White - 2011 - British Business in Sukarno Era

Modern Asian Studies 46, 5 (2012) pp. 1277–1315.

C Cambridge University Press 2011
doi:10.1017/S0026749X11000709 First published online 18 November 2011
Surviving Sukarno: British Business in

Post-Colonial Indonesia, 1950–1967∗
NICHOLAS J. WHITE
Liverpool John Moores University, Department of History, School of

Humanities and Social Science, 68 Hope Street, Liverpool L1 9HW, UK
Email: n.j.white@ljmu.ac.uk
Abstract
Drawing principally upon a rich vein of previously unexploited business records,
this paper analyses the experience of British firms in Indonesia between the
achievement of independence and the beginnings of the Suharto regime. As in
The Netherlands East Indies, British enterprises occupied a significant position
in post-colonial Indonesia in plantations, oil extraction, shipping, banking, the
import-export trade, and manufacturing. After the nationalization of Dutch
businesses from the end of 1957, Britain emerged as the leading investing power
in the archipelago alongside the United States. However, during Indonesia’s
Confrontation with British-backed Malaysia (1963–1966), most UK-owned
companies in the islands were subject to a series of torrid (albeit temporary)
takeovers by the trade unions and subsequently various government authorities.
Most of these investments were returned to British ownership under Suharto
after 1967. But, in surviving the Sukarno era, British firms had endured 15 years
of increasing inconvenience and insecurity trapped in a power struggle within
Indonesia’s perplexing plural polity (and particularly between the Communist
Party and the military). Indeed, the Konfrontasi takeovers themselves, varying in
intensity from region to region and from firm to firm, were indicative of deep
fissures within Indonesian administration and politics. The unpredictable and
unsettled political economy of post-colonial Indonesia meant that the balance
of advantage lay not with transnational enterprise but with the host state and
society.
∗
An early version of this paper was presented at the XIVth International Economic
History Congress, Session 94: Foreign Companies and Economic Nationalism in the
Developing World after World War II, 21 August 2006. I am grateful to participants
at this session for their helpful comments and suggestions, and particularly those of
Professors Ann Booth and William Gervase Clarence-Smith. This paper has also been
greatly improved by the comments of two anonymous referees. Special thanks are due
to the archivists at The Bank of England, The Guildhall Library, HSBC, Merseyside
Maritime Museum, and Unilever.
1277
1278 NICHOLAS J. WHITE
Introduction: the significance of British firms in Indonesia
Dutch firms dominated capital investment in The Netherlands East

Indies and continued to do so in post-colonial Indonesia after
the achievement of independence in 1949–1950. The Netherlands
commanded 73 per cent of total private business investments in the
Indies in 1937, while Britain ranked a poor second with only 14 per
cent.1 Yet, British companies had long occupied central positions in
primary production, the import-export trade, shipping, finance and
manufacturing throughout the islands. At Indonesian independence
these leading concerns included the investment group Harrisons &
Crosfield Ltd with its shipping agency and import-export business but
more importantly the management of rubber and palm-oil plantations
in east Sumatra and west Java; the Anglo-Indonesian Plantations
Ltd with its rubber, cocoa, tapioca, kapok, tea and sisal estates at
P and T Lands at Subang in west Java; the merchant house Maclaine,
Watson & Co. Ltd; the Chartered Bank of India, Australia and China
and the Hong Kong and Shanghai Banking Corporation (HSBC) in
financial services; Liverpool’s Ocean Steam Ship Company (otherwise
known as Alfred Holt & Co. or Blue Funnel), with its Amsterdam-
registered subsidiary, the Nederlandsche Stoomvart Maatschappij
‘Oceaan’ in international shipping; and, in manufacturing, British
American Tobacco. Nor should we overlook the central role of two
Anglo-Dutch multinationals: Unilever in soap, perfume, toothpaste,
cosmetics, margarine and other vegetable oils manufacture at its
Jakarta and Surabaya factories;2 and, in mineral-oil extraction,
refining, transportation and marketing, the Royal Dutch Shell group,
known locally as the Bataafsche Petroleum Maatschappij or Batavian
Petroleum Company.
British business interests in the islands were important enough to
have their own chamber of commerce in Jakarta, as well as a sister
organization in London (known as the Indonesian Association after
independence). The British plantation industry’s chief lobby group,
the London-based Rubber Growers’ Association, had its own Indonesia
1
Unless otherwise indicated, the following two paragraphs rely upon Allen, G. C.
and Donnithorne, A. G. (1957). Western Enterprise in Indonesia and Malaya: A Study in
Economic Development, Allen & Unwin, London. The figure cited for Dutch capital also
includes local Chinese investments.
2
Fieldhouse, D. K. (1978). Unilever Overseas: The Anatomy of a Multinational, 1895–
1965, Croom Helm, London, pp. 275–81.
BRITISH BUSINESS IN INDONESIA 1279
Committee.3 There are no reliable figures for the total value of all
British business interests in Indonesia, but UK officials estimated the
aggregate at £100–150 million in the early 1960s.4 If this upper figure
is accepted, the level of British investment in the archipelago was at
least on a par with that of the United States (usually assumed to be
the chief investing power in Indonesia after the sudden takeover of
Dutch businesses and the expulsion of Dutch personnel from the end
of 1957).5
Drawing principally upon newly-released British business archives,
this paper examines the ways in which British enterprises weathered
the twists and turns of Indonesia’s post-colonial political economy.
Notwithstanding security and labour troubles as well as difficulties
in remitting profits, British firms in Indonesia did not experience
substantial changes in business practice from the Dutch colonial
period until the late 1950s and early 1960s. A more aggressive
economic nationalism only came to the fore in the context of the
Sukarno regime’s foreign adventurism—namely, the confrontations
with The Netherlands and with Malaysia and its principal ally, the UK.
In the latter, British enterprises in the archipelago became the prime
target of a bitter campaign against ‘neo-colonialism’, culminating in
their temporary takeover. As such, British business interests found
themselves caught in the centre of a triangular domestic struggle
for power between the Presidency, the Indonesian Communist Party
(hereafter PKI), and the archipelago’s armed forces.
As Fieldhouse first pointed out in the case of Unilever, Anglo-
Dutch enterprises were able to survive both Konfrontasi by conveniently
transferring the ownership of Indonesian subsidiaries back and forth
across the North Sea.6 This ability to switch nationality points
to an obvious advantage of multinational business operations, and
might indeed support Sukarno’s Nekolim rhetoric that a new era
3
The area planted with rubber by British-owned estate companies in Indonesia
actually increased by nearly 30 per cent in the post-war era—from 306,000 to 396,000
acres between 1939 and 1954. RGA C[ouncil] M[inutes, Guildhall Library, London],
24863/64, 5 April 1954, R[eport of] I[ndonesia] C[ommittee].
4
B[ank] o[f] E[ngland Archive, Threadneedle Street, London], OV 85/5, note by
H. J. Tomkins, 2 February 1962; Lindblad, J. T. (2008). Bridges to New Business: the
Economic Decolonization of Indonesia, KITLV Press, Leiden, p. 206 n. 26.
5
The estimated American total of US$401 millions in 1959 (Ibid., p. 172) at the
prevailing exchange rate of 2.8 US dollars to the pound equates to £143.2 millions.
6
Fieldhouse. Unilever, pp. 301–303.
of western domination had been ushered in by decolonization.7

Moreover, ultimately Sukarno was eased out of power in the course
of 1965 and 1966, and Suharto brought Indonesia back into the
western economic fold. However, the atmosphere of uncertainty,
unpredictability and intensified risk suggests a somewhat different
analysis. The balance of advantage lay with the post-colonial state
(albeit a chaotically managed one) rather than with expatriate big
business. Indeed, the business papers analysed reveal deep fissures
within Indonesian state and society, especially during the takeovers
of the Malaysian confrontation but before and after them as well.
It was precisely this division of authority and opinion which made it
increasingly difficult for British firms to gain leverage in their various
strategies to protect their investments. In providing a more nuanced
interpretation, this paper also breaks new ground. Firstly, it analyses
a wider source base than Fieldhouse. Secondly, it provides a more in-
depth assessment of the significant British business encounter with
independent Indonesia than that afforded in Lindblad’s excellent
book which focuses on the Dutch experience and culminates in the
takeovers and nationalizations between 1957 and 1959.8 Meanwhile,
by concentrating on the ‘official mind’, recent studies by Jones,
Subritzky and Easter present an incomplete picture of Britain’s
interactions with Indonesia during the 1950s and 1960s.9
1950–1957: Pragmatic pluralism and grass-roots

economic nationalism
British business interests had tended to support The Netherlands, and

feared the consequences of full independence for Indonesia, during
the ‘revolution’ of 1945–1949. In the course of guerrilla warfare with
the Dutch, Republican insurgents caused considerable disruption to
7
Mackie, J. A. C. (1974). Konfrontasi: The Indonesia-Malaysia Dispute, 1963–1966,
Oxford University Press, Kuala Lumpur, pp. 216–217; Legge, J. D. (1972). Sukarno:
A Political Biography, Penguin, London, pp. 343–344, 363–364.
8
Lindblad. Bridges, pp. 205–207.
9
Jones, M. (1999). ‘Maximum disavowable aid’: Britain, the United States and the
Indonesian rebellion, 1957–8, English Historical Review, 114:459, 1179–1216; Jones,
M. (2002). Conflict and Confrontation in South East Asia, 1961–1965: Britain, the United
States and the Creation of Malaysia, Cambridge University Press, Cambridge; Subritzky, J.
(2000). Confronting Sukarno: British, American, Australian and New Zealand Diplomacy in the
Malaysian-Indonesian Confrontation, 1961–5, Palgrave Macmillan, Basingstoke; Easter,
D. (2004). Britain and the Confrontation with Indonesia, 1960–1966, Tauris, London.
foreign-owned plantations, killing crops and burning down factories.10
Sir John Hobhouse, an Ocean Steam Ship Company senior executive
and chairman of the British Chamber of Commerce for The
Netherlands East Indies in London, supported the Dutch police actions
to restore ‘order’ in 1947, regretted UN interference to halt this, and
regarded the federal state being established by the Dutch ‘pacifiers’ as
a ‘genuine partnership of Dutch and Indonesians’.11 The alternative
scenario of Republican victory was difficult to digest. During February
and March 1947, George Palmer Holt, a visiting Ocean Steam Ship
Company manager, was able to tour Republican areas of Java, and
attended a political congress in Malang, concluding that the delegates
were ‘certainly not a body of fanatics and revolutionaries’. However,
the view that The Netherlands East Indies was exploited by European
capitalists had ‘become orthodox opinion in the Republic’. It was
recognized that an independent Indonesia could not immediately
ditch European investment, merchants and technicians, but Holt
predicted that economic tendencies would increasingly be towards
public ownership, co-operatives, joint management, and trade union
participation.12
Holt would not be proved far wrong and, most disturbing for
expatriate enterprise, was the thinking of Sukarno, first president
of Indonesia: ‘On questions of economic development he made no
secret of his suspicion of foreign capital and his desire to the see
the Indonesianization [Indonesianisasi] of the economy’.13 Amongst
Indonesia’s political parties, Sukarno’s principal supporters were
to be found in the Indonesian Nationalist Party (hereafter, PNI)
which was generally unsympathetic towards both indigenous and
exogenous business. This radicalism was countered, however, by the
small (yet influential) Indonesian Socialist Party, which espoused
gradualist, evolutionary socialization.14 Even more accommodating
10
Pugh, P. et al. (1990). Great Enterprise: A History of Harrisons & Crosfield, the firm,
London, pp. 185, 186.
11
O[cean] A[rchive, Merseyside Maritime Museum, Liverpool], 671, The Java
Gazette, July 1948, chairman’s address at BCCNEI annual meeting, June 1948.
12
OA, 2537/1, enclosure in Holt to Hobhouse, 17 March 1947; see also Booth,
A. (1998). The Indonesian Economy in the Nineteenth and Twentieth Centuries: A History
of Missed Opportunities, Macmillan, Basingstoke, pp. 311–312 on the ‘profound
distrust of capitalism as a system of economic organisation’ amongst the Indonesian
intelligentsia.
13
Legge. Sukarno, pp. 274–275.
14
Anspach, R. (1969). ‘Indonesia’ in Golay, F. H. et al. Underdevelopment and Economic
Nationalism in South-East Asia, Cornell University Press, Ithaca, pp. 121–122.
towards foreign capital was Masjumi, the Consultative Council of

