Well that could cause troubles after Independence (if Independence goes along roughly as per OTL). Now, let's assume this newly independent state decides not to join the Commonwealth as a Dominion. Lets call it the United States of the East Indies with, one assumes, a federal capital at Singapore. Now, the USEI has two important factors differentiating it from OTLs Malaysia and Indonesia respectively.
Firstly, by including the Indonesian Archipelago, you take away the relatively unified Malay culture that modern Malaysia has (as the Malays of the Archipelago are much more culturally diverse than those of the Peninsula). Secondly, you take away Java's dominance (as Java now has the Peninsula to balance it demographically).
This gives us a federal republic which, like India, probably has an Anglicised elite running the place. Thanks to the British, the vast Archipelago is probably somewhat more developed than the Dutch left it IOTL. This gives us a big, relatively stable, relatively prosperous nation in SE Asia. One which, incidentally, will probably be a very good ally for the US during the Cold War (assuming, of course, that that isn't butterflied away by British dominance over the East Indies during the 19th and 20th C). In any case, it gives Australia a quite well developed and much larger Northern neighbour. I don't know if an apartheid type policy would go down so well in those circumstances.