Global Business Guide Indonesia

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Education | Cooperating with Industry on Education & Research

A distinguishing feature of Indonesia’s universities and business schools are their close relationships with industries. Private universities are often founded by the country’s tycoons as part of their efforts to give back to the country and play a role in the education of the future generation. These intimate ties translate into curriculums being effectively molded to meet the needs of the country’s economy, being reviewed by industry players themselves as well as providing the advantage of giving students real work experience though internship programs which lead to employment on graduation.

The surge in the number of universities over the past two decades, from around 900 in 1990 to over 3000 to date, has come from the opening of private establishments with leading figures from the public and private sector as patrons. Business schools such as Prasetiya Mulya and IBII were founded by businessmen wanting to address the lack of qualified, ‘ready to work’ graduates. Universitas Pelita Harapan is part of Lippo Group, the largest real estate company in Indonesia by assets. This link is put to use when designing the curriculum to impart practical knowledge to students in concentrations such as retail and real estate management where the group holds expertise.

President University is a further example, being founded in 2001 by SD Darmono, the President Director of Jababeka the first publicly listed real estate developer in Indonesia, and Professor Juwono Sudarsono who is a former Minister of Defense. The university is found within the grounds of the Jababeka Industrial Estate which is home to 1500 local and international companies. The rector, Professor Ermaya Suradinata is focused on ensuring graduates have practical skills for business, ‘our curriculum is customised to company needs... all students undertake a two semester internship and we have a high rate of those students being taken on for full time employment.’

Such mandatory internships are becoming common place in universities around the world. Yet in Indonesia they are part of the everyday discourse in higher education to ensure that graduates have employment on finishing their studies and that industries have the right human resources with the skills they need to grow. The lack of connection between education and industry in the past has led to high rates of youth unemployment; the World Bank noted that the country’s youth unemployment is five times higher than the regional average. In January 2010 the official figure stood at 68,000 unemployed graduates out of the 350,000 graduates created every year. This challenge is being taken up by leading universities as they seek to take full advantage of their industry links to produce high rates in graduate employment.

Despite listening to the needs of industries when it comes to educating future graduates, developing a similar relationship in the needs for research has failed to materialise. Research in universities across all disciplines is still at an embryonic stage in Indonesia, but the demand for research from industry itself has been slow to come forward. Research has failed to be taken into account as part of company’s long term investment and development strategy. Dr Kim of Universitas Pelita Harapan Business School explains ‘there has been a misunderstanding on both sides, from the industry side there is a disbelief in the quality of research from universities’.

In order to overcome the challenge in promoting the potential of research, Universitas Indonesia set up PT Makara Mas as a vehicle to develop commercially viable research projects. Since establishment in 2008, Makara Mas has developed and marketed products to ensure that they find success outside of the laboratory including a foldable bicycle and a tuition fee payment system. Obtaining funding from the private sector is a persistent obstacle to realising projects and so the company has to appeal to the corporate social responsibility obligations of SOEs. Director of the organisation, Tjahjanto Budisatrio echoes the feeling of skepticism among the private sector ‘the private sector does not trust us, even if our software is cheaper, they prefer to use foreign technology as they are familiar with it. They do not want to invest in our projects as they see them as high risk and there are no facts behind them, but without financing for the pilot project we cannot produce the facts’. Through eventually spinning off commercially successful projects, Makara Mas continues to fund itself and is planning a number of interesting projects such as renewable energy from algae and further software programs.

Developing the research capabilities of their universities is a sentiment echoed by rectors throughout the education system. As they develop to build up the capacity for research centres, it opens up the possibilities for foreign universities looking to broaden their business research with a partner in a key emerging market.

Global Business Guide Indonesia - 2012

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Indonesia Education Snapshot

Number of Tertiary Education Institutions: 4,445 (2016)
Type: 91.5% Private, 8.5% Public
Students in Higher Education: 4,941,574 (2016)
Net Enrolment Rate in Tertiary Education: 22% (2014)
Relevant Law: Higher Education Law No. 12 of 2012 provides universities with the autonomy to set their own tuition fees and authorising the set up of foreign universities in partnership with Indonesian institutions.