Indonesian Muslims. Masjumi’s leadership tended to be hostile
towards nationalization, and its economic expert, Minister of
Finance, 1950–1951, and first governor of the nationalized Bank
Indonesia, Sjafruddin Prawiranegara, laid more stress on the
importance of output increases than indigenization.15 Moreover,
influential administrator-politicians, notably Mohammad Hatta, vice-
president and first prime minister of independent Indonesia, despite
championing indigenous cooperatives, recognized that western capital
and expertise were vital for the reconstruction of the new republic’s
economy. Hatta played the dominant role in the Indonesian side
of negotiations during the Round Table Conference with The
Netherlands in 1949, and inter alia agreed to provide guarantees
for Dutch investments in post-colonial Indonesia.16 A. L. Mathewson,
convenor of the Rubber Growers’ Association’s Indonesia Committee,
discovered in early 1950 that the non-party and moderate Minister
of Prosperity, Dr Djuanda Kartawidjaja, ‘seemed to have clearly in
his mind that in general, Government must create conditions which
will encourage and enable producers to restore and further increase
production’.17
Both President Sukarno’s and the PNI’s authority was also
constrained by the 1950 constitution, and the general instability
of parliamentary government in the era of political pluralism
between 1950 and 1957. Numerous coalition cabinets did not
afford the radicals sufficient space to engineer a total indigenization
of the economy. Only under Minister of Economic Affairs Iskaq
Tjokrohadisurjo, and Minister of Finance Ong Eng Die, in the
first PNI-led cabinet which excluded Masjumi (from July 1953 to
July 1955), were dramatic attempts made to unravel the colonial
economy.18 Nationalizations were kept within bounds—for example,
15
Ibid., pp. 121, 123; Sjafruddin Prawiranegara. (2003). ‘Recollections of My
Career’ in Thee Kian Wie. Recollections: The Indonesian Economy, 1950s–1990s, Institute
of Southeast Asian Studies, Singapore, p. 83.
16
Booth. Indonesian Economy, pp. 313–314; Penders, C. L. M. (2002). The West New
Guinea Debacle: Dutch Decolonisation and Indonesia, 1945–62, Crawford House, Adelaide,
p. 215; Ricklefs, M. C. (1993). A History of Modern Indonesia since c. 1300, Second
Edition, Macmillan, Basingstoke, p. 232; Thee Kian Wie. (2003). ‘Introduction’ in
Thee. Recollections, pp. 9–10; Lindblad. Bridges, pp. 72–73.
17
RGACM, 24863/61, 6 March, RIC.
18
Anspach. ‘Indonesia’, pp. 120–123; Legge. Sukarno, pp. 242, 245. At the end of
1954, a Bank of England official had discovered the Ali Sastroamidjojo government
‘continually tightening the screw’ on expatriate enterprise—through the refusal
the transmogrification of the Javasche Bank, The Netherlands East
Indies’ bank of circulation, into Bank Indonesia between 1951 and
1953 was understandable since ‘control of money and credit is
generally recognized as an essential ingredient of sovereignty’.19 A
department of the Ministry of Agriculture, the Government Estates
Central, Pusat Perkebunan Negara, took over estates previously owned
by Axis subjects in the wake of the Pacific War or voluntarily purchased
small plantations from departing Dutch owner-occupiers. But by
1952 the vast majority of plantations were back in the hands of
their pre-World War Two overseas owners. A government corporation
operated Shell’s former facilities in North Sumatra from the end of the
Pacific War. But, this was ‘small beer’ when compared with the other
Indonesian fields in South Sumatra and East Kalimantan where Shell
and the American oil companies, Stanvac and Caltex, extracted and
refined under the so-called ‘Let Alone’ agreements dating from 1948.
The oil producers were exempted from Indonesian foreign exchange
controls and restrictions on profit transfers. There was some state
involvement in manufacturing industry, but the ‘alien’ sector was left
largely to its own devices.20
Where indigenization did tend to hit British enterprises before
1957 was in the field of human resources rather than in capital. At
the Round Table Conference in 1949, the Republic had been able
to extract a commitment that foreign employers should include ‘as
soon as possible capable Indonesians in the management (including
boards of directors) and staff positions of companies’. The Anglo-
Dutch Batavian Petroleum Company responded to this latter demand
particularly effectively as foreign staff in managerial and supervisory
posts fell from 60 to 39 per cent between 1949 and 1956. One quarter
of Unilever’s managerial staff were Indonesian nationals by 1956.
The ethnic profile of management at Anglo-Indonesian Plantations
changed dramatically in the 20 years after 1940: from 55 Indonesians
and 268 foreigners to 225 Indonesians and 16 foreigners.21 But, no
of entry permits for staff replacements, reductions in the number of ‘approved’

employees allowed to remit home, denial of import licenses, and regulations excluding
foreigners from certain occupations. BoE, OV 85/3, Notes on a Visit to Indonesia, 6–19
November 1954 by P. L. Hogg, 9 March 1955.
19
Anspach. ‘Indonesia’, p. 137.
20
Ibid., pp. 154, 158, 159–160, 163; Mackie, J. A. C. (1961/2). ‘Indonesia’s
Government Estates and Their Masters’, Pacific Affairs, 34: 4, 338 n. 4; Pugh. Great
Enterprise, p. 185.
21
Anspach. ‘Indonesia’, pp. 127, 135; Lindblad. Bridges, pp. 73, 161–162, 174–175.
British firm was required to install an Indonesian as chief manager or

local director.
Economic nationalism was restrained, in the benteng or fortress
programme for the creation of an ‘indigenous’ (pribumi) merchant
class. From April 1950, this scheme attempted to reserve increasing
proportions of Indonesia’s imports to indigenous traders through the
rationing of foreign exchange in their favour.22 Under the radical
PNI cabinet of 1953–1955, British rubber companies were required
to channel their imports through Indonesian hands. Already in
September 1954 permits to import basic supplies were ‘showing a
tendency to dry up’, and the outlook was far from encouraging if
Iskaq’s plan to allocate 70 per cent of imports to ‘National Importers’
eventuated.23 However, in practice, most benteng entrepreneurs lacked
the finance or commercial ‘know-how’ to compete effectively with
foreign and Chinese enterprises, and, through so-called ‘briefcase’
or ‘Ali Baba’ arrangements, they frequently became mere fronts for
such institutions.
Moreover, from the summer of 1955 Indonesian Socialist Party
Finance Minister Sumitro Djojohadikusumo introduced sweeping
reforms of import and export regulations, appalled as he was by
rampant ‘cronyism’ in the award of licences and disturbed by a loss
of business confidence.24 This was welcomed by British interests.
Plantation companies were entitled to increased foreign exchange
allowances, and export duty cuts suggested a desire to ‘improve
conditions for producers’.25 At the end of 1955, a Blue Funnel
executive was pleased to discover that an effective Bureau for Foreign
Exchange in Trading had replaced the previous ‘corrupt system’
of granting licences as favours or in return for bribes. The head
of the bureau was entirely opposed to any form of rationing, and
intended to allow imports to come in as freely as the market required
22
Anspach. ‘Indonesia’, pp. 168, 171, 172; Thee. ‘Introduction’, pp. 12–13;
Lindblad. Bridges, pp. 129–136; Thee Kian Wie. (1996). ‘Economic policies in
Indonesia during the period 1950–1965, in particular with respect to foreign
investment’ in Lindblad, J. T. Historical foundations of a national economy in Indonesia,
1890s–1990s, North-Holland/Royal Netherlands Academy of Arts and Sciences,
Amsterdam, p. 317. The term pribumi excludes Indonesians of European, Chinese,
Arab or Indian descent. Lindblad, J. T. (2002). The Importance of Indonesianiasi
during the Transition from the 1930s to the 1960s, Itinerario, 26:3/4, 52.
23
RGACM, 24863/64, 5 April, 26 July and 4 October 1954, RIC.
24
Sumitro Djojohadikusumo. (2003). ‘Recollections of My Career’ in Thee.
Recollections, pp. 61–62.
25
RGACM, 24863/65, 3 October 1955, RIC; 24863/66, 7 November 1955, RIC.
and would issue licences to any importer regardless of ethnic origin
or nationality who could place a sufficient down payment in Bank
Indonesia.26 Moreover, in December 1955, the non-PNI Harahap
government issued a policy statement on foreign investment, which
ruled out nationalization without prior agreement and ‘reasonable
and adequate compensation’, as well as promising profit remittances
after the deduction of taxes.27
Admittedly, there were constant complaints by British firms
about increases in corporation tax and export duties, as well as
exchange certificates in which the rupiah rate of exchange for foreign
transactions was pushed well above the official rate. It was claimed
in February 1952, for example, that the Indonesian state was already
retaining one half of the proceeds of all estate crops.28 There were also
ongoing restrictions on the remittance of profits, even under the most
cautious Masjumi-led administrations. A 66.6 per cent levy on foreign
remittances was ‘deplored’ by the Rubber Growers’ Association in
1954. The entire profit for the financial year of 1953 could be remitted
after payment of tax, and, in 1955, overseas transfers were permitted
for 1954’s profits as well. However, estate companies discovered that
40 per cent of net profits would now have to be deposited with Bank
Indonesia, only the remaining 60 per cent being remittable and subject
to payment of the levy. Moreover, in practice, remittances for 1953
were ‘never in full nor were any reasons vouchsafed for the deductions
made’.29 The result was also to make Indonesia’s system of multiple
exchange rates even more complex and even more skewed against
foreign enterprises.30
Yet, such measures and practices were not necessarily expressions
of a rabid anti-western economic nationalism but were more reflective
of the financial problems Indonesia faced in the wake of declining
commodity prices at the end of the Korean War boom, leading to
shortages of foreign exchange and reduced government revenues
from export duties. Budget deficits subsequently re-emerged with a
vengeance after 1952 as the government in Jakarta continued to be
lumbered with the inherited debts of The Netherlands East Indies
26
OA, 97, R. O. C. Swayne diary entry, 2 December 1955. See also Lindblad.
‘Indonesianisasi’, pp. 55–56; Lindblad. Bridges, p. 134.
27
BoE, OV 85/4, note by J. C. Paterson, 26 March 1956.
28
RGACM, 24863/63, 7 January and 4 February 1952, RIC.
29
RGACM, 24863/64, 7 December 1953 and 5 April 1954, RIC; 24863/65, 4 July
and 3 October 1955, RIC.
30
Lindblad. Bridges, p. 41.
regime as part of the Round Table Conference settlement, piled on

