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Reflections on Indian and Chinese Communities in Southeast Asia

(Paper presented in the International Seminar on India-China Cultural Dialogue, jointly organised by the University of Madras and Fu Dan University, Shanghai, China at Chennai, India on August 7-9, 2007)

I had told Deng over dinner in 1978 that we, the Singapore Chinese, were the descendants of illiterate landless peasants from Guangdong and Fujian in South China, whereas the scholars, Mandarins and literati had stayed and left their progeny in China. There was nothing that Singapore had done which China could not do, and do better…

– Lee Kuan Yew, Memoirs of Lee Kuan Yew

No gold did they find underneath any stone they touched and turned yet every stone they touched into solid god they turned

– Visvamitra Ganga Aashutos, Mauritian poet

A comparative study of Indian and Chinese communities in Southeast Asia is yet to be undertaken by scholars specializing in Southeast Asian Studies. A perusal of the bibliography on the subject shows that there is hardly any creative work in this fascinating area. However, there are number of scholarly works analyzing the problems of Chinese and Indian communities in the region as a whole, as well as in individual countries.

The comparative perspective is relevant for two reasons. Lying to the east of India and south of China, the countries of Southeast Asia are extremely important from the foreign policy perspectives of these two Asian giants. The issue is of crucial importance because China’s bilateral relations and, to a lesser extent, India’s relations with Southeast Asian countries are rendered complex by the presence of Chinese and Indian minority groups in these countries. Equally significant is the fact that both China and India are trying to attract the considerable reservoir of capital possessed by these two communities for their economic development.

Being Chinese and Indian outside China and India has several complex facets. I am using the term Overseas Chinese and Overseas Indians because these terms are commonly used by political sociologists. But the terms are unsatisfactory and have serious limitations. The overwhelming majority of Chinese and Indians living in Southeast Asia belong to the third or fourth generations; what is more, the Chinese and the Indians have become a permanent feature of the demographic profile of these countries. They would like to be counted as Malaysians or Indonesians or Singaporeans rather than Overseas Chinese or Overseas Indians. These terms do injustice to these people, because the implication is that they are only an extension of the people of China and India. The Chinese and the Indians are slowly, but surely, emerging as distinct communities, linked with certain cultural affinities with the land of their forefathers, but also different in many respects from these societies. Cultural persistence – retaining many aspects of their culture in an alien environment – and adaptation to new surroundings are twin facets of these dynamic groupings.

Equally unsatisfactory is the term “diaspora”, which today is commonly used for the Chinese and the Indians scattered abroad. The term is Jewish in origin and does not exactly convey the complexities of these communities. The term “diaspora” was used to refer to the Jewish communities “living in exile outside of Palestine” consequent to the seizure of their homeland by external powers. The Jews were subjected to persecution and they fanned out to different parts of the world. However, throughout the centuries they hankered for their original homeland. There was a special relationship between the land of Israel and the Jewish people. However, if one analyses the spread of Chinese and Indian communities abroad, there were several “pull” and “push” factors. And, what is more, most of them do not want to return to China or India. Regarding the Overseas Chinese, Prof. Wang Gung Wu makes an interesting observation. If one subscribes to the view that there is cohesion among the overseas Chinese, it would be misleading. The fact is that, the Chinese, wherever they go, are easily influenced by their environment. They adapt to new circumstances and thus become very different from other groups living elsewhere.

Another caveat is necessary. In terms of their legal status, there are important variations among the people of Indian origin who live abroad. They could be categorized into three groups. 1) People of Indian origin who have become citizens of the countries in which they have settled. 2) All those Indians who have neither taken Indian citizenship nor citizenship of the countries of their residence. And 3) Indian citizens who have gone abroad for specific purposes. The same categorization can be applied to Chinese communities living abroad. However, the existence of two Chinas – Peoples Republic of China (PRC) and Taiwan- adds a new dimension as far as Chinese communities are concerned.

It would be simplistic and naïve to assume that the problems that these people face and what the future holds for them are identical. Their problems are intertwined with the nature of their migration, their social and economic status, the size of the community, educational attainments and the majority-minority syndrome in the countries in which they have settled. In some countries like South Africa and Southern Rhodesia, they were, until very recently, subjected to varying forms of apartheid; in Mauritius, Guyana, Malaysia, Singapore, Sri Lanka and Trinidad, they share political power; in Fiji, though they are the majority community, they have been effectively deprived from political power; in the United States, they are one of the most affluent minority groups and an object of envy and admiration; and nearer home in Sri Lanka, the people of Indian origin were converted into a merchandise to be divided between the two countries in the name of good neighbourly relations.


In this paper I propose to give only a few snapshots in a comparative perspective. To begin with, it is very difficult, in certain circumstances, to identify who are Chinese and who are Indians. In Thailand and the Philippines, to a certain extent, the Chinese have, over the years, successfully assimilated with the Thais and the Filipinos. Similarly Indian Muslims have found no difficulty in assimilating with the Malays. How can we characterize these people? Thais or Chinese? Chinese or Filipinos? Malays or Indians?

