AHC: Indonesia as rich as South Korea

[esofagusJebol]

From Noah Smith's "Indonesia: The most amazing development story on Earth?":

Industrialization started in the 1960s... Suharto invested in infrastructure and education, stabilized the macroeconomy, and promoted free trade and entrepreneurship... foreign investment in manufacturing became significant. By the 1980s, Indonesia was becoming a powerhouse in exactly the kind of labor-intensive light manufacturing industries that countries are supposed to do early on in their arc of industrialization — clothes, fabrics, electronics assembly, and so on. Then everything came crashing to a halt in the Asian Financial Crisis of 1997... Indonesia’s democracy had begun, but its industrialization stalled... before the crisis, it was common for small manufacturing companies in Indonesia to become big companies, but this scaling-up process stopped after 1997-8. But starting in the early 2000s, there was another factor... the rise of China. A third factor might have been what economists call Dutch Disease — rising commodity prices in the 2000s made it more lucrative for Indonesian entrepreneurs to sell commodities instead of manufactured products.

So, Indonesia. A country with a GDP per capita of $4.3k, compared to Malaysia's $11,1k and South Korea's $40k. An Indonesia as rich as Malaysia would be the 7th largest economy in the world, larger than France. An Indonesia as rich as South Korea would be a truly leviathan 3rd largest economy in the world, twice that of Japan.

Now, you might say that a "cyberpunkly advanced" Indonesia is unrealistic, given its insane geographic constraints and size, stretching as large as Lisbon to Tehran. This is where you are debunked by one word: Java. Java is the key.

The island of 151 million is densely habitated, with more people living in it than in the entire Russia or the entire Japan. The northern coasts region are a flat biome of ricefields, like the Han plains or Kanto plains. Indeed, Java produces abundant food, in fact feeding the rest of the archipelago. It is also ethnically quite homogenous (Javanese & Sundanese being dominant), with Indonesian nationalism having been incredibly successful in staving of any ethnic dispute in Java (given the island is the imperial metropole, unlike say Aceh or Papua). Greater Jakarta, strategically located, is today the second largest metropolis in the world, around as large as Greater Tokyo. I will argue that the island is thus good for industrialization. Besides, Indonesia finished its independence process earlier than both Malaysia and South Korea.

So, with PODs no earlier than the proclamation of Indonesian independence in 17 August 1945, how do you make Indonesia as rich and industrialized as possible? Are there any possible downsides?

(After this, I will also propose my own scenarios: the Hatta Path and the Habibie Path)

 

[GSD310]

So, with PODs no earlier than the proclamation of Indonesian independence in 17 August 1945, how do you make Indonesia as rich and industrialized as possible? Are there any possible downsides?

1. Indonesia doesn’t become a parliamentary democracy after it gains independence. This butterflies away the short-lived cabinets, provide some political stability and maybe even blunt the Army’s political aspirations (no 17th October 1952 Incident and its aftermath).

2. Have the presidency fall into the hands of someone who will use the political stability to work on the economy. Acceptability to the Army will be preferred. Probably looking at Hatta or Hamengkubuwono IX as candidates to fill this role.

 

[esofagusJebol]

Habibie Path

This path is the more modest and realistic path. Given that Indonesian industrialization came tumbling down in 1997, the POD is thus either in 1997, or some time before that. We simply need to either butterfly away or scale down the AFC in general (the "global POD"), or severely reduce the apocalyptic impact in Indonesia (the "local POD"). Or both. The latter especially is not unreasonable: after all, no other country in Asia was hit by nation-wide anarchy and general ethnic massacres as bad as Indonesia. When compared to Indonesia, for example, Malaysia seems to not experience anything at all. This is before you also consider the IMF prescription, which both misjudged the cause of the crisis and worsened the situation.

Now how do we exactly severely remove or lessen the impact of AFC in Indonesia? I have no idea.

However with no nation-wide economic crisis, two things emerged:

1. Industrialization continues. That's good.
2. Habibie becomes the president in 2003 after Suharto retires (by then Suharto's like 82 years old). Now this is the kicker part, because Habibie (1) has almost a techno-industrialist and R&D fetish, being both an engineer and the former Minister of Research and Technology, (2) is a reasonably competent leader (after all, his administration solved the aftermath of AFC) that is also not kleptocratic like his boss, and (3) in this scenario, he will have totalitarian violent powers as a New Order dictator to do whatever the hell he wishes.