top of the vast costs of reconstruction in lieu of both the Japanese
Occupation and the war of independence. The resultant escalating
inflation was further fuelled by restrictions on imports, designed
to curb foreign exchange leakages.31 In addition, governments of
all political persuasions found it impossible to shackle military and
civil service profligacy: ‘Government squandermania accompanied by
falling production were the root causes of the deteriorating position’
reported Rubber Growers’ Association chairman Keith Anderson in
May 1954.32
However, declining levels of output did reflect the existence of
an alternative, grassroots-level economic nationalism sparked by
frustrations with the inequitable legacies of colonial rule. The
trade union movement was generally opposed to the decolonization
settlement and wished to see the nationalization of industries and
plantations. As such, employers frequently suspected that wage
demands and strikes were directed not at increasing workers’
living conditions but towards grinding expatriate enterprise out of
the islands.33 As early as January 1950, Unilever conceded joint
consultation on labour problems and a wage increase following a strike
in Jakarta.34 Through threats of a general strike at the end of 1953,
SARBUPRI, the Union of Indonesian Estate Workers, persuaded
the government mediation board, to compel employers in Java to
issue rice to estate workers at a price of 30 cents per kilo, instead of
the 70 cents previously agreed.35 Other concessions extracted from the
employers by SARBUPRI with official support in the 1950s included
the extension from Sumatra to the entire archipelago of a fortnight’s
wages bonus for 1953; a wage hike of 50 cents a day for estate workers
in North Sumatra from June 1955; and, a new pension scheme for
labourers on the east coast of Sumatra in 1957.36
31
Thee. ‘Introduction’, pp. 4–5; Penders. West New Guinea, pp. 238–239;
Fieldhouse. Unilever, pp. 285–286.
32
RGACM, 24863/64, 31 May 1954, RIC.
33
Penders. West New Guinea, p. 206; Brown, C. (1994). ‘The Politics of Trade Union
Formation in the Java Sugar Industry, 1945–1949’, Modern Asian Studies, 28:1, 77–98.
34
U[nilever] A[rchives, Port Sunlight], Acc 1997/127, 41, S[pecial] C[ommittee]
M[inutes], 11 January 1950.
35
RGACM, 24863/64, 7 December 1953, RIC.
36
RGACM, 24863/65, 7 March and 4 July 1955, RIC; 24863/68, 7 October 1957,
RIC.
The flexing of organized labour’s muscle emanated from the
increasing influence of the PKI, which, after 1951, began to
rehabilitate itself under the leadership of the charismatic D. N.
Aidit in the wake of the disastrous Madiun uprising of 1948. The
Stalinist revival involved a rapprochement with the radical wing of the
PNI, an end to criticism of Sukarno, and backing for the anti-Dutch
campaign in West New Guinea (Irian Jaya). The PKI was reconciled to
‘national’ capital, but remained fully hostile towards western capital.
The growing influence of the Indonesian communists was confirmed in
the 1955 elections, when they won 23 and 25 per cent of votes in east
and central Java respectively. For Sukarno, a PNI-PKI alliance was a
means of bypassing Masjumi, and with declining living conditions, the
radical nationalists, the communists, and the President, increasingly
attempted to whip up the masses by blaming Indonesia’s economic
woes on the foreign stranglehold.37
SARBUPRI had affiliated with SOBSI, the All-Indonesian
Federation of Labour Organizations, in 1952, and SOBSI was PKI-
dominated from 1948. With the goal of forcing foreign-owned
enterprise out of the country, SARBUPRI also tended to support illegal
occupation of estate lands; opposition to the return of plantations to
their legal owners; large-scale thieving of crops; attacks on factories,
buildings and trees; as well as ambushes, shootings, and killings of
European managers.38 In the decolonization period, P and T Lands
had experienced higher casualties amongst its expatriate planters
than any comparative concern in Malaya under communist insurgency,
and continued to face security conditions ‘worse’ than those on the
peninsula as late as 1952.39 Meanwhile, the ‘extent to which Dutch
and English companies have suffered. . .[from squatting]. . .has to be
seen to be believed!’ reported a Bank of England official in 1954.
Anglo-Indonesian’s rubber replanting programme had been ‘seriously
menaced’ as a consequence. The company had started to plant saplings
at double the normal distance and entered into prior arrangement
with local peasants to cultivate rice in between the rows until the
trees reached maturity. But local communists were encouraging the
agriculturalists not to co-operate. Another problem at P and T Lands
37
Legge. Sukarno, p. 254; Penders. West New Guinea, p. 180; Anspach. ‘Indonesia’,
p. 121.
38
Penders. West New Guinea, p. 206.
39
Allen and Donnithorne. Western Enterprise, p. 74; OA, 4003/8, chairman’s report
for 1951, 25 April 1952.
was the wholesale theft of estate crops: Anglo-Indonesian had been

forced to give up growing tapioca altogether. The roots were pilfered
by well-organized gangs, ‘who must obviously have had exceptional
transport facilities at their disposal’.40
In a tour of Java in early 1951, R. F. Burt, the City-based rubber
grandee, reported that the Indonesian authorities ‘quite definitely
realized the danger to the economy of the country and to the
standard of living of the people where such conditions continued’.
But the very weakness of the coalition cabinets made it unlikely that
those authorities ‘would undertake the risks of trying to ensure the
maintenance of law and order’ where lawlessness had the support of
locally powerful left-wing groups and ex-army malcontents.41 Ocean
stockholders were told in 1951 that the ‘main difficulties in Indonesia
are due to the complete lack of disciplined control over the men
loading and discharging the cargo. This leads to much stealing. . .and
considerable risk of injury to the crew’. After remonstrations to the
UK Foreign Office, the problems of lawlessness in most Indonesian
ports had subsided by 1953. Nevertheless, Belawan—Medan’s ocean
harbour——remained plagued by violent ‘expert gangs of thieves’
whose intimidation extended to the police and employees of shipping
agents and stevedores.42
The proclivity and ability on the part of the union movement
and left-wing groups to cause considerable inconvenience for British
economic interests in Indonesia was revealed during the Suez crisis
of 1956. Indonesian outrage at the Anglo-French invasion of Egypt in
October and November expressed itself in a move to boycott British
undertakings. Local staff went on strike at the HSBC in Jakarta,
apparently encouraged by a ‘few professional agitators’. Inspired by
SBPI, the communist-dominated port workers’ union, it was shipping
which was the principal target. There were particular stoppages of
wharf work at Tanjong Priok (Jakarta’s port), and a refusal to handle
some British ships. It was not official strategy to interfere with British
shipping.43 But, in early 1957, the Rubber Growers’ Association was
informed that the boycott had not yet ended and ports were still not
40
BoE, OV 85/3, Hogg notes.
41
RGACM, 24863/62, 7 May 1951.
42
OA, 4003/8, Annual Meeting, 6 June 1951, Chairman’s Report for 1950; OA,
1125, Alfred Holt & Company to FO, 7 July 1951; Holt to G. I. Morris, Ministry of
Transport, 16 October 1953; RGACM, 24863/62, 30 July 1951, RIC.
43
OA, 1696, ‘Suez Canal’, Holt to Sir John Nicholson, 4 November 1956 and reply
of 8 November; 1112, AHC to Maclaine Watson, Jakarta, 19 November 1956; HSBC
loading for British destinations, leading to an accumulation of rubber
stocks.44
1957–1963: Dutch nationalization, ‘guided economy’

and regional rebellion
It was the leftist unions which would bring about a more long-term
decline in operating conditions for British enterprises in Indonesia
less than a year later, again in the context of external events.
In protest at the failure of Indonesia’s attempts in the UN to
force The Netherlands to hand over Irian Jaya, PNI- and PKI-
affiliated unions seized Dutch businesses in December 1957. The
army brought an end to ‘syndicalism’ by taking control of the
sequestered firms. But, at the end of 1958, when it became clear
that The Hague was not prepared to surrender Irian Jaya in return
for its Indonesian investments, emergency legislation permitted the
nationalization of all Dutch assets throughout the archipelago.45 In
this, British firms were potentially in a strong position. For fear of
offending Dutch interests, the Ocean Steam Ship Company declined
an offer from the Ministry of Shipping to take over the inter-island
shipping business.46 However, the Singapore-based Straits Steamship
Company, in which Ocean held a controlling interest, was able to
expand its Indonesian services from the east coast of Sumatra to
Kalimantan, Belitung, Bangka and Tanjong Priok—by 1961, the
archipelago accounted for over one-quarter of the Straits Steamship
Company’s total earnings.47 Meanwhile, there were opportunities
for Blue Funnel in the expansion of international cargoes. Pusat
Perkebunan Negara-Baru (New Government Estates Central) had
been formed in December 1957 to administer the 500 or so Dutch
[Group Archive, London], 1459/ 2.04, semi-official letters to Jakarta, M. W. Turner

to H. C. Peterson, 13 November 1956.
44
RGACM, 24863/67, 7 January 1957.
45
Anspach. ‘Indonesia’, p. 191; Penders. West New Guinea, pp. 264–265; Mackie.
‘Government Estates’, pp. 340–342; Lindblad. Bridges, pp. 182–185.
46
OA, 1696, ‘Indonesia. Dutch Disputes’, cable from Jakarta, 11 December 1957;
note of meeting at British Embassy, The Hague, 12 December 1957; cable from
Liverpool to Jakarta, 14 December 1957; Frank Lane, Chairman, Mansfield & Co.,
Singapore to Sir John Nicholson, Senior Manager, Ocean Steam Ship Company
(hereafter, OSSCo), 4 February 1958.
47
K. G. Tregonning, Home Port Singapore: A History of Straits Steamship Company
Limited, 1890–1965 (Singapore: Oxford University Press, 1967), p. 253.
plantations; it would merge with the original Pusat Perkebunan

Negara in 1960. In October 1958, Pusat Perkebunan Negara-Baru
approached the Ocean Steam Ship Company to increase Europe-
bound capacity for export crops.48 Indeed, the Bank of England
appreciated that there was likely to be a considerable diversion of
trade from The Netherlands to Britain, not only with regard to
the marketing of Indonesia’s raw materials, but, even more so, in
respect of the supply of essential capital goods. British financial
institutions were also likely to benefit here, since increased levels of
trade would eventuate with other European countries, notably France
and West Germany. This would be financed in sterling rather than in
Dutch guilders as Indonesia departed from The Netherlands Monetary
Area.49
On the other hand, the speed and breadth of the Dutch takeovers
heightened anxieties that British enterprises and personnel were in
line for similar treatment. As Mike Turner, chief executive of HSBC
in Hong Kong, appreciated in December 1957: ‘It only requires some
agitation in connection with Dutch warships using Singapore to start
a campaign against all British interests in the Islands’. The sense
of foreboding made Turner ‘more reluctant than ever’ for HSBC in
Indonesia to get ‘involved in any way with long term or complicated
finance’, thus allowing for a swift and painless departure.50 Such angst
was related to the disturbing growth in PKI influence, especially on
Java, which was confirmed by the Dutch sequestrations. Unilever
executives were reassured in March 1958 by the British Ambassador
to Indonesia, Sir Leslie Fry, that Sukarno could ‘drop’ the communists
when it suited him but there was ‘nevertheless a strong communist
element among the cabinet ministers’.51 A month earlier, British
plantation interests had been informed by W. H. Meijer, the expelled
chairman of the Dutch plantation employers’ organization, Algemeen
Landbouw Syndicaat (General Agricultural Syndicate), about the
‘extent of the Communist’s party strength’ as a result of the 1957
regional elections on Java. The PKI had captured over 27 per cent of
the popular vote in Java, and had demonstrated ‘self discipline and
48
OA, 2385, Richard Hobhouse to Holt, 25 October 1958 enclosing memorandum
of a meeting with Amin Tjokrosuseno, joint head PPN-Baru and head of the Estates
Department, Ministry of Agriculture; Holt to Richard Hobhouse, 15 November 1958.
49
BoE, OV 85/4, note by Hogg, 20 December 1957.
50
HSBC, 1459/2.04, semi-official copies out to Jakarta, Turner to King, 20
December 1957.
51
UA, Acc 1997/127, 42, SCM [with] O[verseas C[ommittee], 2 April 1958.
superior organization’ with the ultimate aim of securing control of
Java by ‘legal means’ as soon as possible. Most of the other major
parties were either ‘grossly inefficient’ or ‘incurably corrupt’. Only
Sukarno was apparently in a position to impede PKI plans, but it was
‘impossible to foretell on which side the President would throw his
weight’.52
Indeed, a resurrection of Sukarno’s authority accompanied the
confrontation with the Dutch. In July 1959, the ‘revolutionary’
constitution of 1945 was re-adopted, and the President headed extra-
parliamentary cabinets as chief executive.53 The Dutch takeovers and
nationalizations were largely related to the Irian Jaya situation. But
Sukarno’s speeches in 1958–1959 returned to old economic themes—
notably that the Indonesian economy remained disabled by a vampiric
colonial capitalism, draining the country’s wealth.54 Consequently,
there was a growing penchant for state encroachment on the economy,
and departures from western economic conventions in Sukarno’s
Socialisme à la Indonesia. As the President explained in August 1959,
the Indonesian ‘revolution’ had not been designed for the archipelago
‘to become a place for grabbing riches for whomsoever’. Indonesia
‘must completely leave all the constructions of the liberal world,
and. . .must replace them with the foundations of guided democracy
and guided economy’.55 There was increasing preference for loans over
Foreign Direct Investment, and new direct investment was expected
to take the form of joint Indonesian-foreign ventures. The Eight-Year
Overall Development Plan of 1960 declared that ‘the right of private
entrepreneurs to operate is not derived from natural law but is given
by the government’.56
Indonesian parastatals were certainly given a major boost after
December 1957. Pusat Perkebunan Negara, for example, became
the lead player in the Sumatra Planters’ Association, and Harrisons
& Crosfield Ltd noted increasing interference from the left-wing
52
RGACM, 24863/68, 3 March 1958, RIC. As Cribb points out, if the 1957 local
election results ‘were repeated in the national elections scheduled for 1959, the PKI
would have been a necessary part of any future government coalition’. Cribb, R.
(2000). Historical Atlas of Indonesia, Richmond, Surrey, Curzon, p. 163.
53
Legge. Sukarno, pp. 305, 311.
54
Weinstein, F. B. (1974). Indonesian Foreign Policy and the Dilemma of Independence:
From Sukarno to Soeharto, Cornell University Press, Ithaca, pp. 212–213.
55
BoE, OV 85/4, copy of official English translation of the President’s speech, 26
August 1959.
56
Anspach. ‘Indonesia’, p. 195; Booth. Indonesian Economy, p. 317.
Minister of Agriculture, S. H. Sadjarwo, in the association’s affairs,