Of equal significance, the Chinese and the Indians are not homogeneous communities. The Chinese belong to several linguistic groups -Hokkien, Hakka, Cantonese, Teochew, Hainanese, Kwangsi etc; what is more, these dialects are mutually incomprehensible. The attempts made by the Government of Singapore to introduce Mandarin as the common language for all Chinese did not initially find favour with many people, who wanted to continue with their dialects. As Lee Kuan Yew, the architect of modern Singapore, described the problem: “Until the 1970’s about 80 per cent spoke dialect at home…the switch was especially difficult for grand parents…Mandarin-speaking families increased from 26 per cent in 1980 to over 60 per cent in 1990”. The Indians are also divided on the basis of their religion – Hindus, Christians, Muslims and Sikhs – and on the basis of language – Tamil, Malayalam, Punjabi, Gujarati, Sindhi etc. In Malaysia and Singapore, strangely the term Indians encompasses, Indians, Pakistanis, Sri Lankans, Nepalese and Bangladeshis.


Certain interesting details should be highlighted.

1. The Overseas Chinese presence in Southeast Asia is substantial, 26.0 million, whereas Indians are relatively negligible in numbers, 4.05 million. Except in Myanmar, Malaysia and Singapore, where Indians constitute 5.0, 8.0 and 7.1 per cent respectively, they are a microscopic minority in all the other countries.

2. The Chinese constitute 76.0 per cent of the total population of Singapore and, therefore, Singapore provides a contrast to other countries in the region. Far from being a minority compelled to adjust to the demands and pressures of the majority community, the Chinese community in Singapore sets the role model for others to follow. However, its location in the midst of the Malay world, noted for xenophobia, compels the political leadership to organize the political culture in such a way that Singapore does not become a “Third China”. Even during the anti-colonial phase, Lee Kuan Yew and other leaders used to underline this geographical reality. To quote Lee Kuan Yew, “Let us never forget that Singapore is part of Southeast Asia; that we are in the center of Malaysian peoples; that despite the fact that 80 per cent of our peoples are Chinese, we cannot escape from our environment…our geographical and ethnological positions are realities which we must face. If Nanyang becomes the symbol of Chinese excellence and of the supremacy of Chinese scholarship and learning, then, verily we will aggravate the position of overseas Chinese in other parts of Southeast Asia”. In his Memoirs, Lee Kuan Yew describes how he underlined these realities during his first formal visit to PRC in 1976. In the formal state banquet on May 11, 1976, Lee Kuan Yew declared, “History, brought together Chinese, Malays and Indians in Singapore. We are proud of our own heritage. Sharing a common experience, we are developing a distinctive way of life. By geography, our future will be more closely interlinked with those of our neighbours in Southeast Asia”. Lee Kuan Yew underscored the problems if China continued to view Singapore as a “kinsman country”. To quote Lee, “The more China embraced us as a “kinsman country”, the greater would be our neighbours’ suspicions. It was difficult because Singapore’s neighbours had significant Chinese minorities who played a disproportionate role in the economy and their economic success had aroused the jealousy and resentment of the indigenous peoples”.

3. In Malaysia, the Chinese constitute 31.0 per cent of the population. With such a high concentration of Chinese, the Malay-dominated Malaysian government cannot impose, as Indonesia does, restrictive measures like prohibiting the Chinese from engaging in retail trade in rural areas or forcing them to discard Chinese surnames and take new Indonesian names.

4. The ethnic tensions in Southeast Asia revolve around relations between the indigenous majority and the Chinese minorities. It must be highlighted that the Indians generally do not figure as a major factor in ethnic politics. I am citing below three illustrations. A) The Chinese community in East Timor was subjected to barbaric attacks following the Indonesian invasion in December 1975. As the Minority Rights Group put it: “Javanese racism was given a free rein by the Indonesian military”. During the first days of the invasion, 700 Chinese were killed. When the Indonesian soldiers entered the towns of Liquica and Maubra, they killed all the Chinese in these towns. B) Following the defeat of the United States in the Second Indo-China War and subsequent unification of Vietnam, Hanoi embarked on a series of economic measures that adversely affected the Hoa (Chinese community) in Vietnam. Between April 1975 and September 1979, an estimated 200,000 – 236,000 ethnic Chinese left Vietnam by boat to other Southeast Asian countries or to Hong Kong. Another 230,000 left northern parts of Vietnam for China. The exodus of the Hoa people, as is well known, was one of the major reasons for the Chinese invasion of Vietnam in February 1979. C) The worst anti-Chinese riots took place in Indonesia in May 1998. Because of their relative affluence and close affinity with the Suharto government, the Chinese became the tragic victims of mob fury. As Lee Khoon Choy, former Singapore Ambassador to Indonesia, has written, “They became the target of attacks, their shops looted, their properties smashed and burnt, many lost their lives and 70,000 Indonesians left the country in an exodus reluctantly. The Chinese lost altogether US$ 217 million worth of property damage and they took away with them US$ 369 million equivalent in capital”. At the height of the riots, number of Chinese girls and women were raped and some of them burnt alive. Anti-Chinese sentiments continue to simmer in Indonesia. Even as late as December 2000, during the Xmas season, the Chinese Christians became victims when fanatical Muslims attacked Churches in various parts of Indonesia.


