This paper uses a study of the withdrawal of English as a medium of instruction in Indonesian schools to examine the role of language in nation-building using the sociological concept of imaginary signification. The main reason for the withdrawal is located in the tension between two main imaginary significations of the nation's identity. The government saw Indonesia in terms of its economic ambitions. Indonesia was to enter the global knowledge economy, and the education system was to provide the human resources to do so. The teachers understood the use of Bahasa Indonesia in the education system as the means to reproduce children into the nation. We argue that the withdrawal of English as the medium of instruction policy was the result of the tension between these two different representations of national identity.