Global Business Guide Indonesia

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Education | Indonesia’s Higher Education Act 2012

After much delay and controversy, the House of Representatives passed the Ministry of Education Bill called the Higher Education Act in July 2012. The passing of this act represents a fundamental change that is taking place in Indonesia’s tertiary education system and as such has proved highly controversial among students, academicians and politicians alike. The aim of the act is to provide universities with greater power and autonomy over their management, curriculum and use of resources in order to promote internationalisation of education and encourage the entrance of foreign universities. It is also designed to make the country’s higher education institutions more accountable for their academic results to existing and potential students for a more competitive educational market place in Indonesia. This has however once again raised the issue of the commercialisation of education following the overturning of the Law on Legal Education Entities (BHP) by the Constitutional Court in April 2010 (See Partnership and Investment Opportunities in Education).

Indonesia’s Higher Education Act 2012
One of the most significant aspects of the act is that it opens the way for Indonesia as a destination for foreign students and universities.

The Higher Education Act stresses the importance of graduates’ qualifications and competencies as opposed to just the gaining of diploma in addition to the need to improve the public perception of vocational and polytechnic qualifications among industries and employers (See Education In Indonesia: Overview). Article 59, for example, states the introduction of community colleges in all districts or municipalities of the country. The act is therefore designed to expand access to higher education for all Indonesians while also raising the standards of the education choices available to students to improve the quality of local human resources. The law also authorises some public universities to seek funding from sources outside of the government while still remaining under state regulations. It is feared that this measure could result in a sharp increase in tuition fees thereby shutting out poorer students from higher education and cancelling out the aforementioned efforts to provide more widespread access.

One of the most significant aspects of the act is that it opens the way for Indonesia as a destination for foreign students and universities. Previously, the entrance of foreign universities was regarded as a threat to national sovereignty over education and therefore highly restricted. Article 50 of the Higher Education Act stipulates that foreign universities are allowed to set up branches, centres on the study of Indonesia and independent research centres in the country. Article 90 of the Higher Education Act states that foreign universities may operate in Indonesia provided that they are accredited by their country of origin, are not for profit, collaborate with local universities and prioritise the employment of local Indonesian faculty members.

Foreign universities opening branches in Indonesia will also be obliged to uphold the constitution and promote local civic and religious values. This article also states that the Indonesian government holds jurisdiction over the disciplines in which foreign universities may operate and offer as courses although they will have control over setting their own curriculum. The Minister of Education Muhammed Nuh has publicly supported the entrance of foreign universities in Indonesia provided that they collaborate with local institutions thereby following the same path that Malaysia has followed and has seen their tertiary education system flourish. He added that foreign universities will be allowed to offer subjects that Indonesian institutions do not have the capacity to provide or that require a high level of investment. It is hoped that the presence of foreign universities will raise the standards in the local education market and enable the country’s most gifted students to stay in Indonesia as opposed to going abroad and contributing to the ongoing ‘brain drain’ (See Addressing the brain drain in Indonesia).

The law is due to face challenges in the constitutional court which may delay the plans of foreign universities wishing to establish a campus in Indonesia. The main area of contention is the resulting privatisation and perceived commercialisation of education which goes against the values underpinning the constitution as well as creating a conflict between state and private universities. Article 74 of the law obliges all universities to ensure that 20% of their places are awarded to the economically disadvantaged as opposed to based on academic merit. State funded institutions therefore face the possibility that as all of their fees are covered by the state, the 20% quota could be absorbed fully by them as opposed to private universities. It is also feared that foreign universities will poach the best lecturers from local institutions as they will have the resources to offer higher salaries and that students will follow suit in choosing not to go to national universities. Various educational bodies have also put forth their concerns that the introduction of university autonomy would mean a loss of state responsibility over higher education. To date, a number of organisations have announced their intention to challenge the law in the constitutional court while the government is still preparing detailed implementing regulations that take stakeholders viewpoints into account and aim to resolve such grievances.

Global Business Guide Indonesia - 2013

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Indonesia Education Snapshot

Number of Tertiary Education Institutions: 4,384 (2015)
Type: 91.5% Private, 8.5% Public
Students in Higher Education: 6,959,622 (2015)
Net Enrolment Rate in Tertiary Education: 20.18% (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.