Large-scale migration of Indians and Chinese commenced when the colonial powers began to extend their domination over Southeast Asian countries. In some countries, there was shortage of labour; in few others, the local peopled lacked economic initiatives. Under the protective umbrella of the British, the Indian labourers migrated to Burma and Malaya. The Chinese, under the supervision of labour contractors or on their own, migrated to all countries of the region. The fact that the Chinese and the Indians were industrious, and not troublesome, with no apparent interest in local politics made them desirable colonial subjects. As the colonial rule progressed, the Chinese became the most dominant group in trade, industry, commerce and the professions. In the twentieth century, another class of migrants – lawyers, doctors, teachers and administrative personnel – moved into these countries. The early migrants were “birds of passage”, but gradually transient population became settled communities. The sex ratio also began to improve.

The Chinese and the Indians were always subjected to pulls and pressures from their motherland. In the beginning, it was mainly economic and large proportion of their savings was remitted to China and India. But with the growth of nationalism, political pulls also started exerting in a big way. Just as Mahatma Gandhi’s baptism into politics took place in South Africa in defence of Indian community, the initial activities of the revolutionary movement in China were related to Chinese communities abroad. Dr. Sun Yat Sen himself was a migrant from Honolulu, who had his higher education in Hong Kong. From its inception, the Kuomintang began to enlist the support of the Chinese communities in Southeast Asian countries. The Nationalist Government, after the Revolution in 1911, started a “Ministry of Overseas Chinese”; Consulates were opened in Malaya, East Indies and the Philippines. What is more, the new government enunciated a novel principle of citizenship. The doctrine “once a Chinese, always a Chinese” came into force. It meant that citizenship went by ethnic origin and not by the place of birth. It had dangerous implications and naturally was viewed with great suspicion by the colonial governments and Southeast Asian nationalists. The Chinese in Southeast Asia gave massive financial support to the Nanking Government during the Sino-Japanese War. Finally, they united those forces that were opposed to Japan and kept the resistance movement against Japan alive in Southeast Asian countries.

Communism also came to Malaya and Singapore from China. It was from among the local Chinese that the Malayan Communist Party (MCP) was able to recruit its revolutionary followers and train its militant leadership. Very few Malays and Indians joined the ranks of the MCP. In Malay perception, the MCP was Malayan only in name, but was Chinese in practice. It was the inability of the MCP to build up a multi-racial following, which led to its eventual downfall. The powerful ideological support that the Chinese Communist Party (CCP) extended to the MCP during its struggle for power after the Second World War created further misgivings among the Malayan nationalists. They viewed the Chinese minority as a potential “fifth column” of China.

Suspicions about China’s expansionist designs and the CCP’s linkages with the local communist parties stood in the way of normalization of diplomatic relations between Beijing and the anti-communist countries of Southeast Asia. Complicating the situation was the subtle distinction that China made between party-to-party relations and government-to-government relations. For several years, the underground broadcasting stations of the pro-China communist parties were functioning from South China. However, today since the communist ideology has been put into cold storage by Chinese leadership, the issue of export of communism is no longer a thorny issue.

Compared to the Chinese, political consciousness among the Indians was comparatively less. Most Indians were plantation workers and had no interest in politics. But with the growth of nationalist movement in India, the educated Indians began to take a lively interest in the political developments in their motherland. This received a further impetus after Jawaharlal Nehru’s visit to Malaya in 1938. During the Second World War, the Indians rallied round the Indian National Army and joined the Azad Hind Fauj in large numbers. The Thondar Padai sensitized the Indians and gave them the proud feeling that they were in the vanguard of Indian independence.


Given the pervasiveness of ethnicity in all Southeast Asian societies, it is necessary to highlight the fact those ethnic differences express themselves clearly, especially in the economic sphere. Some of the accepted stereotypes are clearly exaggerated, but they still provide important clues to appreciate mutual perceptions. It is said of the Chinese that they are the ‘most obtrusive, the most tenacious, the most feared, a people whose virtues of thrift, self help and industry have almost become vices”. In contrast, it is said of the Malay, “Nature has done so much for him that he is never really cold and never starves. He must have rice, but the smallest exertion will give it to him…Whatever the cause, the Malay of the peninsula was, and is, unquestionably opposed to steady continuous work”. The Indians, being dependent on the plantation owners for their living, developed their own peculiar characteristics. They were like creepers around a tree, were generally law abiding and, what is more, fatalistic about their approach to life.