notably in the setting of wages.57 Moreover, the new Basic Agrarian
Law impinged upon British-owned estates. One-third of each foreign-
owned plantation was now to be surrendered to the Ministry of
Agriculture. Harrisons & Crosfield proposed a consolidation scheme
under which the surrender of one-third of the total area would not have
seriously affected production on its Sumatran estates. The Minister
accepted this offer, but promptly demanded a further one-third of
the productive area be given up. Such tactics appeared to a Bank of
England official to illustrate a tendency in Indonesian economic policy
to acquire ‘eventual control of foreign productive enterprises without
cost to themselves’.58
By the end of 1962, the foreign-owned exchange banks—HSBC,
Chartered, the Oversea-Chinese Banking Corporation and the Bank
of Tokyo—were responsible for a trifling 4 per cent of total credit
granted in Indonesia by commercial banks; just seven years earlier,
national banks had disbursed 39 per cent of all credits granted
by foreigners. Much the greater part of banking business was,
therefore, undertaken by the five state commercial banks.59 The
ideal of replacing the ‘colonial economy’ by ‘a national economy’
affected international shipping too where it was seen as increasingly
desirable that imports and exports should ‘be carried out as far as
possible by Indonesian national shipping companies’. Consequently,
the parastatal Indonesian Freight Organization, was established in
1960 to book and channel the carriage of overseas trade.60 Indeed,
Ocean Steam Ship Company directors were concerned at a more
aggressive phase of ‘unwise’ economic nationalism. The state-owned
Indonesian national line, Djakarta Lloyd, entered the liner trade
in 1960 and was admitted to the Europe-Indonesia Conference. By
1962, Djakarta Lloyd had also started a service to Japan. In 1960,
George Holt cautioned against hasty measures to establish Indonesian
shipping companies, as well as manufacturing concerns (given much
57
H&C A[rchives, Guildhall Library, London], 37271, McLeod, joint manager,
Medan to Estates, London, 16 October 1958.
58
BoE, OV 85/5, note by Hallows, 19 December 1961.
59
BoE, OV 85/5, note by Brittain, 16 August 1963; Anspach. ‘Indonesia’, p. 141.
60
OA, 1696, ‘Indonesia. Dutch Disputes’, translated elucidation to Government
Ordinance No. 25, 27 May 1960.
higher priority in the eight-year plan than the five-year plan of 1956
that it superseded).61
Moreover, Dutch businesses were part of an integrated network
of backwards and forwards linkages from production to shipping
and insurance, so that their expropriation after 1957 had wider
implications.62 For British firms, this often meant the loss of significant
Dutch partners and personnel. Blue Funnel had run a joint service
with the Dutch Mails from continental northern European ports to
Java from 1920 and did not ‘look forward with any great pleasure’
to working with ‘entirely new partners’.63 In addition to the British
shipping agents, Maclaine Watson at Jakarta and Harrisons &
Crosfield at Medan, the Ocean Steam Ship Company relied on Dutch
merchant houses, for example, the Borneo-Sumatra Maatschappij
(hereafter Borsumij) in Palembang. The famed efficiency of the
Borsumij organization was threatened, however, by the imminent
departure of Dutch staff in the autumn of 1958.64 Although Unilever
did increasingly distribute its products (Sunlight soap especially)
through benteng ‘national traders’, it refused to completely abandon
the ‘Big Five’ Dutch agencies. The multinational had been dismayed,
therefore, by Government plans—even before the nationalization—
to take distribution out of the hands of the Dutch merchants, since
Unilever would be forced to link up with a large number of local
firms ‘who had little experience and no facilities in this field’. Should
the government insist on cutting out the Dutch distributors, the
Special Committee in London viewed the only solution as lying in
the creation of its own distribution network ‘although this would
involve us in finance of about Rupiahs 150 million and a great deal
of extra clerical work’. Hence, the takeover of the ‘Big Five’, and
the evacuation of the European management, was hardly greeted
enthusiastically by Unilever, and culminated in direct selling in Java
after 1962. At the end of 1956, due to the ‘enormous expansion
of our interests in Indonesia’, Unilever’s overdraft facility with the
‘Factorij’ (Nederlandsche Handel-Maatschappij, Netherlands Trading
61
Jamieson, A. G. (1995). Facing the Rising Tide: British Attitudes to Asian
National Shipping Lines, 1959–64, International Journal of Maritime History, 7:2, 139,
142; OA, 1151, ‘A Shipowner’s View on East-West “Interdependence”’, reprint from
Far East Trade, 6 February 1960; Mackie. ‘Government Estates’, p. 338.
62
Booth. Indonesian Economy, p. 316.
63
OA, 1696, ‘Indonesia. Dutch Disputes’, McGregor, Gow and Holland Ltd.,
London to AHC, 10 June 1960.
64
OA, 2385, Holt to Hobhouse, 26 October 1958.
Association, one of the four Dutch banks in the islands) had been
increased to Rupiahs 40 million. In February 1960, subsequently,
visiting Unilever chairman, George Cole, fretted that the Factorij was
‘becoming less efficient’ in its rapid turnover from Dutch to Indonesian
management.65
The Rubber Growers’ Association in London, meanwhile, was
principally concerned about the future of Dutch employees on the
estates. By mid 1959 only 6,000 of the 50,000–60,000 Dutch
population at the time of the takeovers remained.66 In Harrisons
& Crosfield’s Jakarta office, the limited promotion of Indonesians
to management positions now told: the local assistants capable of
replacing the departing Dutch staff were ‘all promoted clerks, several
of them getting on in years, and, with one exception, all of Chinese
origin’.67 Out on the estates, meanwhile, the Dutch withdrawal,
and the refusal of the Indonesian authorities to grant work permits
for replacement non-Dutch foreigners, left 13 expatriate managers
overseeing 100,000-plus cultivated acres and 11,000 labourers in the
Harrisons & Crosfield group on Sumatra by 1962. In 1958 there had
been 41 European staff.68
Further inconveniences and insecurities for British firms derived
from the counter economic nationalism of the regional rebellions
in the Outer Islands, which formally began in February 1958. The
dissidents were alienated by both the drain of export revenues from
Sumatra, Sulawesi and Kalimantan to Jakarta and the restriction
and high prices of imports arising from multiple exchange rates
and import licences. They were further dismayed by Sukarno’s
authoritarian tendencies and rapprochement with the PKI.69 There
65
UA, Acc 1997/127, 42, SCMOC, 8 January 1957, 2 April 1958, Cole’s report to
the Directors’ Conference, 19 February 1960; Fieldhouse. Unilever, p. 296; Lindblad.
Bridges, pp. 174–175.
66
RGACM, 24863/68, 6 January 1958, RIC; Mackie. ‘Government Estates’,
p. 340.
67
H&CA, 37258, copy of note on visit to Jakarta of Mr. Sands by L. F. Paris,
Manager, Jakarta, undated but c. October 1959.
68
H&CA, 37271, copy of visiting agent, Namu Rambei, Galang to Estates, Medan,
25 February 1960; J. McLeod and R. A. Strachan, Joint Managers, Medan to Sir
Leonard Paton, Chairman, 17 January 1962.
69
Dick, H. (2002). ‘Formation of the nation-state, 1930s–1966’ in Dick, H.,
Houben, V. J. H., Lindblad, J. T. and Thee Kian Wie. The Emergence of a National
Economy: An Economic History of Indonesia, 1800–2000, Allen & Unwin, Crows Nest, New
South Wales, p. 179.
was clandestine Anglo-American official support for the anti-Sukarno
and anti-communist movement. But, despite the alternative republic
in Bukittingi being headed by the financially conservative Masjumi
leader, Sjafruddin, there is no evidence that British business interests
backed the rebellions. On the contrary: Shell, as well as Caltex
and Stanvac, continued to pay revenues to Jakarta.70 There were
violent rebel reprisals on Harrisons & Crosfield’s Sungei Rumbija
plantation in North Sumatra, following the manager’s involvement
in government military operations to suppress illicit tapping.71 The
Rubber Growers’ Association ‘sincerely’ hoped that Sjafruddin’s
threat of ‘a long economic war of attrition’ against Jakarta did not
materialize, ‘otherwise all foreign interests would become involved
with unpredictable consequences’. In the meantime, the whole
economy was ‘going from bad to worse’. Barter trade and smuggling
was on the rise, and, with Sumatra’s exports—bar mineral oil—
coming to a standstill, the foreign exchange position ‘was worsening
so rapidly that there could be little hope of any profit or other transfers
being granted in the immediate future’. Many rubber companies
were facing bankruptcy, and indeed were so short of sterling that
they found it impossible to pay their Rubber Growers’ Association
subscriptions.72 As the locus of government military suppression
shifted from Sumatra to Sulawesi, by May 1958, perilous shipping
conditions eventuated in the Makassar straits, and, on the east coast
of Kalimantan, Shell was forced into closing the ports of Balikpapan
and Tarakan following damage to installations and the sinking of
a tanker.73 On Java, meanwhile, Unilever was working at just 30 per
cent of normal output in April 1958; this was partly due to the scarcity
of foreign exchange to purchase imports but also reflected extreme
difficulties in obtaining supplies of copra and palm oil from the Outer
Islands.74
70
Ricklefs. Modern Indonesia, pp. 262–263; Jones. ‘Indonesian rebellion’.
71
H&CA, 37271, Johnstone to Estates, London, 3 March 1959.
72
RGACM, 24863/68, 3 March 1958, Reports of Indonesia and Finance
Committees; 24863/69, RIC, 27 October 1958.
73
OA, 1112, Maclaine Watson to AHC, 30 April 1958; OA, 2385, Meyerink to
Holt, 2 December 1958 enclosing notes on visit, October/November 1958; Jones,
‘Indonesian Rebellion’, p. 1204.
74
UA, Acc 1997/127, 42, SCMOC, 2 April 1958.
1963–1966: Konfrontasi
Even so, with the petering out of regional secessionism and end of
the Irian Jaya agitation in the course of 1962, the outlook for certain
British businesses looked relatively bright again. The ongoing dearth
of foreign exchange had made the repatriation of profits for British
manufacturers, banks and rubber companies impossible since 1955.
For Harrisons & Crosfield, however, uncertainty over the future of
the group’s land rights had been relieved. Sixteen of the plantation
companies it managed were merged during 1960 and 1961 to become
wholly-owned subsidiaries of London Sumatra Plantations Ltd. While
one-third of the new group’s planted area in Sumatra was surrendered
in 1962 in accordance with Sadjarwo’s diktat, a compromise was
reached on the renewal of titles whereby expiry dates could be
averaged to maintain larger units. For the key portion of Harrisons &
Crosfield’s acreage an extension of titles for a further 15 years had
been secured, offering, in Chairman Sir Leonard Paton’s view, ‘no
greater encouragement for facing the future’. The London board was
also looking forward to a £12 million engineering deal in Jakarta.75
At the beginning of 1963, Unilever found more Sumatra palm
oil available; the multinational was able to purchase foreign
exchange requirements on the open market from government-
approved exporters; and, notwithstanding spiralling hyper-inflation,
half the products manufactured at Unilever’s Java factories were not
subject to price control.76 Plans for an evacuation from Indonesia on
the part of HSBC had been put off earlier in 1961, once the Jakarta
office was discovered to be again operating at a profit.77 Shell’s future
seemed relatively secure too, after the signing of an agreement in
June 1963 between the Indonesian government and the oil companies
allowed the latter to continue in the absence of suitably experienced
and financed indigenes and as subcontractors of indigenous enterprise.
Shell, Caltex and Stanvac were given full control over management
while the government of the Republic won formal agreement for a
60–40 split of profits.78
75
H&CA, 37271, Paton to Joint Managers, Medan, 1 January 1962.
76
UA, Acc 1997/127, 43, SCM, 15 January and 19 February 1963.
77
HSBC, 1459/2.04, semi-official copies out to Jakarta, Turner to King, 13
February 1961.
78
Dreams of a rosier future were shattered, however, by Confrontation
with British-backed Malaysia from September 1963. In the short
term, Anglo-Indonesian trade was allowed to continue as undisturbed
as possible. Outright nationalization of British firms was resisted by
Jakarta, opting instead for the severance of commercial and financial
links with Malaysia. But there were extreme inconveniences and
uncertainties for British enterprises in the archipelago. Because the
fusing of Malaya with Singapore, Sarawak and North Borneo (Sabah)
was assumed to be a manifestation of British neo-colonialism, houses
belonging to British companies in Jakarta, as well as the British
embassy, were attacked and ransacked on the inauguration of the
new federation. In West Java, following the unofficial seizure of British
plantations by the trade unions, these firms were taken into ‘protective
custody’ by the Indonesian government. The pattern reproduced
the lead-up to the expropriation of Dutch interests with Indonesian
supervisors and ‘control teams’ installed by the communist-led unions
and regional government.79 In Jakarta, meanwhile, the staff and
labour force at Harrisons & Crosfield’s branch went on strike and,
subsequently, representatives of the KBKI clerical union announced
to the British management that they had taken over. The company was
placed under the supervision of the Governor of Jakarta, and then, in
accordance with a presidential directive, under a central government
department. In this particular case, a Team Pengawas Pemerintah
(supervisory team) was appointed by the Ministry of Agriculture, and
this also assumed complete managerial control of the estate companies
for whom the company acted as agents. The expatriate managers of
Harrisons & Crosfield Jakarta were not allowed into the office or
onto the estates under their agency, nor were they permitted any
contact with office or plantation staff.80 Meanwhile, an Indonesian
ban on through bills of lading involving shipment via Malaysian ports,
the customs authorities in Medan preventing ships from clearing for
Malaysian ports, and the seizure of vessels in Palembang, led to the
79
Mackie. Konfrontasi, pp. 181, 189; OA, 1869, ‘Djakarta, 1963’, Mike Spreckley,
Maclaine Watson to Holt, 21 September 1963; T[he] N[ational] A[rchives of the
United Kingdom, Kew, London], DO 169/82, copy of telegrams from Jakarta to FO,
21 and 23 September 1963; BoE, OV 85/5, note of 23 September 1963 (author
unidentified).
80
H&CA, 37529, J. G. H. Thwaites, Singapore to Branches, London, 26 September
1963; memorandum attached to Paris, Jakarta to Branches, London, 23 March 1964.
Straits Steamship Company suspending Malaysia-Indonesia sailings

