980): pp.25-31.

  52. J. A. Winters, ‘Structural Power and Investor Mobility: Capital Control and State Policy in Indonesia, 1965-1990’, (Yale University, Ph.D. Dissertation, 1991): p. 122.

  53. F. Hawkins, ‘Indonesia’s Own Military-Industrial Complex’, Bangkok Post, (28 January 1971). The Indonesian version was published in Nusantara, 30 January 1971 with the title ‘Kompleks Industri Militer Indonesia’. Later, the editor of Nusantara was prosecuted and sentenced to two years imprisonment.

  54. Interview, 19 December, 1992.

  55. On primitive capital accumulation see K. Marx, Capital, 1, (New York: International Publishers, 1990).

  56. Robison, R. Indonesia:The Rise of Capital, (Sydney: Allen and Unwin, 1986) pp. 164-8.

  57. Winters, J.A. ‘Structural, pp 170-1.

  58. ‘Hary Mulyadi Mengaku Sebagai Pencetus Ide Peristiwa Solo’, Sinar Harapan, (4 December 1980); ‘Ada Blackout, Ada Desas-Desus’, Tempo, (13 December 1980); ‘Adam Malik Menyinggung Peristiwa Jateng: Tonggak Sisa Kolonialisme Masih Terasa’, Merdeka, (24 December 1980).

  59. ‘Tidak Ada Lagi Jam Malam’, Tempo, (13 December 1980): pp.12-14.

  60. ‘Pribumisasi dan Indonesianisasi Modal di Jateng Mulai Tahun Ini’, Merdeka, (31 January 1981).

  61. Interview,July 1986.


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