Indonesia is the largest archipelago nation all over the world and it has an intricate and rich history based on the centuries of foreign impact. Among the most typical phases of this history was the era of the Dutch colonial rule of approximately 350 years, or between the onset of the 17 th century and the proclamation of the Indonesian independence on August 17, 1945. Over the long span of this era of colonialism, the Dutch East India Company (VOC) and the Dutch colonial government, that followed, adopted several political, economic and social policies which relegated the Indonesian society structure to its fundamental form. Independence was the beginning of the formal colonial domination, but the heritage of the Dutch rule left a long shade over the development process of the country. This essay posits that the Dutch colonial rule had far reaching and enduring impacts on the Indonesian social fabric and economic set up that have to this day affected the development of Indonesia.
During the late 16 th century, the Dutch expedition arrived in the archipelago initiated an expedition of spices that led to the entry of the Dutch in Indonesia. The Dutch East India Company (VOC) was established in 1602 and monopolized on the trade in the region. In 1799, when the VOC became bankrupt, the Dutch government took direct rule over the territory and it was then known as the Dutch East Indies. The Cultivation System, or Cultuurstelsel, which was initiated in 1830 by Governor-General Johannes van den Bosch, was one of the worst and most severe and harmful. Manufacturing coffee, sugar, and indigo as export produce, under this system, the Javanese farmers were compelled to give one-fifth of their farmlands or 66 days of labor per year to the Dutch government. This policy made the Netherlands very rich at the expense of creating vast famine, poverty and social disruption in the archipelago. The Cultivation System was finally scrapped in 1870 after its continued indignation by liberal Dutch and humanitarian organizations, although its disastrous impact on the Indonesian peasant society would haunt generations to come.
The deliberate disintegration of the Indonesian society along racial and ethnic lines is one of the social legacies of the Dutch colonial rule that has been relevant over time. The Dutch adopted a legal system of classification of the people into three groups, Europeans, Foreign Orientals mainly Chinese and Arab traders, and Indigenous Indonesians. This system of hierarchy institutionalized racial inequality and it brought about deep social divisions that were to last long after independence. The Chinese, especially, held a vague and usually perilous status in the colonial society. Despite their status as members of the upper category of the Dutch legal system, the Chinese also experienced a range of restrictions in their movement and economic life. The Chinese were often employed by the Dutch as an economic intermediary, a policy that resulted in resentment amongst the native Indonesians and that led to ethnic tensions that occasionally resulted in violence throughout the 20th century, most famously the anti-Chinese riots of 1998.
The policy of colonial education also made a tremendous difference in the Indonesian society. Dutch were particularly unwilling to impart broad based education to the natives because they believed an educated native community would rebel against the colonial regime. Formal education, during most of the colonial era, was severely confined to the Dutch and a select few of the indigenous Indonesians who were considered useful to the colonial government. The introduction of a few schools in Dutch to elites of native speakers did however yield an unwanted by-product: the emergence of an educated Indonesian nationalist movement in the west. Sukarno, Mohammad Hatta, Sutan Sjahrir and others are landmarks of the colonial education system who used it against their colonizers. However, the general level of literacy in Indonesia during independence was very low and was estimated to be only six to seven percent of the population. This lack of education posed huge problems to the new independent state and led to decades of stunted growth of human development.
It is also a consequence of the colonial economy that a well-established system of classes with deep roots in Indonesian society was formed. A limited native elite of Javanese aristocracy usually of the priyayi, or middle classes, would act as intermediaries between the Dutch government and the masses. This caste was relatively privileged and had access to colonial education and government jobs, but the great majority of Indonesians stayed in poverty, as subsistence farmers or plantation workers. Such division of classes did not evaporate with independence. To a large extent, it was restated and re-enforced by the post-colonial state, as the former colonial elites and their descendants tended to retain their social and economic privileges. Wealth and power concentration within the hands of a small group of people remains one of the most characteristic aspects of the Indonesian society, with the country still experiencing disastrously high rates of income inequality.
The economic model imposed on Indonesia by the Dutch colonial rule, which is based on extraction, can probably be considered the most harming long-term economic repercussion of the Dutch colonization. Instead of creating a diversified industrial economy, the Dutch structured the colonial economy in nearly a way that would cater to Dutch commercial interests. The archipelago was seen as a great store of raw materials spices, coffee, sugar, rubber and subsequently oil to be extracted and marketed to Europe to process and sell. This model had created a very lopsided economic structure in Indonesia by the time of independence. The country possessed low industrialization, a very low infrastructure beyond those directly linked to exports production and an economy that was virtually solely reliant on the export of primary commodities. Successive post-independent governments had to overcome a huge challenge of developing a modern and diversified economy out of this platform.
Some also claim that Dutch colonialism had left behind a level of physical infrastructure roads, railways, ports, and irrigation systems, which became the basis of future economic development in the country after independence. This is partly true, but it is worth mentioning that this infrastructure was constructed with colonial extraction purposes, and not with the good in mind of the Indonesian people. During the period under discussion, railways, say, were built to carry plantation lands to ports, but not to connect population centers and stimulate internal commerce. This left much of the colonial era infrastructure not very useful in supporting large-scale economic development, and largely in need of heavy investment and redesign after independence. Moreover the Dutch colonial policy of not promoting indigenous entrepreneurship and industrialization implied that Indonesia had reached independence without a substantial domestic capitalist group that could spearhead industrialization. It was the state that had to become dominant in economic development, which created a state-based model under Sukarno and Suharto with different successes in the efficiency and equity in the long run.
A further legacies of the colonial export economy has been manifested in the continued reliance on primary commodity exports by Indonesia far into the post-independence period. Throughout most of the 20 th century, the Indonesia economy was heavily dependent on oil, rubber, palm oil and other raw materials. This reliance exposed the Indonesian economy to changes in the prices of global commodities and this served as a contributing factor to economic boom and recession that compromised long term stability and planning. In spite of these daunting odds, Indonesia has achieved impressive social and economic development since its independence. During the New Order regime of President Suharto in 1966-1998, there was a high level of economic growth, great poverty alleviation and a major advance in infrastructure and education. Indonesia was able to change its economic structure based largely on agriculture to one with a large industrial and service base. but, during this period of development, a good many of the structural inequalities of the colonial era continued to exist. The strong legacy of colonial era policies was reflected in regional inequalities between the outer islands and Java, and ethnic economic inequalities, as well as monopolization of economic power by a small elite.
In conclusion, the Dutch colonial rule left a mark in the social and economic development of Indonesia. These oppressive policies of VOC and the Dutch colonial state destroyed the final social system, fixed racial and class relations, suppressed the education and business activities of natives, and imposed the economic system of extraction that maximized the Dutch profits at the cost of Indonesian welfare. As the independence was declared in 1945 these legacies did not fade away. Rather, they influenced the issues that Indonesia had to struggle with building a modern nation-state and still do not cease to affect the social and economic environment in the country today. This knowledge of this colonial history is not just an academic practice. It is crucial both to the interpretation of modern Indonesia and to the development of policies which actually target the inequalities ingrained in that country over a long period, contributed to by colonial rule. It is only through a direct acknowledgement of this past that Indonesia can proceed even more towards a more fair and equitable future of all its citizens.
By: Naomi Kanaya Revadanty Purwanto
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