in September 1963.81
In January 1964, a second wave of takeovers commenced with an
attempt by the SOBSI-affiliated Unilever union, SERBUNI, and some
sympathetic Indonesian managers, to oust the British management
at Unilever’s head office in Jakarta. In response, the authorities
formed a supervisory team, comprising a senior police officer as
chairman and two representatives each of the Governor of Jakarta,
the Board of Unilever Indonesia, the trade unions, and the indigenous
management. Subsequently, Unilever (and other British industrial
concerns such as British American Tobacco) were placed under
the supervision of a team appointed by the Minister of Peoples
Industries.82 The takeover movement now spread to Sumatra. Staff
unions took control at Harrisons & Crosfield, followed by the Governor
appointing a Team Pengawas. The unions also moved against the
plantations where the company’s Medan branch manager, John
McLeod, discovered that ‘None of the European staff is permitted
to exercise any authority, nor are they allowed to enter their offices’.
In February, Minister of Agriculture Sadjarwo announced that estate
companies in North Sumatra would be placed under the control of a
single supervisory team appointed by the Governor on the Minister’s
behalf, and the role of expatriates would be that of ‘advisers’.83
At the same time, those British firms taken under the government’s
wing in September 1963 were subject to new inconveniences—for
example, most of Harrisons & Crosfield’s accommodation in Jakarta
was occupied by members of the union and the supervisory team, the
latter now being in complete control of the business.84 There was still
no boycott of British shipping, but there was increasing diversion from
81
TNA, DO 169/82, copy of telegrams from Singapore (Office of the Political
Adviser to the Commander-in-Chief, Far East) to Ministry of Transport, 23 and 28
September 1963.
82
UA, Acc 1997/127, 43, SCM, 10 Feb. 1964, Report to the Special Committee by
I. E. B. Quarles van Ufford; D[irectors’] C[onference] M[inutes] extract, 14 February
1964; SCM, 23 June 1965 attached report by Quarles van Ufford; H&CA, 37259,
Paris to Branches, 13 February 1964; 37274, copy of second message from British
Ambassador, Jakarta to FO, 10 February 1964. For additional detail on the Unilever
experience of Konfrontasi see Fieldhouse. Unilever, pp. 307–313.
83
H&CA, 37274, extract from Chartered Bank, Medan to Chartered Bank,
Jakarta, 23 January 1964; translation of decision of the Minister of Agriculture and
Agraria, 1 February 1964; McLeod to Branches, 3 February 1964; messages from
Jakarta to FO, 10 February 1964.
84
H&CA, 37259, Paris to Branches, 14 February 1964.
British vessels of export cargoes. On a visit to Medan at the end of
February 1964 George Holt was ‘not optimistic’ about the future,
especially as a new shipping decree seemed to make it impossible for
Harrisons & Crosfield to continue as Blue Funnel’s agents.85 In March
1964, Imperial Chemical Industries (ICI) (which merely operated
a representative office in Jakarta) was left as the lone British firm
without any form of supervision. In May, the closure of the Chartered
Bank’s branches in Medan and Surabaya was demanded.86
Indeed, from the spring of 1964, Indonesian state direction of British
enterprises was also stepped up: expatriate staff were increasingly
deprived of authority but also dispossessed of housing and transport.
Sumatran plantations were set monthly production targets for exports
to meet government-to-government contracts. Supervisory teams
enforced the switch of company banking accounts from the Chartered
to Bank Indonesia (HSBC having fortuitously taken the decision
to close its Indonesian business in July 1963). By the end of May
1964, most of the expatriate staff at P and T Lands had evacuated,
and, generally, British nationals employed by Anglo-Indonesian were
refused extensions to their work permits and visas. S. H. Pull, chairman
of the British Chamber of Commerce in Jakarta and head of the
managing plantation agents, Wattie & Co., reported to the Rubber
Growers’ Association in August 1964 that ‘matters in the estate sector
had almost passed the point of no return’.87
A month earlier, Harrisons & Crosfield had taken the decision to
withdraw expatriate estates staff and their remaining dependents
from Indonesia.88 Concurrently, Unilever House in London was
informed that the influence of the PKI on government affairs was
growing, and the regime—and, notably, Sukarno himself—was moving
towards an economic nationalism which regarded all property ‘in
the widest sense’ as belonging to the indigenes. It was appreciated
that ‘help’ in the form of capital and know-how would still have to
be sourced from overseas, but in future in a system of ‘production
sharing’ in which factories and plantations would be Indonesian-
owned with foreign participation taking the form of machinery and
85
H&CA, 37274, messages from Jakarta to FO, 10 February 1964; McLeod to
Branches, 31 March 1964.
86
H&CA, 37259, Paris to Branches, 23 March 1964; BoE, OV 85/6, copy of W.
G. Pullen, Chief General Manager, Chartered Bank, London to Tenku Yusuf Muda
Dalam, Minister for Central Bank Affairs, Jakarta, 12 June 1964.
87
RGACM, 24863/74, 1 June, 6 July and 5 October 1964, RIC.
88
H&CA, 37271, Director, Estates, London to Estates, Medan, 8 July 1964.
technical expertise. Overseas profit transfers and capital repatriations

