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The shortage of talent is often cited by foreign investors as an obstacle for doing business in Indonesia. Without significant improvement in the education system, companies will find it increasingly hard to source professional and managerial staff, and the country as a whole will fail to realize its economic potential. President Joko Widodo has made education a central theme of his election campaign, promising to improve schooling in terms of quality and accessibility. Upon taking office in October 2014, he included higher education in the new Ministry of Research, Technology and Higher Education in a bid to more closely link education with research and technology (See Making Research & Development Part of Indonesia’s Vision for Growth).
While the organizational overhaul suggests that the new administration attributes particular importance to tertiary education, change on the ground has so far occurred mainly at the primary and secondary level. Academic excellence, however, will be important for Indonesia to succeed in the upcoming ASEAN Economic Community (AEC), where education will be thought of as a market rather than a government service. As it seeks to match the quality of leading universities in the region and the world, Indonesia needs to further internationalize its higher education sector through global collaboration in research and technology. It also needs to make local universities more appealing to foreign faculty and students, and to foreign investors as well.
Indonesia is home to more than 4,000 higher education institutions, which includes general universities, academies and colleges, polytechnics and specialized institutes. According to official data, more than 90% of these institutions are privately run, while the rest are state-funded. The public institutions, however, accounted for almost 40% of 6.9 million students and 234,000 teachers in 2015. Increasing at nearly 2% per annum, the number of students in Indonesia has outpaced general population growth over the past years. Growth is expected to stay strong as the government strives to improve enrolment and graduation rates at primary and secondary schools.
In fact, a lack of good early education is blamed for many of the ills in higher education. Teachers often do not have the qualification – or motivation – to prepare pupils for higher achievement, while parents from a non-academic background sometimes prefer to get their children out of school as early as possible. Compared with other countries, including neighbouring Malaysia, relatively few secondary school graduates in Indonesia move on to tertiary education, and those who do are often poorly equipped, which leaves universities to pick up the slack and drags down the level of academic learning.
Higher education itself is found wanting. Misallocation or misappropriation of education funds is believed to be widespread and is frequently reported in the media. While the funding situation might be the first place to look, it is certainly not the only problem besetting many local institutions. The methods of instruction are often outmoded, resting too heavily on top-down teaching and learning off by heart, while lacking room for critical or creative thinking. University graduates often do not match the requirements of the labour market, while insufficient R&D activity means academia in Indonesia is failing the country's growing industry.
Citing an official from the Ministry of Research and Technology and Higher Education, Tempo magazine in May 2015 reported that there were 235 universities across the country whose operations were suspended for failing to meet educational standards. These standards pertain to a wide range of aspects, including teacher-student ratio and administration. There is obviously too little independent quality control, and given the large number of institutions, including many small private ones, it is hardly surprising some of them are little more than money-making schemes that taint the country's entire education sector. There have been media reports about alleged 'diploma mills' that sell degrees with little or no teaching involved. While such cases make for strong headlines, the more widespread problem is simply a lack in quality. This reflects in global university rankings, where Indonesian institutions and courses feature lowly, if at all.
Upon taking office the Widodo administration wasted no time before embarking on education reform. One of the new administration's most salient moves was the introduction of the “Smart Indonesia Card” in November 2014, which provides financial support to millions of poor families to cover school fees and expenses. The aim is to back up with practical support the state's guarantee of free primary and secondary education, while at the same time making twelve years of school mandatory. The “Smart Indonesia” scheme will enable more students to enter university, but its direct effects on higher education are limited.
In addressing the tertiary level of education, the Widodo government founded the Ministry of Research, Technology and Higher Education by separating higher education from the Ministry of Education and Culture. Coupling tertiary education with research and technology, on the face of it, suggests that the government aims to bring closer together two elements that can and should facilitate each other in achieving their respective goals. Rather than a career politician, the president instituted the rector of Diponegoro University to lead the new ministry.
The Widodo administration has initiated a five-year programme to send hundreds of teachers out into under-developed regions of the archipelago to help close the educational gap with the economic centre. This may help mitigate capacity constraints at individual schools, but it will not do much to address fundamental flaws in the quality of education. The country not only needs more teachers, but better ones. Aside from decent salaries, this is a task for teacher training – and an opportunity for private-sector investment in vocational education (See Vocational and Non-Formal Education Opportunities in Indonesia). Many teachers lack deep knowledge of their own subject or adhere to old-fashioned methods of instruction. For science and industry to thrive, it is necessary to instil in students at an early age the ability to think outside the box.
Every year, tens of thousands of Indonesians pursue higher education abroad. It reflects rather poorly on domestic higher education when well-heeled students opt to spend their education budget overseas rather than at home. What these students usually seek is the international exposure, and the only way for Indonesian academia to offer local students a similar experience is internationalize itself by opening up not just to foreign students, but also to faculty and investment. Currently, foreign investment in tertiary education is severely constrained and limited to non-profit engagement (See Indonesia; Investing in Education). An isolationist stance in higher education does a disservice to local universities by hampering the acquisition of foreign knowledge, resources and funds.
Amid the ongoing economic integration of ASEAN countries, pressure is growing for the education sector to open up as well. Since the Indonesian state – for good reason – focuses its efforts on improving compulsory primary and secondary education, additional resources for tertiary education will need to come mostly from the private sector. The non-profit rule stands in the way of attracting foreign resources.
Opening up also means granting universities greater leeway in how they manage their teaching and research activities and encouraging closer integration with industries, which could unlock much business potential (See Opportunities for Research Collaboration in Indonesia). Indonesia should not reject foreign universities that can bring R&D experience to the country. Some ASEAN states, including Singapore and Malaysia, allow foreign-based universities to establish branch campuses. Such a policy could help Indonesian academia catch up with advanced overseas research skills.
The Widodo administration must face these issues sooner or later. Affordable access to education and the new institutional setup prepare the ground for higher education to prosper, but investors will be holding out for meaningful legislative reform. Given the economic pressure that comes with trade integration and the importance for Indonesia to develop human resources, it is reasonable to expect and hope for Indonesian academia to become more open for foreign investment in the near future.
Global Business Guide Indonesia - 2015
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.
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