The reasons for these differences are not difficult to understand. The Chinese economic monopolies came as a response to a variety of historical and social factors. The Chinese, who came to Southeast Asia, hailed from South China; they were exceptionally hardy and determined and plunged into business, which were shunned by indigenous communities. Once established, monopolies tend to perpetuate themselves, unless broken by state intervention. Being pragmatic and practical, the Chinese do not swim against the tide and always try to be on the right side of the authorities. Behind every successful Indonesian General, there was invariably a wealthy Chinese businessman. The co-operation and interaction between Chinese businessmen and military generals is generally referred to as “cukongism”. “Cu” means master and “Kong” means Godfather. One of the notorious Cukongs was Liem Sioe Liong, a good friend of Suharto family. His business interests spread over clove, flour, cement, petro-chemicals, property development and banking. He owned the largest business conglomerate in Indonesia. Suharto used the Chinese businessmen, because they never threatened his political position. What Suharto underestimated was the growing opposition from the students and the general public. As Lee Khoon Choy vividly describes, the Pribhumis, people who belong to the lowest strata of society, “hated the Suharto regime, because it sided with the Cukongs. They hated the Cukongs more, because, in their opinion, they were looting the country and exploiting the poorer classes”.

Describing the economic achievements of the Chinese, which is out of all proportion to their numbers, the National Review commented, “In Indonesia, where they are less than 4 per cent of the population, they have 75 per cent of the wealth. In Thailand, the Chinese represent 8 per cent of the population, but control 80 per cent of the wealth. The numbers are even more amazing in the Philippines; less than 2 per cent and 70 per cent. Even in the backward economies – Burma, Cambodia and Vietnam – Chinese entrepreneurs are behind the vast majority of private business ventures”. This is not to imply that all Chinese are billionaires, but most of the business tycoons are Chinese. The overwhelming majority of the Chinese belong to the middle class and are either wage earners or self employed. And invariably they are the first victims in times of ethnic conflict.

In contrast, the indigenous people had abundance of land resources; they generally practiced a distributive rather then an acquisitive ethics in respect of wealth and resources. Their elites are more interested in retaining their political and social dominance. What has been the Chinese response? Prof. Wang Gung Wu has written, “The Chinese have adapted to their politically disadvantaged position by sharpening their entrepreneurial instincts, by learning modern business, financial and industrial skills and finding partners with cross-national enterprises, especially with Western and Japanese multi-national organizations”. As a minority group, subjected to discrimination and persecution, the Chinese have displayed remarkable perseverance, which unfortunately is not so evident among the Indians.

Southeast Asian countries have been undergoing remarkable economic transformation, though the economic miracle suffered serious setbacks when an economic crisis gripped these countries few years ago. Unfortunately the contribution of Indian minority groups to this economic transformation had been negligible. What is more tragic, the fruits of economic development have not percolated to the poorer sections of Indian society. Though the Indian Chettiars played a crucial role in the economic development of Southeast Asia during the colonial period, they invariably brought their profits to India and did not develop any economic stakes in the region. The Indians today own only 1.5 per cent of Malaysia’s national wealth, compared to 19.4 per cent for the Malays, 38.5 per cent for the Chinese, the balance being held by the foreigners. NJ Colleta vividly illustrated the conditions of Indian labourers, “Ignored by government policy, hidden from mainstream Malaysian society, the plantation Indian labour force indeed becomes Malaysia’s forgotten people”. The Malaysian Indian Congress, which represents the Indian community in the ruling Barisan Nasional, does not have much political clout and has not been able to do anything substantial to improve the lot of the Indians. Unlike the Chinese, who lay great emphasis on education, education is not considered as an investment by the Indian working classes. Describing the plantation schools, Michael Stenson has written, “The estate Tamil schools are often mere apologies, their rooms inadequate, their teachers untrained and they provide no opportunity for progress in higher education”. A committee appointed by the Malaysian Government to study the problem of dropouts, popularly known as the Murad Committee, had the following comments, “Plantation school children are under achievers, early leavers and acquire jobs of low socio-economic status”.

A notable feature of the Indian community in Malaysia is its changing socio-economic profile. In 1970, 47 per cent of the Indians were engaged in agriculture, 74 per cent of whom in the plantations. With rapid economic expansion and diversification of the economy, the plantations have been converted for other purposes, including construction of luxury homes. The uprooted Indians were paid only a pittance as compensation. They naturally migrated to urban areas and joined the squatter population. Few years ago, Samy Velu, the President of the Malaysian Indian Congress, deplored the plight of thousands of estate Indian workers “living in squalor in slums in dozens of long houses and squatter settlements all over Selangor”.

Aliran, the well-known journal of Malaysian Reform Movement, provided statistical details, which make disturbing reading. Forty per cent of the serious crimes in Malaysia are committed by the Indians; there are 38 Indian-based gangs with 1,500 active members; during the last few years, there had been a hundred per cent increase in the number of Indian gangsters; Indians recorded the highest number of those detained under the Emergency Regulations and banished to Simpang Rengamn prison. In the field of social woes, it is the same story. In Kuala Lumpur, 15 per cent of the squatters are Indians; they have the highest suicide rate; 41 per cent of the vagrants and beggars are Indians; 20 per cent of the child abusers are Indians and also 14 per cent of the juvenile delinquents.

