Global Business Guide Indonesia

Education | Education in Indonesia: Overview

Since the 1980s, Indonesia’s education system has been seen as in decline in comparison to neighbouring countries such as Malaysia and Singapore that have seen rapid improvements, even obtaining global recognition. Indonesia’s education system has taken a very different course in development to that of its neighbours due to the unique conditions that it faces in terms of size of the population and the regional disparities of it’s 33 provinces. Today, the challenges and opportunities posed by the education system reflect the uneven nature of the country’s development. The government, through the National Education Ministry, must balance its goals of guaranteeing the right to free primary and junior secondary education to all citizens, as well as raising the quality of its universities to compete on the international stage.

The passing of the 2007 law by the House of Representatives guarantees 20% of the state budget towards education, in 2010 this equated to approximately $26 billion USD. However, in practice this funding becomes thinly spread to cover the costs of basic education, teachers salaries as well as research funding. How such funding is distributed is also difficult to monitor under the decentralised system as it is controlled by the local authority. At a basic level, international aid programs have been responsible for the construction and running of thousands of primary schools throughout the country such as the Basic Education Program with the Australian Government providing $500 million USD in aid and the creation of 2000 schools (as of 2010). Education has undoubtedly seen vast improvements in the past decade with the literacy rate at 92% and school enrolment levels rising steadily. Ensuring accessibility to schooling remains an ongoing challenge and one that cannot be solved by education spending alone. Improving the country’s infrastructure through roads and public transport in the most remote regions will ensure that the schools that have been built will serve all those that they are intended for.

To improve access to further education and ensure equal opportunities, the leading state universities reserve over half of all places for academically gifted high school students from across the country. Teachers in some of the most remote regions are asked to identify students that have a promising academic record for advanced admission to university. Scholarship programs have also been implemented by the government to give the most promising students from low income families the opportunity to make the most of their talents by providing funding for higher education. The program called ‘Bidik Misi’ under the National Education Ministry, provided 200 billion RP in scholarship funding for 20,000 students in 2010. Another program gives the opportunity for winners of an international olympiad held every year to study at the world’s leading universities fully funded by the state. The effectiveness of these programs has come under scrutiny as put into perspective, these scholarships impact a very small part of the nation’s youth considering that 27% of the total 250 million population are under 15 years of age. In addition, the country’s most disadvantaged children are often unable to make it to the stage of education where the scholarships are awarded, due to financial pressures.

Vocational schools were set up from the 1970s by the Indonesian government as part of its efforts to reduce unemployment and to build up the capacity of its future human resources. These schools have risen in quality since the ‘Vocational Education Strengthening Project’ by the World Bank and the Asian Development Bank, initiated in 2006. Today there are 8,399 vocational schools across the country catering to 3.9 million students that will go on to take up jobs in key areas where skilled labour is needed such as automotive manufacture. These schools have become increasingly popular with enrolment up by 11% in 2011 from the previous year, as they meet the needs of families who lack the finances to put their children through higher education but provide reliable employment opportunities.

Despite the ring fenced 20% of state spending on education, only 1.2% of total GDP is actually spent on tertiary education compared to 2.1% in Malaysia (2007). Out of this 1.2%, only 25% is provided by the state with private sector spending making up the remainder. This illustrates that tertiary education coverage still remains low in Indonesia. Improving access and quality in higher education is where the country faces some of its greatest challenges to not only compete in light of the ASEAN one market, but also in the future of its workforce and goal to create a knowledge based economy. Indonesia’s higher education system is therefore at a critical stage in the lead up to 2015 that will see it’s workforce competing on a regional scale. The National Education Ministry is determined to raise the standards of education through its medium and long terms goals to rid the country of substandard universities and ensure that teachers have at least a 3 year Bachelors qualification or equivalent by 2015. To ensure the country’s successful development, universities must be in tune with the needs of the private sector and foreign education providers should not miss out on the huge domestic demand for high quality education from the primary to the tertiary level. With education and lack of qualified human resources often cited as one of the greatest obstacles to doing business in the country, failure to raise the bar on a country wide level will have far reaching effects on the nation as a whole.

There are immense benefits to be found on both sides of a relationship between Indonesian universities and an international institution. Indonesia needs to absorb the best practices of the world’s leading institutions but has plenty to offer in terms of its unique cultural diversity and promising economic position. The announcement by President Obama in November 2010 of $165 million in investment over the next 5 years to strengthen Indonesia’s education system and promote exchanges is just one example of what will be many more international relationships of mutual benefit. Indonesia has found natural partners in neighbouring Australia as well as its historical relationship with the Netherlands but considering the sheer size and scale of the country, the opportunities to extend ties globally are boundless.

Global Business Guide Indonesia - 2012

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