The convenient thing about Malaysia is that its industrialization is almost all through foreign investment; it produces high-tech electronics, but the brand is owned by foreign companies. Therefore, in this scenario, Indonesia need not to pursue a strategic micromanaged policy to create its own Samsungs and Hyundais. Instead, it need "only" competently pursue general things like education, fiscals, and infrastructure to attract foreign companies. Copying Malaysia (not an unreasonable thing to do, if you think about it) however will result in Indonesia becoming as rich as, well, Malaysia.

That's still far away from our target of South Korea-level wealth, although obviously this is still incredibly great. However, of course I would like Indonesia to far exceed Malaysia. If we assume that Habibie is a as much of a hypergenius as he is perceived today with at least as much foresight as South Korea's President Park, it's not impossible for Indonesia to score a few big industries.

If Indonesia can manage its industrialization (which will assume it can) and create a quite sizeable, secure middle class, I believe a less violent political reform from military dictatorship to authoritarian democracy will still happen. After all, it did in South Korea. Wholesale corruption will still be a thing, but to be honest, I don't know how much it will impair industrialization. After all, both Malaysia and South Korea was/is corrupt as hell. The largest driver of political reform, sadly (or hooray-ly depending on your personal politics), is Islamism. By the 1990s, Suharto are trying to shift its support base from the military to the Islamists, with Habibie being appointed the head of Indonesian Muslim Scholar's Association (ICMI). A President Habibie will probably be almost completely reliant on Islamist support. The result is a far more conservative Islamic Indonesia, with far more resemblance to... Malaysia. Although still far more authoritarian.

On the other hand, Islamism is only as good as it keeps the regime in national power, so we might also see Indonesia pursuing a conservative-moderate line of "Indonesianized" Islam as practiced by e.g. the Nahdlatul Ulama or Muhammadiyah mass organizations (the Islam Nusantara syncretism thing by NU is especially interesting). Heck, maybe Habibie will even include Gus Dur and Amien Rais (the two Islamic opposition leaders during Suharto's regime, each the chief of the aforementioned Muslim mass organizations) in his government.

Given the now insane power imbalance between Java and the other isles, along with more limited decentralization reforms, this might cause further grievances between Java and its other imperial colonies, I mean, its outer isles. Especially in its non-Muslim lands. (As a sidenote, Indonesian colonization, I mean, transmigration program in the outer isles will likely be even more insane in scale. Papua likely would been about 2/3 settlers by 2023).

Speaking of corruption, given the already existing model of the New Order, it is also likely that all the industries will be owned by a class of hyper-rich conglomeracies, like South Korea. They will be ethnically Chinese, but interestingly the Habibie model of Islam-backed authoritarianism likely also provides for the emergence of Muslim business elites (unlike Suharto, which deliberately kept businesses in the hands of the Chinese, so the economic leaders are dependent on him for protection from the angry racist masses). Capitalism and classism will be far more vicious and unforgiving.

I also propose a potential emergence from this: a counterculture. An Indonesia that is both rich and conservative can set the right pressure and environment for the rapid emergence of "escapist" popular culture, like how both anime and K-POP emerged for each country's respective cyberpunk capitalism and/or stringent social norms.

Indonesia, therefore, might develop its own anime equivalent.

Or not; however both anime, K-POP, and even VTubers might be even more prevalent, simply due to the country being more industrialized and internet-ized since the get-go.

Conclusion: In the Habibie Path, by 2023, Greater Jakarta is a cyberpunk far larger than Tokyo. Dense tall corporate towers pack the skies, its surface covered with bright lights and moving Kobo Kanaeru (a VTuber) advertisements. Inequality and urban sprawl is far more ridiculous and visible, the government is corrupt and far more authoritarian, the air even more chokeful of air pollution fog. The country is boiling for a populist Erdogan-style backlash, if it not already happened. If the New Order still persists, they will probably move to a China-style surveillance state, turning it into an even more of a cyberpunk.