would be repaid in the form of goods produced by the resultant
industry. Concurrently, there was on-going pressure from the unions
to oust all the expatriates at Unilever Indonesia, and to confiscate
the British and American sections of the group and to nationalize
the Dutch share.89 In November 1964, a presidential decree appeared
to suggest the de facto seizure and control of all British enterprises
by the Indonesian government. This also included Unilever factories,
despite their supposed trans-national ownership, and reassurances
from Sukarno—as well as Subandrio, the leading cabinet minister—
that it was not the intention to interfere with the independent conduct
of Unilever’s business.90 At the end of the month, the manager of the
Chartered Bank was summoned to Bank Indonesia, informed that his
Jakarta branch was to be fully controlled, and that a new Indonesian
management would be installed.91
The increasingly radical tone of Indonesian economic nationalism
was epitomized by the Minister of Sea Communications, Major
General Ali Sadikin, in singling out the Europe-Indonesia
Conference—now led by Blue Funnel—as ‘the tool of imperialist
domination in the field of international shipping’. Indonesia was to
remain part of the conference system, but through developing a ‘strong
fleet’ of its own would subsequently ‘have the power. . .to transform
the. . .imperialist “tool” into a tool for our nationalist stride’.92 Ocean
Steam Ship Company executives were informed that the British flag
would be withdrawn from the islands from January 1965. George
Holt pointed out that this would leave a serious gap in westbound
trade, especially in the shipping of bulk liquids from Belawan. But the
president’s policy was now to establish ‘real political independence
without worrying about the economic consequences’, and Indonesian
officials saw the withdrawal of the British flag as an opportunity to
further expand Djakarta Lloyd through links with the communist
bloc.93 Indeed, as the tempo of Confrontation was stepped up in
1965, and Indonesia edged closer and closer to Beijing, ‘the more
89
UA, Acc 1997/127, 43, SCM, 18 August and 15 September 1964.
90
BoE, OV 85/5, telegram from Jakarta to FO, 29 November 1964; UA, Acc
1997/127, 43, SCM, 1 December 1964.
91
BoE, OV 85/5, telegram from Jakarta to FO, 30 November 1964.
92
OA, 1696, ‘Indonesia. Dutch Disputes’, confidential translation, 13 November
1964.
93
Ibid., Gleichman to Holt, 17 November 1964; notes by Holt, 30 November and
16–19 December 1964.
radical anticapitalist groups within Indonesia’s political spectrum’
were bolstered, further accelerating ‘the internal drift to the left’.94
The protests of Unilever executives that its plant in Indonesia was
Dutch-owned had led to a temporary postponement of a complete
takeover. But, in April 1965, all foreign companies were put under
full government control, including Shell which had also tried to claim
immunity from Konfrontasi given its supposed Dutch status.95
Two retrospective observations should be made about this saga of
supervision, takeover and control between 1963 and 1966. Firstly, the
Confrontation experience varied considerably from British company
to company, and from region to region, mirroring the pluralism of
Indonesian society and politics. Hence, in West Java, where communist
influence was relatively strong, the British plantations suffered the
deepest degree of local control from September 1963. In Sumatra,
however, and particularly in Medan, the military presence was much
more effective in the context of the suppression of the regional revolts
in the outer provinces. As such, damage to and attacks on British
properties in Medan were relatively limited, and attempts by the
SOBSI unions at the end of September 1963 to raise ‘total strikes’
on the plantations were suppressed by the police. It was not until
January and February of 1964 that Harrisons & Crosfield in Medan
was officially taken-over, and, even then, the chief expatriate manager,
John McLeod, was able to spend three hours per day at the office.96
Even within Java, there was great variation in the practice of control.
For example, amongst the head offices of the plantation groups in
Jakarta, Pull of Wattie continued to run his business ‘in more or less
the usual way’ (albeit from his home), ‘being provided with two cars,
money, cigarettes etc. by his “Team”’. He met with two Indonesian
members of his staff every evening and discussed the day’s business,
and also made decisions with Dr Danardojo Hadisano, the Deputy-
Minister of Agriculture. Wattie’s exports of estate produce and general
imports were still continuing as usual, and the firm was ‘not much
worse off than before’. But Harrisons & Crosfield’s management
was ‘virtually without contact’ with its Team Pengawas. The chief
94
95
UA, Acc 1997/127, 43, SCMOC, 23 June 1965, Quarles van Ufford report.
96
H&CA, 37274, Strachan to Branches, 17 October 1963; extract from Deli Times,
3 November 1963 enclosed in Strachan to Branches, 3 November 1963; 37259, Paris
to Branches, 28 May 1964.
manager, Leonard Paris, was simply sent cheques to sign and was
denied transport or payment of his salary.97
The second wave of takeovers in Jakarta during January and
February 1964 ‘meant something different in almost every case’
reported Paris: Shell ‘had the situation more or less under
control’; Chartered had convinced Bank Indonesia officials that
even the slightest measure of interference would have repercussions
detrimental to Indonesia; Maclaine Watson, meanwhile, was
operating under ‘normal supervision’.98 Unilever, on the other hand,
had avoided a union takeover, but the officially appointed supervisor
was in sympathy with PKI demands to nationalize all foreign capital,
and had ‘no real power or backing’ to resist labour demands. Even
so, and notwithstanding massive labour and managerial indiscipline,
Unilever managers were able to maintain lines of communication with
the Jakarta factory. But, to re-emphasize the diversity of experiences,
at the Surabaya plant, Indonesian control was ‘virtually nil, not even
by a Supervisor’.99
This all suggests that the anti-British campaign was incoherent,
chaotically managed and lacked central direction. There seems to
have been a similar absence of official planning during the occupation
of Dutch businesses and properties in December 1957, and senior
cabinet ministers were caught off-guard.100 The Suez crisis boycotts,
and the widespread lawlessness of the 1950s, had already shown
the tendency of the unions to operate their own system of economic
justice, frustrated as they were by the compromises towards foreign
capital taken by the coalition governments in Jakarta. That the anti-
British economic nationalism of the Konfrontasi period was largely
spearheaded by left-wing groups, and reflected the inability of the
central government to control this grass-roots feeling, is confirmed
by earlier demands, dating from the aftermath of the abortive
Indonesian-supported anti-Malaysia rebellion of December 1962
in the British-protected sultanate of Brunei. The Indonesian Ship
Workers’ Union issued a warning that ‘unless the British Colonialists
cease oppressing and suppressing the people of North Kalimantan
[that is, Brunei, North Borneo and Sarawak], all vessels flying the
97
H&CA, 37274, McLeod to Branches, 10 December 1963.
98
99
UA, Acc 1997/127, 43, SCMOC, 23 June 1965, Quarles van Ufford report.
100
Anspach. ‘Indonesia’, p. 191; Penders. West New Guinea, p. 265; Lindblad. Bridges,
pp. 183, 186.
Union Jack as well as British vessels calling at Indonesian ports will
be boycotted’. Further union demands followed in January 1963,
and it was shortly after these remonstrations that Subandrio, as
Foreign Minister, announced the policy of Confrontation against
Kuala Lumpur on the grounds that the Malayan government, in
advocating the creation of ‘Mighty Malaysia’, were ‘representing
themselves as accomplices of the neo-colonialists and neo-imperialists
pursuing a policy hostile to Indonesia’. But, at this stage, as a Maclaine
Watson manager in Jakarta appreciated, ‘The Government is. . . quite
happy to let the present verbal barrage continue in an effort to distract
the peoples’ minds from economic problems. . . [T]here is absolutely
no intention on the part of the Government to go any further’.101
Once the Malaysian federation became a reality, however, the more
moderate elements within the Indonesian government and military
were temporarily unable to contain the PKI and the labour movement.
This leads to the second point worth underlining at this juncture:
again, as in the Dutch expropriations, there was a concern by the
central government authorities and the military to limit the influence
of the PKI unions and ensure that management remained in non-
communist, and sometimes—to 1965 at least—in expatriate hands.
In October 1963, Deputy-Premier Subandrio assured the British
Ambassador, Sir Andrew Gilchrist, that the Jakarta government
intended to hand back the British companies once the Malaysia
dispute was settled.102 The desire to contain PKI-labour influence
was evident in the specific experience of Harrisons & Crosfield
in Jakarta. KBKI clerical union section leaders were immediately
informed in September 1963 that occupied firms would be placed
under the Ministry of Labour, the political head of which was also
national chairman of the clerical union. But, this aspiration was
subsequently overruled by a decision at the end of the month to
install a Team Pengawas responsible to the Governor of Jakarta, and
subsequently, to the Minister of Agriculture.103 As late as January
1964, Sukarno instructed due observance of his decree of September
1963 which expressly forbade takeovers of British concerns unless
instructions came from the President, and this was supported by the
101
OA, 1869, ‘Djakarta, 1963’, copy of Holt to Spreckley, 1 January 1963 enclosing
R. C. Wurtzburg, Manager, Mansfield & Co., Singapore to AHC, 24 December 1962;
Ian Trevor to Holt, 4 January 1963; Mackie, Konfrontasi, p. 125.
102
BoE, OV 85/5, note by Barker, 14 October 1963.
103
H&CA, 37259, Thwaites to Branches, 26 September 1963.
implacably anti-PKI army chief of staff, Lieutenant-General Achmad

Yani. Significantly, 65 trade union activists were arrested in Jakarta
after the unauthorized takeover attempts of January and February
1964.104 In Medan, when the Chartered Bank was placed under
supervision in January 1964, a ‘security team’ of five officials arrived
at the bank, explaining that ‘they did not intend to interfere in any
way with the running of the office and that their function was to
ensure that there was no “unofficial” takeover’. The team consisted of
representatives of the Governor’s office, the police, the military, the
judiciary, and the National Front (Sukarno’s mass organization) but
at this stage not the unions.105
The President’s diktat of September 1963 was revoked by the
‘Committee of Thirteen’, established by the cabinet to settle economic
and financial difficulties. PKI boss Aidit declared that the position
of the workers in taken-over concerns would be ‘defended to the
death’. However, the presidential and military position had not
been completely reversed since the new supervisory team imposed
in February 1964 at Harrisons & Crosfield in Medan, for example,
consisted not only labour representatives but also military and
National Front elements, and the team would operate ‘outside the
office’ and play no direct part in the running of day-to-day business.
Moreover, Chaerul Saleh—the cabinet minister closest to Sukarno
and associated with the communist (but anti-PKI) Murba party—
reiterated to Gilchrist that there remained ‘no intention of taking
over or nationalising British capital, all firms will be returned to full
British control’. The present actions were of a temporary nature, and
were necessitated by the militant attitude of labour, in order to secure
continual production.106
Top policymakers in Jakarta were still not willing to jettison
foreign investment. As indeed Sukarno acknowledged as late as
1965, the Eight-Year Plan continued to rely ‘heavily’ on overseas
inputs; new ways were merely being devised to make the relationship
more favourable for the Indonesian host through, for example,
production-sharing agreements epitomized by the Anglo-American
oil company settlement which preceded the Confrontation with
104
H&CA, 37274, private letter from Johnstone, 11 February 1964.
105
Ibid., Chartered Bank, Medan to Chartered Bank, Jakarta, 23 January 1964;
McLeod to Branches, 27 January 1964.
106
Malaysia.107 Theo Gleichman, the Dutch chairman of Nederlandsche
Stoomvart Maatschappij ‘Oceaan’, was informed by The Netherlands
ambassador to Indonesia in the autumn of 1964 that ‘by no means
all the Military, advocate strong anti-British measures’. Meanwhile,
the technocrats in the shipping ministry accepted that Gleichman
should take on the position of acting chairman in the Indonesia-Europe
conference, partly because a full chairmanship for Nederlandsche
Stoomvart Maatschappij ‘Oceaan’—as an entirely British-owned
company—would raise criticism from anti-British political groups
inside Indonesia. But it was also the ultimate desire of the Indonesian
authorities to re-instate George Holt as chairman as soon as Konfrontasi
was terminated.108
The balance of advantage: the post-colonial state versus

expatriate enterprise
In their tussles with Indonesia’s various economic nationalisms,

British businesses were not completely powerless, or without ‘agency’
and pursued a variety of strategies to try and protect their investments.
For the multinationals there was the option to change the nationality
of ownership of Indonesian subsidiaries during the confrontations
with The Netherlands and Malaysia, as well as replacing Dutch and
British personnel. Hence, after December 1957, Unilever shares in the
archipelago were transferred from ‘NV’ in Rotterdam to ‘Ltd’ in Lon-
don, and the transnational’s executives went to considerable lengths
to convince Indonesian officials of British ownership and control of
the Jakarta and Surabaya factories. Concurrently, two Indonesian
managers benefited from accelerated promotion to directorial
positions, and urgent steps were additionally taken to replace Dutch
managers with Britons and Germans. To confirm its new-found British
identity in the islands, Unilever joined the Indonesian Association
in London, and also sought to strengthen its links to government
departments in Whitehall and to the British Chamber of Commerce
in Jakarta.109 Shell followed similar tactics to save its business in
107
Weinstein. Foreign Policy, pp. 213–215.
108
OA, 1696, ‘Indonesia. Dutch Disputes’, letters to Holt, 17 November and 24
December 1964.
109
UA, Acc 1997/127, 42, SCMOC, 19 February, 20 November and 9 December
1957, 2 January and 22 July 1958, 1 January 1959. Although Unilever enterprises
the short-term. In 1960, the oil transnational planned to transfer its