The communal clashes that took place between ethnic Indians and Malays in early March 2001, which took a toll of six lives and a number of wounded people sent shock waves throughout Malaysia. It was the worst ethnic riots since May 1969. The Indian involvement this time – five of the six killed were Indians, the other was of Indonesian origin – is a sharp reminder that in Malaysia’s progress towards prosperity, the Indians had been left behind. The Chinese are firmly entrenched in trade, business and industry; and the status of the Malays had been steadily improving due to the energetic drive of the Government since the New Economic Policy was launched in early 1970’s. Compounding the tragic situation, many Indians in the urban areas are not only getting marginalized, but also lumpenised.

The Indian minority in Myanmar is not only a disadvantaged, but also a discriminated group. Under the British, the Indian community enjoyed a privileged position. Burmese nationalism, when it developed, had twin facets, one struggle against British colonial domination and second, the struggle against the Indian compradore classes. The 1930’s witnessed number of anti-Indian riots. On the eve of independence, the Chettiars realized that their heydays are over, some of them disposed off their lands and returned to Chettinad. The Burmese nationalists, true to their pledges, introduced radical land reforms and the absentee Indian landlords were hit adversely. The Chettiars complained about non-receipt of compensation and, even when it was paid, it was inadequate. When the Burmese Government implemented the Socialist Programme in the 1960’s and nationalized even retail trade, it sounded the death knell of the poorer sections of Indian population. Many of them lost their savings, returned to India and had to start their lives from a scratch. The Burmese repatriates complained that they lost their savings, their properties were confiscated and their women were not even permitted to bring their Mangalya Sutras.

Despite the good equation between Jawaharlal Nehru and U Nu, the compensation due to the Indians was not settled. As a result of these discriminatory policies, including non-conferment of citizenship, large number of Indians had to leave Myanmar. The remaining continues to live in Burma as a disadvantaged group. The Singhvi Committee Report mentions, “A majority of the present day Indian community in Myanmar is not well off. In the Yangon area, which has its largest concentration, most of the PIOs are engaged in jobs like domestic help, mechanics and construction workers, while others are engaged in petty trade”. Indian faculty members dominated the educational scene, during the British period, but today there are hardly any Indian students and teachers in Burmese universities. Between 1964 and 1988, Indians were denied admission to universities and professional courses. The community has absolutely no political clout, the military junta bans political activities and there are no Indian political organizations.


It would be highly instructive and worthwhile to compare and contrast the policies of China and India towards their overseas populations in Southeast Asian countries. These policies should not be viewed in isolation, but have to be studied as an integral part of their overall foreign policy objectives. It is also necessary to remind ourselves that Beijing’s foreign policy has undergone sharp twists and turns. Naturally, the consequences on the Chinese communities in Southeast Asian countries had also varied from time to time.

The emergence of China as a united country, after centuries of foreign domination, created a sense of immense pride among the Chinese communities in Southeast Asia. Soon after the Revolution, the Chinese Government formed the Overseas Chinese Affairs Commission. Through radio broadcasts, China appealed to the Chinese to send the children to homeland for education; it also appealed for remittances from the Chinese for the development of China. The CCP denounced the newly independent governments as “running dogs of imperialism” and extended powerful vocal support to communist parties. In the 1970’s, when PRC began to win friends and influence people in Southeast Asian countries, it revised the earlier overseas Chinese policy. In 1969, the PRC began to insist that the overseas Chinese should apply for visa for visiting China. Previously they had been allowed free entry. The Chinese Government also gave up the principle of Jus Sanguinis (the law of blood) that any person descended from a Chinese father was automatically a citizen of China. The Chinese leaders began to emphasise that they did not recognize the principle of dual nationality. China encouraged the Chinese to take up the citizenship of those countries in which they have settled; those who wanted to remain Chinese nationals could do so, but they must abide by the laws of the countries of their residence.

It must be stated that the status of the Chinese and the Indians depended on the nature of nation building experiments and the majority-minority syndrome in individual countries. The ideal situation is the establishment of a political system, which provides for the harmonious co-existence of multiple identities. We must distinguish between citizenship and nationality. Citizenship implies political loyalty; one can be a citizen irrespective of the nationality to which he belongs. Nationality implies a cultural group, with its own distinct culture. The ideal nation building process is one in which a Chinese can speak Chinese language, follow Chinese culture and follow Chinese traditions, while being a citizen of Malaysia or Indonesia. But the problem arises because in many newly independent countries, the indigenous majority wants to build the nation on the basis of the language, religion and culture of the majority community

It is my submission that whenever China followed an assertive policy towards the Chinese communities in Southeast Asian countries, it harmed the interests of the Chinese minorities and also resulted in strains in bilateral relations. A few examples are given below to substantiate this point.

The period from 1949 to 1954, when the “free world” was ostracizing China, synchronized with Beijing’s policy of powerful ideological support to armed communist struggles in Southeast Asian countries. In 1951, the British Government in Malaya, as a part of the counter insurgency operations, deported a few Malayan communists to China. General Templer, during this period, was also vigorously following the policy of quarantining the local Chinese into “New Villages”. There was considerable resentment among the local Chinese and the press in China sharply criticized the British policies. In early 1951, China declared its intention to send an investigation team to Malaya and requested the British Government to provide facilities for relief and welfare work. The British Government bluntly refused. In the face of this firm stand, China began to downgrade its criticism. Beijing had no other option, but to accept the Malayan communist deportees.