 

[Arnold d.c]

So, with PODs no earlier than the proclamation of Indonesian independence in 17 August 1945, how do you make Indonesia as rich and industrialized as possible? Are there any possible downsides?

I would say not impossible, but it would be difficult especially within the context of Indonesian politics. Several obstacles must be acknowledged, namely:

1. Prior to WW2, the DEI economy was very much commodity-based and so when the Great Depression struck, the economy went down the toilet, with GDP per capita plunging by 20% in the first four-five years of the depression. There was some development of industry, namely textile but its growth was relatively modest.
2. Japanese occupation (1942-45) did an estimated damage of 2.3 billion guilders (in 1942 prices) or 50% of Indonesia's GDP in 1941. Aside from the famine and forced labor, large parts of Indonesia's railways, bridges and locomotives were carried away to Malaysia and Thailand for usage or scrap iron.
3. Education was very rare; the level of enrollment in primary education was 15-18% in 1930s. For comparison, the enrollment rate in Korea was 50% in 1942.

So in 1945, Indonesia has little industry, a wrecked economy and infrastructure and relatively poor human capital. There will inevitably be, I suspect, a period of political turmoil that will lead to a "Lost Decade" post-war. For Indonesia to end up in South Korea's GDP per capita from OTL 1967, its GDP per capita must grow about 13% p.a. for 57 years. There are some ways to accelerate growth:

1. No parliamentary democracy - as @GSD310 mentions, parliamentary democracy in the mold of the Dutch was unsuitable for Indonesia. The constant cabinet shuffling led to an inconsistent economic policy.
2. A better education program: Sukarno, to his credit, succeeded in increasing school enrollment in Indonesia, but it still required continuous improvement and the Indonesian education system is still behind today.
3. A political head willing to cooperate with international sources of capital early on is a major advantage. By avoiding the nationalization spree in the 1950s and engaging with foreign countries for investment, Indonesia might have seen substantial foreign investment. For instance, it could have challenged Thailand for the title of "Detroit of Asia", which it is actually doing right now on the EV front.

 

[hirsch91]

I don't know much about Indonesian history but it industrialization as well as education under the Suharto regime is reflected in the sharp decrease of Indonesian fertility rates. You can also see since the Asian financial crisis, when Indonesian industrialization stalled, their fertility rate is declining less rapidly. So if Indonesia were to become as wealthy as South Korea did, odds are their fertility rates would crash just like South Korean did. In the past 30 years, South Korean fertility rate dropped 55% while Indonesian dropped by 25%.

Indonesian population might be in the 230s rather than the 270s. But it would still have all the ingredients of a great power.

However, I'm not sure if it could have South Korean GDP per capita by now. Before the Asian financial crisis, Indonesian GDP per capita was less than 1/10 of South Korean. It would need double digit growth akin to the PRC for 30 years to catch up with South Korea on a per capita basis. Considering there's credible indications that China might have lied about their growth, I see it hard to achieve double digit growth for 3 decades straight.

 

[comrade cat]

Some folks above already mentioned the instabilities under parliamentary democracy in the early 1950s.

First I'm gonna be honest, I still quite like a parliamentary democracy system, especially compared to the original (not amended) 1945 constitution, which I found to be, uh....let's just say it is obviously a document made under the IJA titulage. Although I acknowledge the 1950s instability caused by governments that cannot keep ruling for more than a year at most under that system.

So....not long ago, I found a mechanism called "constructive vote of no confidence" in the German constitution, in which a reigning government could only be toppled in a vote of no confidence if the opposition has sucesssfully brought a sucessor with a majority vote first. If, let say, a parliamentary system is retained, but with the addition of this system, will you think this could stabilize the system somewhat? (It was said that the Prussian free state managed to stabilized its government throughout the Weimar era because of this, as opposed to the federal government who didn't have it).

And, if no, the parliamentary system still has to go, what do you think best replaced it? (other than the original 1945 constitution, pretty please).

 

[Workable Goblin]

Also, "parliamentary system" is a broad term that covers a lot of variations...a parliamentary system with only one or two major parties like Japan or the United Kingdom can be quite politically stable (even if prime ministers come and go), whereas a presidential system with many minor parties in the legislature and no stable governing coalitions will be very unstable politically (and probably quickly fall into authoritarianism where the president assumes lots of power in order to bypass the perpetually gridlocked legislature). Probably the main thing is that the electoral system has to be designed to have a relatively small number of significant parties and produce convincing majorities for the winner of elections, or at least promote the formation of stable coalitions (effectively big-tent parties).

