A good education is in high demand in Indonesia's vibrant economy, where tens of millions of people join the job market every year. Competition is particularly tight for jobs at multinational corporations, making a respectable degree crucial for fresh graduates. As the government is hard-pressed to provide universal access to basic education in the far flung regions of the archipelago, the quality of schooling is sometimes left wanting. A growing number of parents are happy to consider paying for education to maximise their children's opportunities in the country's globalising economy. All this makes Indonesia – the world's fourth-most populous country with a young median age – an attractive market for private education.
More and more Indonesian graduates are keen to study abroad, get some foreign work experience under their belt or even pursue a global career, which makes languages an important part of the curriculum. Furthermore, local universities do not feature highly in global rankings, prompting ambitious students to look further afield in search of a prestigious degree. With Australia, the US and UK ranking among the most popular academic destinations for Indonesian students, a good command of English is more than helpful. This explains why bilingual schools, which teach some or all subjects in English, are mushrooming in and around Jakarta. And amid China's rapid economic ascent and catering to the large Chinese-Indonesian community, some schools – and preschools – also opt for Mandarin as a teaching language.
For a long time, primary and secondary education in Indonesia did not feature prominently on the radar of investors, not least because the public education system offers free basic schooling for all. This is in stark contrast to higher education, where private organisations run the vast majority of institutions. Over the past decade, however, Indonesian parents have become more demanding with regards to their children’s education and many have high hopes for language development. Bogged down with the need to accommodate millions of people across the country, the tax-funded education system is unable to meet the high expectations of some parents and pupils today. There is a shortage of qualified teachers in primary and secondary public education and the competencies acquired at school are often out of tune with the requirements of today’s labour market, say employers. In short, the state school system fails to deliver the expected quality of education at the required quantity.
At the same time, rising disposable incomes allow an increasing number of families to pay for education themselves. Most well-to-do parents in the urban centres are willing to spend generously on education if they are convinced this will enhance their children's career prospects. Others are motivated by the desire to instil in their children a sense of global awareness. Promising to immerse students in foreign languages, foreign cultures and foreign ways of thinking, private schools that pride themselves as “international schools” are increasingly sought after. Of course, these schools also cater to foreigners living in Indonesia, many of whom wish for their children to be taught in English. Expatriates' employment terms often include generous allowances for their children's education, making high tuition fees less of an issue.
Indonesians have become almost obsessed recently with the need to be fluent in foreign languages, especially English. Parents appear to be outdoing each other in getting a head start for their children with early exposure, as reflected in the predominance of English or bilingual baby books and the spread of English-language playgroups and preschools. While the early-English urge has prompted some public backlash, it is certainly a powerful educational trend, and one that investors will take heed of. As more Indonesians can afford it, bilingual education from preschool all the way through to university looks set to become the norm rather than the exception. This is the core of what makes the international schools international, while claims to modern teaching methods and high security complete the package.
The vast majority of international schools today are located in or around the capital of Jakarta, but as economic prosperity increasingly spreads into the regions, so too will demand for high-class education. With global corporations looking to tap the business potential of new growth regions, expat communities will increasingly fan out into places like Medan, Makassar and Manado (See Indonesia’s Economic Potential; A Look Beyond Java). The so-called secondary cities, usually the provincial capitals, have witnessed exceptional economic development in recent years and in numerous ways have taken the shine off Jakarta and Bali, not least because the cost of land and labour is significantly lower. With rising affluence, they will also see rising demand for private education.
The Education and Culture Ministry must balance the goal of guaranteeing free basic education to all citizens with that of raising the quality of its schools to empower students to compete on the global stage. Aware of the immense investment that is needed to accomplish this dual task, Indonesia has made room for private-sector actors to engage in education (See Indonesia: Investing in Education).
Chapter XVIII of Law Nr. 20/2003 on National Education allows foreign entities to invest in Indonesian education, albeit carried out in conjunction with local institutions and involving local staff (Article 65). The so-called Negative Investment List, which lists economic activities where foreign investment is restricted, was revised in 2010 to allow foreign entities to hold 100% ownership in institutions of formal education, which includes kindergartens, primary and secondary schools as well as universities, scrapping the former 49% cap.
With more and more schools rushing to implement bilingual or even trilingual curricula, the obvious challenge is finding enough qualified teachers to do the job. There is concern about those teaching in English not being qualified to do so in a manner that will actually enhance student’s linguistic capacity. Poor classroom instruction, some have warned, could promote a type of Indonesian English that differs from Oxford English in that it includes a host of grammatical simplifications, or errors, depending on where you stand. Rather than becoming the polyglots they may have hoped to become, Indonesian students could then find themselves unable to master both their native and the foreign language to a high standard. Vocational training, therefore, is key to create the manpower needed to support Indonesia's nascent multilingual education system.
Aside from language learning, promulgating effective teaching methods is also important. Teaching at Indonesian schools is often too theoretical and an authoritarian style of instruction offers scant opportunities for creative and critical thinking – the very skills necessary to develop entrepreneurship and problem-solving capabilities. This makes vocational training next to formal education an interesting segment for investors.
Global Business Guide Indonesia - 2014
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.