Indonesian business to a separate company, which would be owned
partly by the British side of the group and partly by Shell’s Canadian
subsidiary. At the same time, Shell withdrew its Dutch personnel
from the islands.110 Meanwhile, Maclaine Watson advised that Blue
Funnel ‘refrain from sending Dutch flag ships to Indonesian waters’.
Moreover, wharf properties in Java and Sulawesi were transferred from
the ownership of Nederlandsche Stoomvart Maatschappij ‘Oceaan’ to
the Ocean Steam Ship Company during 1958.111
Subsequently, it was deemed prudent to re-introduce Nederlandsche
Stoomvart Maatschappij ‘Oceaan’ Dutch-flag ships to Indonesian
waters from the autumn of 1963. In November 1964, Blue Funnel
executives were able to persuade the Indonesian authorities to allow
the company to continue to call at Indonesian ports as a Dutch concern,
in spite of the Ocean Steam Ship Company having gone to great
lengths back in 1958 to stress to the Jakarta bureaucrats that the
Amsterdam-listed company was overwhelmingly British-owned. At the
same time, the Ocean Steam Ship Company’s property in Indonesia
was sold back to Nederlandsche Stoomvart Maatschappij ‘Oceaan’.112
The products of the Shell refineries in Indonesia were distributed by
tankers flying the red ensign. Shell had replaced its British crews
on these vessels with Dutch ones, but it was thought inadvisable to
switch from the British to the Dutch flag because The Netherlands’
burgeoning aid to Indonesia was likely to antagonize Malaysia. Shell
Indonesia chose a Norwegian flag of convenience instead.113 Shell was
also able to secure the return of its refinery at Balikpapan to its control
from the military, following the replacement of 51 British personnel,
involving the promotion of 21 Indonesians to managerial positions.114
On the advice of Subandrio and Indonesian directors in the autumn
of 1963, Unilever began to replace its British expatriate management
with Dutch individuals who were once again in favour with the Jakarta
in Indonesia had traditionally been owned and managed by the Dutch wing of the
multinational, the conglomerate as a whole was only about one-third Dutch-owned in
1959.
110
Ibid., Cole report, 19 February 1960.
111
OA, 1112, letter to AHC, 19 February 1958; 2385, enclosure in Hobhouse to
Holt, 25 October 1958; Holt to Meyerink, 25 November 1958.
112
OA, 1869, ‘Djakarta, 1963’, Holt to Day, 28 September 1963 and reply, 10
October 1963; 1696, ‘Indonesia. Dutch Disputes’, Gleichman to Holt, 17 November
1964; 4007/7, Managers Meeting Minutes, 25 November 1964.
113
OA, 1696, ‘Indonesia. Dutch Disputes’, Gleichman to Holt, 17 November 1964.
114
OV 85/5, telegrams from Jakarta to FO, 24 September and 10 October 1963.
regime. This action, followed by a return of shares in the Indonesian
business from Ltd to NV, seems to have won Unilever a reprieve from
full government takeover during 1964. Indeed Subandrio confirmed
that the restructured Unilever would serve as an ‘example of good
co-operation between Holland [sic.] and Indonesia’.115
As a wholly owned British company, Harrisons & Crosfield had far
less room for manoeuvre. However, in reorganizing its plantation
interests between 1960 and 1962, efforts were made to give the
impression of increased Indonesian participation to try and improve
relations with the Sukarno regime. An Indonesian subsidiary of
London Sumatra was registered in Jakarta and three Indonesian
directors were appointed to the board, including Tandiono Manu, ex-
Minister of Agriculture, who was believed to be a friend of Sadjarwo.116
Indeed, developing cordial relations with key powerbrokers in the
post-colonial state was a second strategy for protecting trade and
investments, a process of ‘building up goodwill’ as the tendency
has been described for West Africa.117 In this, Unilever and Ocean
especially, attempted to present their business activities as integral to
Indonesia’s economic development and decolonization.
The British stake in Unilever Indonesia was certainly much helped
by the progressive attitudes of its Europe-based directors. During the
struggle for independence, Paul Rijkens, chairman of Unilever NV,
had been very critical of The Netherlands for not adhering to the
Linggajati agreement of November 1946, which, in turn, had ‘given
the Indonesians an excuse to deviate from what has been agreed’.118
In similar vein, from 1950, Unilever executives—notably Rijkens—
regarded The Hague’s stubborn refusal to surrender Irian Jaya as
liable to harm Dutch relations with the other and more important
islands of the former Netherlands East Indies. The best solution was
Dutch acceptance of West New Guinea’s transfer to the Indonesian
Republic but with The Netherlands continuing to administer the
115
UA, Acc 1997/127, 43, SCM, DCM extract, 1 November 1963; SCM, 10
February 1964, Quarles van Ufford report; DCM extract, 24 April 1964.
116
H&CA, 37942, letter from Freddy Harper, Chairman, London Sumatra, 5
October 1962; R. H. Paylor, Acting Manager, Estates, Jakarta to Estates, London,
12 November and 18 December 1962.
117
Decker, S. (2008). Building Up Goodwill: British Business, Development and
Economic Nationalism in Ghana and Nigeria, 1945–1977, Enterprise & Society, 9:4,
602–613.
118
OA, 2537/2, letter to Sir John Hobhouse, 4 March 1947; see also Fieldhouse.
Unilever, p. 284 for the favourable attitude of Unilever executives towards Indonesian
independence.
Papuan territory for a further 25 years. This possible solution to

the crisis was accepted by Sukarno.119 In February 1960, Unilever’s
chairman, George Cole, visited Jakarta where he parleyed with senior
cabinet ministers who ‘went out of [their] way to be friendly and
showed a genuine interest in Unilever’. Representatives of the British
banks described the treatment Unilever was receiving in respect of
import licences as ‘remarkably favourable’—applications for these
certificates were on average granted up to only ten per cent, whereas
the Anglo-Dutch conglomerate was having about 90 per cent of its
requests approved. Cole was additionally advised by the American
ambassador, Howard P. Jones, that established European interests
should be prepared to assist Indonesia and ‘recognize what is going
on there’ to ‘forestall’ ‘the Russians’.120 Hence, in November 1961, to
help Indonesia dispose of its copra, Unilever breached its established
buying policy of purchasing raw materials through commodity brokers
by accepting a government offer of a contract for a continuous supply
at a fixed price. Following the beginnings of Malaysian confrontation,
Unilever director, F. J. Tempel, offered Sukarno technical assistance
in the fields of oils and fats, plantations and transport. This followed
the Bung’s confirmation that Unilever Indonesia would be able to
continue running its own business ‘provided [it] did not attempt to
introduce any element of colonialism’.121
During the Suez crisis, Sir John Nicholson, chief executive of the
Ocean Steam Ship Company, was delighted that George Holt was
visiting Southeast Asia since ‘your presence will help to remind
your circle of genuine friends in Indonesia that Great Britain is
not exclusively populated by old-fashioned imperialists’. Indeed, Holt
developed close relationships with Indonesian policymakers on his
many trips to the archipelago: in August 1958, even if Indonesia
became a ‘one party socialistic state rather on the lines of modern
Jugoslavia [sic.]’, Holt was anxious to maintain good relations with
the new leadership ‘not with the intention of entering into any sort
of debate but to let them know that the way will be open to them for
friendly co-operation with us’.122 One practical manifestation of this
was the re-organization of Blue Funnel’s pilgrim service from Java to
119
UA, Acc 1997/127, 41, SCM, 8 May 1950; Penders. West New Guinea, pp. 218,
347; Lindblad. Bridges, p. 161.
120
UA, Acc 1997/127, 42, SCMOC, Cole report, 19 February 1960.
121
Ibid., 17 Nov. 1961; 43, SCM, DCM extract, 1 November 1963.
122
OA, 1696, ‘Suez Canal’, letter to Holt, 8 November 1956; 2385, copy of Holt
to Meyerink, 14 August 1958.
Jeddah from the end of 1958. This involved close consultation with the
Indonesian authorities on the suitable re-fitting of a ship, including an
onboard mosque.123 The Blue Funnel director also courted Indonesian
ambassadors in Britain. Hence, Dr Sunario attended the launch
of a new Blue Funnel vessel on Tyneside in February 1960, and
the shipping line gave practical expression to its sympathies with
Indonesian economic nationalism by providing training on Ocean
Steam Ship Company vessels for young Indonesian officers ultimately
destined for Djakarta Lloyd.124 During Konfrontasi, Holt maintained
communication with the Indonesian embassy in London, and the
latter ‘showed appreciation’ of ‘our policy. . .to carry on to the best
of our ability and to serve the Indonesian economy’.125 This ‘very good
record of assisting the Indonesian national aspirations’ clearly went
some way in persuading the archipelago’s authorities to recognize
Nederlandsche Stoomvart Maatschappij ‘Oceaan’ as a Dutch concern
in 1964.126
A further option open to British firms in Indonesia was to
lobby British government agencies to put pressure on the Jakarta
government. But, as the Rubber Growers’ Association discovered in
1957, the British government was reluctant to forcefully support the
interests of British investors in the archipelago given the diplomatic
desire ‘to avoid offending Indonesian susceptibilities and encouraging
a pro-Communist reaction’.127 Her Majesty’s Government had limited
leverage anyway. As the Bank of England appreciated in 1962, the
prospect of compensation for sequestrated assets was poor ‘even
assuming the will to pay’. Indonesia’s overall gold and foreign
exchange position was a net ‘minus’, and the Jakarta regime was
hard pressed even to pay for current imports, let alone long-term
compensation payments. The only funds which could be frozen in
London in the event of an expropriation dispute were on Bank
Indonesia’s ordinary account, which amounted to a mere £2.7 million
in early 1962.128 As we have seen, during the Malaysia-Indonesia
123
OA, 2385, Holt to Meyerink, 25 November 1958; Falkus, M. (1990). The Blue
Funnel Legend: A History of the Ocean Steam Ship Company, 1865–1973, Macmillan,
Basingstoke, pp. 296–299.
124
OA, 1151, ‘Shipowner’s View’.
125
OA, 1869, ‘Djakarta, 1963’, Holt to Day, Maclaine Watson, 28 September 1963.
126
OA, 1696, ‘Indonesia. Dutch Disputes’, Gleichman to Holt, 17 November 1964
enclosing notes on visit to Indonesia, 26 October to 16 November.
127
RGACM, 24863/67, 7 January 1957, RIC.
128
BoE, OV 85/5, note by Tomkins, 2 February 1962.
dispute Ambassador Gilchrist was frequently in contact with British

business leaders in Jakarta, and did try and intervene with Indonesian
cabinet ministers on their behalf. But Gilchrist and his embassy staff
had lost credibility with the boxwallahs back in September 1963, when
the military attaché defiantly played the bagpipes whilst the British
Embassy was stoned, and Gilchrist obstinately re-raised the Union
Jack. Such behaviour, according to Harrisons & Crosfield’s manager
in Jakarta was no ‘substitute for diplomacy’, was regarded as insulting
by Indonesians, and placed in jeopardy ‘the whole British community,
including a great many women and children’.129
British companies were by and large left to themselves to deal with
the Indonesian authorities. Yet, even the best connected and most
flexible of British interests in Indonesia remained beholden to the
twists, turns and intricacies of Indonesian domestic politics and foreign
policy. As Unilever Indonesia’s new Dutch chairman, I. E. B. Quarles
van Ufford, reported in February 1964: ‘The biggest problem is one
over which we have no influence, i.e. the personal relationship between
President Soekarno [sic.] and the Tunku [Malaysia’s prime minister]’.
Concurrently, it became increasingly difficult to cope with domestic
political scenarios because the Indonesian nationalist assault upon
British firms did not emanate from a central, easily identifiable source.
British companies became enmeshed in the President’s ‘brilliant series
of balancing acts between the national, religious and communist
groups, which again are all balanced out against the armed forces’.
In this, ‘[no] one has full responsibility for anything, but a lot
of people have power’.130 As Harrisons & Crosfield’s manager in
Jakarta confirmed ‘the lack of unanimity between Ministers and
top Government bodies has frequently been demonstrated’.131 The
company’s chief executive in Medan, John McLeod, enjoyed congenial
relations with the senior military officer in North Sumatra, Major-
General R. A. Kosasih, playing golf and tennis with him, and being
reassured in October 1963 (and again in January 1964) that under
his watch there would be no takeover of British firms or property
by the unions à la Jakarta. But McLeod’s assertion that Kosasih
was ‘the man of North Sumatra’ (emphasis in original) proved
misjudged. As we have seen, the unions did move against the east
129
H&CA, 37259, Paris to Strivens, Branches, 21 September 1963.
130
UA, Acc 1997/127, 43, SCMOC, 10 February 1964 and 23 June 1965, Quarles
van Ufford report.
131
coast plantations and the offices of British firms in Medan in January
1964, and Kosasih was powerless to prevent these subsequently being
placed under government-appointed supervision teams. On a visit to
Jakarta in February, McLeod discovered that the military had for
the moment lost influence at the centre of power. In discussions
with Ambassador Gilchrist, it appeared that ‘left wing elements’ had
‘at least temporarily, taken over control in Indonesia’.132 In April
1964 came an order that McLeod and other foreign staff could no
longer attend the Harrisons & Crosfield office in Medan, a decision
in McLeod’s view emanating from ‘the Communist Unions’.133 In
October, McLeod was the last of the company’s staff to leave Indonesia,
having been harassed and even beaten up.134
Back in Jakarta, even if Subandrio and Sukarno were sympathetic
towards Unilever’s continued operations in the islands, the unions
and pro-communist supervisors stifled attempts by the expatriates
to retain control of day-to-day management. Quarles van Ufford
did have a secret understanding with the supervisor giving the
senior expatriate authority over most payments. Nevertheless, the
Indonesian supervisors were dictating Unilever’s pricing strategies,
and in the interests of their ‘social and political impact’ rather
than their ‘commercial meaning’. In consequence, during 1964,
the total rupiah loss was 3.5 millions or about £900,000. Political
considerations overrode commercial logic elsewhere at Unilever
Indonesia. Marketing was a ‘shambles’ because the state-owned
trading companies—the Indonesian successors to the Dutch ‘Big Five’
through which Unilever Indonesia was now required to distribute
its products—had been reorganized three times in 18 months to
allow ‘various political parties’ to get ‘their turn’. Meanwhile, the
area manager in Surabaya had defrauded the company of Rupiah
28 millions but could not be ‘dismissed because of his political
connections’.135
This lack of control on the part of expatriate businesses over
Indonesian events was re-emphasized during the dismantling of the
Sukarno regime between 1965 and 1967. This might seem like a
132
H&CA, 37274, McLeod to Gilchrist, 3 October 1963; McLeod to Branches, 27
January and 10 February 1964.
133
Ibid., McLeod to Branches, 7 and 29 April 1964.
134
Pugh. Great Enterprise, p. 188.
135
UA, Acc 1997/127, 43, SCMOC, 23 June 1965, Quarles van Ufford report. On
the bewildering reorganizations see Dick. ‘Nation-state’, p. 187; Lindblad. Bridges,
pp. 197, 204.
bizarre assertion. After 1967, Unilever, for example, negotiated a