I see the major issues with the non-authoritarian early models as not being failures of parliamentary democracy (or federalism, for another controversial subject) per se, but rather the fact that the design and implementation of those models were too influenced by the Dutch, both for obvious historical reasons (i.e., being a Dutch colony) and because the Dutch hoped to manipulate the situation to their advantage even after they were forced out. I think a federal parliamentary democracy, well-designed, could actually have been very good for Indonesia by avoiding some of the excesses that actually took place.

Anyway, going with an early PoD the best approach to development seems to be investment in "fundamentals"--primary and later secondary and even later still tertiary education (as opposed to building centers of excellence like the Indians did but not ensure universal literacy and basic education), land reform to kickstart a broad wealth base, infrastructure investment to help industries, and so on. Of course direct industrial support is not useless either, but it has to be done in a particular way focused on building up companies that are competitive in the global market (as opposed to permanently dependent on subsidies). Together a steady line in this area would likely lead to a big boom later in the century as trade liberalizes, since Indonesia will have a huge workforce and consumer market--not as big as China's, obviously, but still very large. This does not necessarily require political stability per se, merely that this model is broadly accepted politically so that successive administrations don't change the fundamental aspects of it.

One problem I should mention (which was recently discussed in the Insane Memes thread) is that it wasn't obvious until the 1990s or so that the Japanese/South Korean/Taiwanese model was actually very good for economic growth, whereas ISI and other methods were not--you had stuff like Pakistan outstripping South Korea in terms of GDP growth, which sounds absurd nowadays. So this will probably make it somewhat more difficult to keep a steady hand on the tiller.

 

[esofagusJebol]

Hatta Path

The second path involves more wanking, and honestly, I'm not too sure of its realism. But let's give it a shot.

1945-1955
In politics, the early goal of Indonesian state-building is to prevent or at least control these things:

1. Communist takeover
2. Army takeover
3. Radical Islamist takeover
4. Sukarno takeover

In governance meanwhile, the early goals are:

1. Avoid or reduce civil wars
2. Reform the military and prevent warlordism
3. Avoid the stupid wars
4. Literally the most basic of mundanity is far better than the shitshow that is post-1955 Sukarno, which involves civil war, separatism, famine, hyperinflation, and collapsing infrastructure while the president parties all day with all his wives, including the two Japanese spies he married because he was seduced by them.

As such, we will freely use several PODs.

1. Commies
Future Indonesian Communist Party (PKI) leader Aidit and the gang were actually captured by the army in September 1948 after the communist Madiun uprising, but they then escaped from prison. We will have the army execute them in this timeline, which messes with future PKI's organizational capabilities. Tan Malaka is killed as OTL, and for good measure, we'll also have Alimin dead during his partisan involvement in the Sino-Japanese war with Mao's guerilla armies. The goal is to give the momentum and leadership of the nation's left-wing post-1949 to Sutan Sjahir's Indonesian Socialist Party (PSI). Sutan Sjahrir was Indonesia's first PM, appointed because he (unlike Sukarno) was not a Jap-fascist collaborator and is thus acceptable to both the Dutch and the Americans.

2. Army
A major reason the army first distrusted and disrespected the civilian government is because of Sukarno and other civies' refusal to go on guerilla (in the eyes of both the army and my eyes, because he's scared), and instead surrendered to the invading Dutch during the Second Military Aggression, abandoning TNI and Sudirman to fend for themselves in the jungle. This is also in contrast to the guy Sukarno appointed to replace him, the conservative Muslim figure Sjarifuddin Prawiranegara, whose PDRI emergency government had to constantly be on the run from Dutch forces in a guerilla manner.

In this timeline, we will have Sukarno grow a ball and go on the guerilla, like Sjarifuddin. As the OTL independence was achieved largely through diplomacy and US pressure, instead of military actions (with the 1 March General Offensive being exaggerated OTL as by Suharto's propaganda), this won't actually change much. Structurally, the army is still plagued with problems and outsized influence, but at least the concept of a "civilian government" now has more moral command, which will become helpful later.

