When Indonesia finally received de jure independence in December 1949, the infant republic faced a range of serious problems, but nowhere were the problems more pressing than in the field of economic policy. In contrast with the Philippines and India, where the USA and Britain had honoured previous commitments and granted independence in 1946 and 1947 respectively, the refusal of the Netherlands to recognise the 1945 declaration of independence had led to four years of bitter and destructive fighting. Infrastructure on Java and elsewhere, already damaged during the Japanese occupation, deteriorated further after 1945, and by the end of the decade most of the important export industries were producing only a small fraction of their pre-1942 output. Smallholder agricultural output in Java was also well below pre-1942 levels. De Vries observed that many seed farms had been destroyed, irrigation systems had not been maintained and “vast areas of hill country” had been damaged by soil erosion. In the final years of the Japanese occupation, the Japanese army commandeered large amounts of rice, while the widespread issue of Japanese banknotes caused mounting inflation. Food was scarce everywhere and those with little or no land were most severely hit; most demographers concur that the population actually declined in Java after 1943, indicating a sharp increase in mortality.
* Anne Booth is Professor of Economics (with reference to Asia) in the School of Oriental and African Studies, University of London. She specialises in the modern economic history of South East Asia. Her most recent book is Colonial Legacies: Economic and Social Development in East and Southeast Asia (University of Hawaii Press 2007).