favourable deal for the return of its businesses. Both existing and
new capital in the toiletries and edible oils factories would qualify as
coming under the new Foreign Investment Law and would therefore
be available both for repatriation as capital and as a basis for dividend
payments. Moreover, the group received import duty remission on all
capital imports and a tax holiday for three years. Consequently, it was
decided to place an order for capital equipment to the value of half a
million US dollars, and a new influx of expatriates was to strengthen
the management. Unilever and other British multinationals were
represented at a conference in Geneva in November 1967 at
which ‘[e]xcellent speeches had been contributed by the Indonesian
Foreign Affairs and Economic Ministers, both of whom had indicated
that private investment would be welcome’.136 Labour relations
at Unilever’s factories were greatly improved, meanwhile, by the
‘loss’ of ‘200 hard core Communists’ from the pay-roll. Indeed, the
three remaining non-communist unions petitioned the new military-
dominated regime to return the company to the multinational’s
control as soon as possible.137 In March 1968, Harrisons & Crosfield
signed an agreement in Jakarta with the Indonesian government for
the repossession of its properties. The official handing-over ceremony
in Medan on 1 April took place ‘in an atmosphere of goodwill and
high hopes for the happy future relationship’.138 During 1968, the
British exchange banks both re-opened offices in Jakarta, and, in 1970,
the HSBC management there reported on a welcome restoration of
confidence in the rupiah, combined with a relaxation of import controls
and reductions in taxation.139
But, the Suharto regime was not anticipated by expatriate
enterprises, nor indeed was the favourable treatment which certain
British firms would receive under the new administration. Even after
the brutal military suppression of the Indonesian communists, and
the curtailment of Sukarno’s authority, following the abortive coup of
30 September 1965, there were no certainties. In November 1965,
Unilever’s boss in Indonesia found ‘the political situation still very
136
Ibid., 44, SCMOC, DCM extracts, 21 July and 17 November 1967.
137
Ibid., 9 February 1967, attached report by Quarles van Ufford.
138
H&CA, 37258, Gilchrist to Michael Stewart, UK Foreign Secretary, 16 April
1968.
139
HSBC, GHO 336, Report on Djakarta Office. Results for Year Ended 31
December 1970.
confused’.140 As the Malaysian Commercial Association of Great
Britain learned from a ‘most reliable source’ it was ‘not yet clear how
permanent and far-reaching the reversal of. . . [the PKI’s] fortunes
will prove to be. . .[E]ven if the military. . .should find itself firmly
in the saddle it would not be able to afford—anyway for some time
to come—to give up “Confrontation”’.141 As British plantation owners
found, this still meant that the ‘principal obstacle’ in Indonesia was the
ambiguous legal status of their properties, which had not been officially
nationalized but merely placed under the ‘control and management’
of the government. Consequently, the estate companies were not
entitled to compensation under international law but, concurrently,
British managers were not able to run the plantations either.142
Even after Suharto had forced Sukarno to transfer executive power
to him in March 1966, the General still declared that his regime
was compelled to continue Konfrontasi.143 Because the Nederlandsche
Stoomvart Maatschappij ‘Oceaan’ commanded only five of Ocean’s
60 vessels engaged in Europe-Indonesia trade, in the financial year
of 1966 the group continued to be ‘quite hard hit by the commercial
effects of the disastrous policies’ pursued by the Sukarno regime.144
Moreover, the unsatisfactory takeover deal of Shell—as far as the
oil transnational was concerned—went ahead in 1965 with the oil
company continuing to pay for ‘what used to be their own oil before
they have been paid for it themselves’. In February 1966, Quarles
van Ufford predicted that even if full military control eventuated in
Indonesia, it would be ‘unlikely’ that there would be any opening up
of Indonesia ‘willingly’ to foreign capital.145 In August, the Bangkok
ceasefire agreement presaged the end of the Malaysia-Indonesia
dispute, but in the autumn of that year Unilever Indonesia’s chief
executive still expected to negotiate some form of partnership or
management contract. It was a great surprise, therefore, when Sultan
Hamengku Buwono IX of Yogyakarta, vice-premier responsible for
economic affairs, decreed in December 1966 that Unilever would be
140
UA, Acc 1997/127, 43, SCMOC, DCM extract, 5 November 1965.
141
HSBC, MB Hist 2166, MCAGB Circular No. 190, 28 January 1966.
142
RGACM, 24863/75, 7 March 1966, ‘Draft report for year ended 31 December
1965’.
143
Van Der Kroef, J. M. (1968). The Sarawak-Indonesian Border Insurgency,
Modern Asian Studies, 2, p. 252 n. 17.
144
OA, 554, OSSCo News Release, 17 May 1967, chairman’s statement.
145
UA, Acc 1997/127, 43, SCMOC, 4 February 1966, attached report by Quarles
van Ufford.
returned in toto, and that it would not be necessary to form a joint

venture.146 As late as March 1966, the Rubber Growers’ Association
was still anticipating the eventual expropriation of the British estates.
Instead, quite out of the blue, a cabinet presidium instruction of
April 1967 permitted the return of plantations to their former foreign
owners (bar Dutch firms and individuals) on 30-year or 15-year leases
(depending upon the level of rehabilitation and replanting carried
out since independence).147 In 1961, it will be recalled, Harrisons &
Crosfield had only been able to secure a 15-year extension for the
key portion of its concessions, and, when negotiations began with the
Suharto regime in 1967, the company (like Unilever) expected to be
allowed to return on an unappealing joint-venture basis.148
At the same time, the New Order was not that new: many of
Suharto’s officials had cut their teeth under the ‘guided economy’,
and statism and a suspicion of foreign capital persisted ‘well into
the New Order period’.149 In international shipping, Ocean Steam
Ship Company directors remained concerned in 1973 with corruption
and excessive red-tape in the islands. Moreover, the reservation of
government project cargo to the Indonesian flag, dating from 1964,
would not be repealed until 1985.150 Moreover, British investment did
not return in oil, and the military-dominated Pertamina would expand
‘rapidly to the point where it was considered to operate as a “state
within a state”’.151 At the same time, a resumption of anti-Indonesian
Chinese measures—because of Beijing’s alleged involvement in the
abortive coup of 1965—was not welcomed by British firms since these
strictures would lead to further dislocation of the economy, given the
significance of Chinese merchants at a local level.152
146
Ibid., report on visit to Indonesia by Quarles van Ufford, 17–27 May 1966; 4
November 1966; 44, SCMOC, 9 February 1967, Quarles van Ufford report.
147
RGACM, 24863/75, 7 March 1966, ‘Draft Report for 1965’; 24863/77, 1 April
1968, ‘Draft Report for 1967’.
148
Pugh, Great Enterprise, p. 189.
149
Mackie, J. A. C. (1996). ‘The 1941–1965 Period as an Interlude in the Making
of a National Economy: How should we interpret it?’ in Lindblad, National Economy,
p. 340; see also Hill, H. (1998). Foreign Investment and Industrialization in Indonesia,
Oxford University Press, Singapore, pp. 30–1; Weinstein. Foreign Policy, pp. 279–280,
281, 284–285.
150
OA, 862, Board Memorandum, 20 August 1973; Soedarpo Sastrosatomo.
(2003). ‘Recollections of My Career’ in Thee. Recollections, p. 158.
151
Booth, Indonesian Economy, p. 319.
152
UA, Acc 1997/127, 43, SCMOC, Quarles van Ufford reports, 4 February
and 17–27 May 1966. As early as 1959, Unilever directors had been disturbed by
restrictions on Indonesian Chinese trading in rural areas, as well as mass repatriations
Post-Sukarno Indonesia, then, was not necessarily the foreign
investors’ paradise that journalist John Pilger has suggested.153 That
British business interests in Indonesia ultimately survived Sukarno
was more by luck than judgement. In this wider study of British
businesses, it is difficult to demur from Fieldhouse’s assertion for
Unilever that the multinational’s ‘well-being depended entirely on
the benevolence of [the Indonesian] host government and that this
could be solicited but not extorted by threat or force’.154 Moreover,
the uncertain and imponderable nature of Indonesian politics and
economic nationalism intensified risk, made long-term planning
virtually impossible, and gave the decolonized Indonesian state the
upper-hand in its dealings with British private enterprise. Lindblad
points out that nationalization of Dutch enterprises could be justified
in international law in the context of decolonization, but this was
obviously trickier for British companies seized temporarily in a war
(albeit low intensity and undeclared).155 But, in the thick of the
Malaysia-Indonesia Confrontation, few in the British business world in
Indonesia had much confidence that this international legal decorum
would be observed by a government which appeared to have been
hijacked by the Beijing-inspired far left. As Ambassador Gilchrist
reported on a meeting with the British business community in Jakarta
in February 1964: ‘no-one. . . had any illusions about the ministerial
assurances regarding the temporariness of the measure. The parallel
with [the] anti-Dutch action six years ago was too vivid’.156 It was
precisely the unpredictable and disjointed nature of Indonesia’s body
politic which made British business operations in the archipelago so
difficult to manage. As Mike Turner, HSBC’s chief executive, wrote
to his Jakarta manager back in May 1958: ‘what one considers to be
the future of Indonesia—whether it will go communist or re-organize
itself, possibly with aid from outside, on a sound basis’[—]was ‘largely
a matter of guesswork’.157
to mainland China, disrupting both the distributive system and labour supply. Ibid.,
42, SCMOC, 23–27 January 1959; Cole report, 19 February 1960; 23 August 1960.
153
Pilger, J. (2001). Globalisation in Indonesia: Spoils of a Massacre, Guardian
Weekend, 14 July.
154
Fieldhouse. Unilever, p. 313.
155
Lindblad. Bridges, p. 207.
156
H&CA, 37274, second message from Jakarta to FO, 10 February 1964.
157
HSBC, 1459/ 2.04, semi-official copies out to Jakarta, Turner to King, 7 May
1958.
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Modern Asian Studies 46, 5 (2012) pp. 1277–1315.

Surviving Sukarno: British Business in

Liverpool John Moores University, Department of History, School of

Introduction: the significance of British firms in Indonesia

Dutch firms dominated capital investment in The Netherlands East

of western domination had been ushered in by decolonization.7

1950–1957: Pragmatic pluralism and grass-roots

British business interests had tended to support The Netherlands, and

towards foreign capital was Masjumi, the Consultative Council of

of entry permits for staff replacements, reductions in the number of ‘approved’

British firm was required to install an Indonesian as chief manager or

regime as part of the Round Table Conference settlement, piled on

was the wholesale theft of estate crops: Anglo-Indonesian had been

1957–1963: Dutch nationalization, ‘guided economy’

[Group Archive, London], 1459/ 2.04, semi-official letters to Jakarta, M. W. Turner

plantations; it would merge with the original Pusat Perkebunan

Minister of Agriculture, S. H. Sadjarwo, in the association’s affairs,

Straits Steamship Company suspending Malaysia-Indonesia sailings

technical expertise. Overseas profit transfers and capital repatriations

implacably anti-PKI army chief of staff, Lieutenant-General Achmad

The balance of advantage: the post-colonial state versus

In their tussles with Indonesia’s various economic nationalisms,

the short-term. In 1960, the oil transnational planned to transfer its

Papuan territory for a further 25 years. This possible solution to

dispute Ambassador Gilchrist was frequently in contact with British

bizarre assertion. After 1967, Unilever, for example, negotiated a

returned in toto, and that it would not be necessary to form a joint

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