The second illustration pertains to Indonesia. From the mid-1950’s Sino-Indonesian relations began to improve in a big way. Sukarno was an ardent votary of non-alignment; Indonesia repudiated the concept of two Chinas and upheld the legitimacy of the PRC. The improved relations paved the way for the signing of the Dual Nationality Treaty on April 22, 1955. The Treaty, which was a landmark in China’s policy towards Overseas Chinese, contained the following important provisions: 1) Chinese, designated as nationals of both PRC and Indonesia, would formally choose the nationality of one country within two years after the Treaty was ratified. 2) The citizenship of those, who failed to choose, would be determined by the nationality of their fathers. 3) China pledged that those who remained as Chinese nationals would abide by the “laws and customs of Indonesia” and not “participate in political activities”. By implication, it meant that China would not interfere in the internal affairs by influencing the Chinese minority. 4) Indonesia, on its part, pledged to “protect the proper rights and interests of Chinese nationals”. It was assumed that this provision could act as a restraint on discriminatory legislation against Chinese nationals. Chou En Lai proclaimed that neither China nor Chinese communities posed a threat to Southeast Asian countries and expressed China’s willingness to negotiate agreements with other countries on the lines of the Dual Nationality Treaty.

Despite the lofty objectives, the Treaty became a source of internal discord in Indonesia. While the PRC ratified the Treaty in December 1957, on the Indonesian side there was strong opposition from the Indonesian army, local capitalists and anti-PKI political forces. A crisis was precipitated in May 1959, when the Department of Trade revoked the trading licenses of aliens in rural areas; it was followed by a decree empowering the army to remove aliens from their places of residence for “security reasons”. China was taken aback and appealed to President Sukarno to reconsider the decision as the legislation violated the spirit of the Dual Nationality Treaty. China could not influence the Indonesian Government to rescind the legislation. Beijing was faced with a serious dilemma. It did not want to break its carefully nurtured relations with Jakarta; nor could it afford to let down the Indonesian Chinese. Beijing, therefore, adopted another stance; it tried to use economic leverage to force Sukarno to reconsider the decision. In December 1959, Beijing appealed to the patriotism of the Indonesian Chinese and asked them to come back to China. Nearly 1,19,000 Chinese returned to China. The Treaty was ratified by Indonesia in 1960. However, it was repealed in 1969. The incident illustrated the helplessness of China to protect the interests of Chinese minorities. It is also interesting to note that Burma, which expressed a desire to sign a similar treaty with China in 1955, revised its decision in the light of the Indonesian experience. As Stephen Fitzgerald has written, “In Indonesia, there was continued discrimination against the Chinese, whether nationals, dual nationals or Indonesians of Chinese descent”. Following the downfall of Sukarno and the virtual collapse of the Jakarta-Peking axis, the Indonesian army began to liquidate the PKI cadres. The Chinese in Indonesia also became the victims of oppression. Beijing once again realised that it had no diplomatic means to ensure the safely and security of the Chinese in Indonesia. In May 1966, Beijing announced that it would send ships to repatriate Chinese wishing to leave Indonesia. Nearly 10,000 Indonesian Chinese returned to China during this period.

The Cultural Revolution – when China was embroiled in unprecedented internal turmoil – had its adverse impact on the Overseas Chinese. The Ministry of Foreign Affairs was sharply criticized by the Red Guards and many senior officials were removed. The ideological momentum spread from China to the outside world and the pro-Beijing communist parties in Southeast Asia re-embarked on armed struggles. The Red Guards arrived in Burma and in June 1967, the local Chinese wearing Mao badges, held demonstrations protesting against Burmese treatment of Chinese minority. Number of Chinese was detained. Rangoon also refused permission for an investigation team from China to study the incidents. Even Prince Sihanouk was provoked to denounce the Red Guard type of activities of the Chinese in Cambodia and the attempts to “export Cultural Revolution”.

Despite diplomatic reconciliation with Southeast Asian countries in the post-Cultural Revolution era, Beijing could not do much to ameliorate the conditions of the Chinese community in Vietnam. After the unification of Vietnam, Hanoi, for its own reasons of rapid economic integration, passed legislation and took administrative steps, which adversely affected the Hoa people. These measures were taken in the backdrop of the rapidly changing international situation in Indo-China – the escalation of Sino-Vietnamese rivalry; the consolidation of close diplomatic, economic and security relations between Hanoi and Moscow; China’s support to the anti-Vietnamese genocidal Khmer Rouge; the Vietnamese invasion of Cambodia and the installation of the Heng Samrin Government; Beijing’s convergence of interests with ASEAN and the United States to checkmate Vietnamese expansionism; and, above all, China’s punitive expedition against Vietnam in February 1979. This was the first instance when China resorted to an armed conflict to protect, among other things, the interests of the overseas Chinese and also “teach a lesson” to Vietnam. From the point of view of China’s policy towards Overseas Chinese, the Sino-Vietnam War was an unmitigated disaster. It did not contribute to the overall improvement of the situation. Thousands of Chinese left Vietnam during this period.

