[quote=@Mihndar]
Though I'll concede that the population of people reconciled to the government would be small, I still think that the natural resources afforded by Indonesia and whatever other possessions they might have would bolster Japan's economic growth, and considering Japan had a larger economy than China all the way until the 2000s (and that's even with Deng's reforms, which presumably would not happen in this universe) they would still have an industrial capacity to outproduce them in terms of war assets even if they can't match their army in terms of numbers. And that industrial capacity would be primarily geared towards military production, unlike in modern-day Japan.
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Having the raw materials doesn't mean they're a larger economy, since you still need to refine them into a usable industrial product. And then you need to transform the industrial product into an end product like a tank or a ship.

Japan may have the capacity to do that. But it'll only be for their national armory and it'll probably all be in Japan since Indonesia would be too dangerous. And the stuff they produce may not even come back to them. With raw Indonesian produce they're really a sort of a bottom of the barrel western economy. Like the Balkans now, Central America, and much of Southern America (hell, even Indonesia itself. All that "rich land" and they're certainly 'murika 2.0) they wouldn't have the internal industrial capacity. The raw material they pull out is basically useless to them because they don't have the infrastructure. And if they build that they'd be entering into competition of manufacturing and higher-tier economies like the US, Europe, or even China itself. The US and Europe could probably bankrupt Japanese efforts too since they're so established.

And with as minimal an industrial base at home as Japan has I doubt they'd be able to develop Indonesia.

But that's even if they can put into the budget the subsidies while balancing police efforts in their colonies and handling political radicalism from both sides of the fence.