3. Radical Islamists
Here, we need to differentiate between radical Islamists and conservative Muslims, like Masjumi. I think without New Order's Pancasila fascism, a highly conservative Muslim Indonesia is a bit inevitable. So our focus will be to control the excesses of Islamism.

4. Sukarno
Finally, His Majestic Majesty President/MPRS Mandate Holder/Commander in Chief/Great Leader of the Revolution Bung Karno*) himself. There's a saying that "You either die a hero or live long enough to become the villain".

Therefore in this timeline, we will, like, kill him. Truth be told, I think it's the best fate that Sukarno deserves: immortalized as a god-like martyr of nationalism and democracy instead of plunging into OTL's dictatorial idiocracy.

1949 - 1955
With the PKI being fringe (either as a party or better yet a scary but otherwise not too important insurgency at the Merapi-Merbabu Complex) and the military more docile, we will just say that there is "more stability" during the 1949-1955 election era. As such, there were only two prime ministers in the period: Natsir and Soekiman. Getting MSA and American backing would be beneficial, but I don't have a clue how a Soekiman government could've passed without collapsing, so let's just say he passed something less radical. Despite ostensibly being the leader of the Islamist Masjumi party, Soekiman also actually OTL started a violent crackdown against the DI/TII Islamist rebellion, a stark contrast to his predecessor's amnesty program. The stability gives his government more power to continue the violent military operations.

Then, 1955 rolled around. It is an election of hope: to finally actually have an elected government, and to elect a constituent assembly that will create a functioning constitution. And the results are out: kinda like OTL, but:

1. Masjumi got the largest vote, thanks to the governance being not that bad and the moderate-traditionalist NU staying inside the party (which will later be important). While Masjumi is a hardline conservative party, it is also a pro-American party that literally tried to bring Indonesia to the Western Bloc OTL (and TTL, although TTL they're smarter to not push things too far). Both the PNI and PKI meanwhile were responsible for the 1957 OTL nationalization spree.
2. PKI vote is divided between PSI, PNI, and a bunch of other parties.

It is a worrying result, of course, as without a clear majority (with the Masjumi divided between Natsir, Soekiman, and NU), a potentially unstable coalition would have to be negotiated. In this uncertainty, in the days after the election results are announced, Sukarno gave a speech to praise the elections, call for national unity over partisan bickering, and support the democratic process. He gave an epic, memorable quip warning about the dangers of sectarianism, ideological radicalism, and ethnic supremacism that might tear Indonesia apart, one so good that even I can't think of one, only he can.

And then, just like that: bang! Shots rang through the air, and Sukarno falls from his podium, dead. The angry mob quickly caught its perpetrator, which after an interrogation was exposed to be a DI/TII agent reacting in vengeance for the military operations. Support for actual radical Islamism collapsed forever, with them having killed the founding father and with a saner political alternative (Masjumi) already existing. (By the 1960s, DI/TII has been annihilated).

The death also threw Vice President Hatta, which planned to resign after the elections, in the sudden spotlight as the 2nd President of Indonesia.

*(The full title of Sukarno in 1965 begins with "Paduka Jang Mulia". Paduka means "Your Majesty". Jang Mulia means "Your Majesty". I therefore translate "Paduka Jang Mulia" as "Your Majestic Majesty".

1955-1965

 

[jsb]

Java is the key.

A question at the risk of potentially annoying many Indonesians, but would a geographically smaller "Indonesia" have been easier to remain stable and grow faster? After all if most of the population is in Java and Sumatra would it matter if they lost many of the out islands at independence and concentrated on a smaller Javanese (and with Sumatran?) nation that might have far fewer political and cultural divisions?

 

[rfmcdonald]

I would argue that Indonesian industrialization and economic growth has already been a notable success, with Indonesia having seen the sorts of sustained growth that has not only transformed Indonesia but seeing Indonesia advance up the regional rankings. The Philippines in the 1960s was three or so times as rich per capita, but now Indonesia is something like a third again richer per capita.