Compared to the severe setbacks in China’s policy towards Overseas Chinese, New Delhi was relatively in an advantageous position. As noted earlier, the Indian minorities in Southeast Asia do not evoke the jealousy and hatred of the indigenous peoples. They are small in number, politically they do not have much clout and economically most of them belong to the poorer strata of society. This is in striking contrast to the attitude of the indigenous people towards the economically powerful, culturally exclusive and politically aggressive Chinese minorities in Southeast Asia.

Because of the nationalist heritage and the keen interest that the Indian nationalist leaders took in the welfare of overseas Indians during the struggle for freedom, it was expected that India would adopt a more forward looking policy that would enhance the status and dignity of these peoples and India’s standing among them. In a Message to the Indian National Congress in 1939, Jawaharlal Nehru said, “India is weak today and cannot do much for her children abroad. But she does not forget them and every insult to them is humiliation and sorrow for her. A day will come when her long arm will protect them and her strength will compel justice to them”. The hope that New Delhi would adopt a meaningful policy has been belied. Even Jawaharlal Nehru admitted, “I entirely agree with any criticism that may be made that we have not been able to do anything substantial in regard to Indians in the British Commonwealth”. What is more, there is no public consciousness or even awareness of the problems faced by the Overseas Indians.

Two illustrations are given below to examine India’s policy towards Overseas Indians in Southeast Asia. The first relates to the status of Indians in Burma, where, unfortunately New Delhi attached greater importance to the improvement of state-to-state relations rather than protecting the legitimate interests of the Indian community. Soon after independence, the Burmese Government initiated radical land reforms, which hit the interests of the Indian Chettiar community. A total of 27 lakh acres of land, 14 per cent of the total cultivable land in Burma, was nationalized. The market value of the land was estimated at Rs. 70 crores. Despite the excellent equations between New Delhi and Rangoon, India could not persuade Burma to pay adequate compensation to the landlords. According to informed estimates, by the end of 1961, only Rs. 1.75 crores had been paid as compensation. During the second wave of nationalization in the 1960’s under General Ne Win, in furtherance of the Burmese Way to Socialism, Rangoon nationalized the petty retail shops owned by the Indians – 12,000 shops with assets worth Rs. 15 crores were taken over by the government. What is more tragic, the Indians were not even allowed to repatriate their savings. The repatriates complained of demonetisation of currency notes, expropriation of properties, confiscation of valuables and unimaginable humiliations. According to a Policy Note issued by Government of Tamil Nadu, from June 1963 onwards, 1,44,353 repatriates from Burma have returned to India. Even after a lapse of forty years, the compensation due to these people has not been settled. New Delhi’s official stance had been that nationalization was strictly a matter of domestic jurisdiction.

A crisis in Malaysia on the question of work permits was averted by New Delhi, thanks to the behind the scenes diplomacy by the Indian Government. In order to solve the acute problem of unemployment, the Malaysian Government in 1968 introduced the system of work permits for non-citizens in specialized categories. In 1969, Kuala Lumpur announced that the work permits would not be renewed, which, for all practical purposes was a warning to non-citizens to quit their jobs. If the Government had strictly enforced the rules, 55,000 Indian labourers would have lost their jobs. The Government of India and the representatives of the Malaysian Indians were able to persuade the Government to make modifications in the regulations. Kuala Lumpur agreed to speedily dispose off the applications for citizenship; those who applied for citizenship would be given employment passes. Those who were eligible for citizenship could also apply for it during the work permit period. If the citizens were not forthcoming, non-citizens could continue in their jobs. The last concession was a boon for the Indians, because Malays at that time were unwilling to work in the plantations. A few months later, the Malaysian Government extended the work permits of all those who had applied for citizenship. However, the communal violence, which took place in Malaysia in May 1969, had a traumatic impact on the minority groups. Nearly 60,000 Indians voluntarily returned to India during this period.


The liberalization of the Indian economy and the efforts made by the Government of India to attract investments from the people of Indian origin have given encouragement to sections of Indian communities living abroad to demand that New Delhi should introduce dual citizenship. To many, dual citizenship means an affirmation of Indian nationality and identity. They also feel that dual citizenship would facilitate free movement into India and back, enable them to acquire moveable and immovable property without the clearance of the Reserve Bank and further promote their participation in trade, investment, industry and philanthropy. In March 1999, the Government of India introduced the PIO cards to meet the aspirations of the people of Indian origin. On a payment of US Dollars 1000, the PIOs, in certain specified countries, could acquire a PIO card. The card would enable them to enjoy parity with the NRIs in respect of all facilities in economic, financial and educational fields. The scheme turned out to be a failure. According to the Singhvi Committee Report, only 1,100 persons of Indian origin acquired the PIO card.