Were it not for Marcos, Filipinos today would have been richer

Millennials earning a monthly income of, say, P30,000 could instead be earning somewhere between P90,000 to P120,000 today

www.rappler.com

Indonesia does lag somewhat behind a Thailand that is the leader among the large Southeast Asian countries, and is notably behind a Malaysia that (however) has been plugged into global economic and trade networks in a way the much larger Indonesia never was. It is also significantly behind a South Korea with its very different history.

Indonesia is not to me any sort of failure. It did not do as well as a South Korea that had a disinctive history and an exceptional relationship with the US that let it industrialize so quickly, but, well, it is a fundamentally different society in many ways. By the standards of its peers, Indonesia has done just fine.

 

[focus9912]

Habibie Path

This path is the more modest and realistic path. Given that Indonesian industrialization came tumbling down in 1997, the POD is thus either in 1997, or some time before that. We simply need to either butterfly away or scale down the AFC in general (the "global POD"), or severely reduce the apocalyptic impact in Indonesia (the "local POD"). Or both. The latter especially is not unreasonable: after all, no other country in Asia was hit by nation-wide anarchy and general ethnic massacres as bad as Indonesia. When compared to Indonesia, for example, Malaysia seems to not experience anything at all. This is before you also consider the IMF prescription, which both misjudged the cause of the crisis and worsened the situation.

I wonder if you had read @GSD310 's timeline that involves Suharto died after getting a stroke in 1997 (and thus, does not make the crisis from becoming getting basically uncontrollable)? Indonesia getting as rich as South Korea with a POD of the 1990s seem ASB though (unless there is suddenly another Korean War after the death of Kim Il-Sung, and thus wrecking the Korean economy enough to be overtaken by Indonesia),and honestly, the Habibie path even much less realistic than the Hatta path IMO (making Suharto to not be able to produce children at all is a more realistic scenario than the Habibie path to be honest).

I would say not impossible, but it would be difficult especially within the context of Indonesian politics. Several obstacles must be acknowledged, namely:

1. Prior to WW2, the DEI economy was very much commodity-based and so when the Great Depression struck, the economy went down the toilet, with GDP per capita plunging by 20% in the first four-five years of the depression. There was some development of industry, namely textile but its growth was relatively modest.
2. Japanese occupation (1942-45) did an estimated damage of 2.3 billion guilders (in 1942 prices) or 50% of Indonesia's GDP in 1941. Aside from the famine and forced labor, large parts of Indonesia's railways, bridges and locomotives were carried away to Malaysia and (Malaysia also suffered from this, with a few notable permanent closure of branch lines) Thailand for usage or scrap iron (in building the Death Railway to connect with Burma).
3. Education was very rare; the level of enrollment in primary education was 15-18% in 1930s. For comparison, the enrollment rate in Korea was 50% in 1942.

So in 1945, Indonesia has little industry, a wrecked economy and infrastructure and relatively poor human capital. There will inevitably be, I suspect, a period of political turmoil that will lead to a "Lost Decade" post-war. For Indonesia to end up in South Korea's GDP per capita from OTL 1967, its GDP per capita must grow about 13% p.a. for 57 years. There are some ways to accelerate growth:

1. No parliamentary democracy - as @GSD310 mentions, parliamentary democracy in the mold of the Dutch was unsuitable for Indonesia. The constant cabinet shuffling led to an inconsistent economic policy.
2. A better education program: Sukarno, to his credit, succeeded in increasing school enrollment in Indonesia, but it still required continuous improvement and the Indonesian education system is still behind today.
3. A political head willing to cooperate with international sources of capital early on is a major advantage. By avoiding the nationalization spree in the 1950s and engaging with foreign countries for investment, Indonesia might have seen substantial foreign investment. For instance, it could have challenged Thailand for the title of "Detroit of Asia", which it is actually doing right now on the EV front.

Meanwhile, I agree with this statement (with one minor edit) fully. Perhaps, the Dutch conglomerates would able to invest (Indonesian-built DAF car & trucks and Fokker aircrafts, anyone?) in an independent but still Dutch-aligned Indonesia. (There is a part of me that want a TL in which Fokker is actually having a large enough presence in Indonesia, and in turn are able to survive, thanks largely to Habibie became a staff of Fokker early on his aviation career and eventually becoming the leader of the company)