In the course of the Pravasi Bharatiya Divas in January 2003, the Government of India announced its decision that New Delhi had decided to confer dual citizenship to NRIs in few countries. The Home Minister announced certain qualifications – dual citizenship had to be applied for and this provision would not give them the right to vote. The 16 countries identified are USA, Canada, United Kingdom, Netherlands, Italy, Ireland, Portugal, Switzerland, Greece, Cyprus, Israel, Australia, New Zealand, France, Sweden and Finland. It was also explained that the countries concerned should also introduce reciprocal legislation.

Two comments are in order. The countries identified are parts of the developed world. The overwhelming majority of the PIOs live in South and Southeast Asia, African countries and Caribbean. All of them are excluded. Second, citizenship implies both rights and duties. Those who are conferred dual citizenship are entitled for certain rights, what are their duties towards India? The Government of India is silent on this vital matter. What is more, dual citizenship implies dual loyalty and if this provision were introduced at a later date to the countries of the developing world, it would make the task of integration of the Indian minority groups in the host countries extremely difficult. The Indian communities in these countries are in the painful process of integration with the indigenous peoples and any hasty decision would endanger their safety and security in moments of crisis in bilateral relations. I submit the best way to fulfil the demands and aspirations of the PIOs is to liberalise the PIO card, so that they can enjoy all the facilities (except the right to vote) as the NRIs are at present entitled to.


It is well known that the rapid economic transformation that has taken place in China during recent years had been facilitated by the capital and enterprise of the Chinese communities living abroad. The Chinese outside China constitute only 4 per cent of China’s population, but their income is two thirds as high. The Chinese business communities, especially in Hong Kong, Taiwan and Southeast Asian countries, have built up power business networks – bamboo networks as they are called – and they virtually control the economies of these countries. Since 1995, Chinese based in these countries have contributed nearly 75 per cent of the average annual Foreign Direct Investment inflows of US 40 Billion dollars into China.

New Delhi’s concerted efforts to attract capital and technology from Indians living abroad have just begun. Unlike in the past, when New Delhi used to look upon educated Indians leaving for foreign countries as “brain drain”, it looks upon them now as “brain bank”. Sadly, the overwhelming majority of people of Indian origin living in developing countries are not Kamdhenus, as they are comparatively poor and do not have the resources to invest in India. As pointed out earlier, the Indians who constitute 8 per cent of the population of Malaysia, own only 1.5 per cent of the national wealth.

Dr. C. Rangarajan, former Governor of the Reserve Bank of India, has made a systematic study of investment inflows into India. He has drawn attention to sharp fluctuations in investments made by the NRIs. It began with US Dollars 63 million in 1991-92, which rose to US Dollars 715 million in 1998-99, and finally dropped to US Dollars 62 million in 1999-2000. Recent years have witnessed an unprecedented upsurge in foreign exchange reserves. According to a study made by the Reserve Bank of India, the increase in inflows had been by way of current account surplus, non-debt creating capital inflows and asset revaluation consequent to dollar depreciation. The study further highlights the fact that there had been an increase in NRI deposits during April-November 2002 by about US Dollars 2.1 billion.

How does one explain the increase in NRI remittances? Many analysts have attributed the increase to few factors. Since July 1999, the Government of India and the Reserve Bank have taken several steps to liberalise the opening and operations of foreign currency accounts. Unlike in the years of foreign exchange stringency, the restrictions on remittances have been substantially loosened. Foreign Exchange Regulation Act 1973 have been repealed and replaced by Foreign Exchange Management Act. NRIs need no longer feel that money sent to India cannot be taken quickly to meet their needs abroad. The attraction of keeping their money safely in Swiss Banks or other European banks have lessened. There are also tax simplifications in dealing with income, gifts, capital gains etc. The NRIs, so to say, pay flat rates, which is lower than the rates applicable to residents within India. More important is the interest differentials in bank deposits. While the rates in US and European countries have been substantially reduced during the last few years, the Indian interest rates are attractive. The Reserve Bank’s management of the rupee rate has been admired globally and the rupee has remained steady and in line with market rates. Lastly, after September 11, 2002, the US and European authorities have tightened the operations of bank accounts by foreigners, especially from those from the Arab and Asian countries. There is no longer the permissiveness and openness in their supervisory methods. This factor would have led many NRIs shifting their accounts to other countries and perhaps to India also as they consider India now as a safe haven.

How long will this phenomenon last? Only time can provide an answer. However, it must be pointed out that there is a basic difference in the attitude of the Chinese and the Indians towards their homeland. As IG Patel, the distinguished economist and administrator, remarked few years ago, “The non-resident Indians may have their heart in their homeland, but they prefer to keep their cash elsewhere”.


What are the future prospects of Overseas Chinese and Overseas Indians in Southeast Asian countries? The future would depend upon the good will, co-operation and the extent of integration taking place in their respective societies. What gives hope is the remarkable resilience displayed by the Chinese and the Indian communities in Southeast Asia.

(The writer, Prof. V. Suryanarayan, is Director and Senior Professor (Retd.), Centre for South and Southeast Asian Studies, University of Madras. This essay is based on author’s earlier writings on the subject. He is also associated with the Chennai Centre for China Studies.)

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