Global Business Guide Indonesia

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Education | Making Research & Development Part of Indonesia’s Vision for Growth

As Indonesia approaches the ASEAN Economic Community, having a well educated workforce is crucial to be able to compete in an increasingly fluid and competitive regional landscape. Cooperation between the academic and private as well as public sector is also vital for core industries to remain competitive both at home and abroad by moving up the value chain in their product and service offerings. With over 3,000 universities of varying quality and a shortage of PhD qualified academics to staff them, Indonesia’s research output of an international standard has been thin on the ground as governmental regulations making research publication obligatory appear to be doing more harm than good. Hope is however on the horizon; the new Jokowi administration has merged two formerly separate bodies to form the Ministry of Research & Higher Education to facilitate better coordination and boost the country’s capacity in R&D.

Making Research & Development Part of Indonesia’s Vision for Growth
Universities and scientific research bodies will need to take a more entrepreneurial and commercially minded approach to attract funding from the private sector
 

Room for improvement

National spending on research and development equated to 0.2% of GDP in 2014. This figure stands in stark contrast to the Asian average of 1.9% of GDP and the region’s top spender South Korea with 4.36% (OECD). The OECD Global Forum on Development published research in 2014 showing the crucial role of R&D spending in emerging markets to avoid the ‘middle income trap’. Having achieved middle income status, Indonesia is now at a stage where a lack of spending on areas that boost productivity and innovation will see a slower rate of growth take hold for the forseeable future. Indonesia’s vision of becoming a knowledge-based economy and shifting away from a reliance on natural resources will depend on its commitment to increasing its R&D spending drastically and ensuring that funds are spent effectively.

Over the course of 2001-2010, Indonesian researchers published less than 8,000 articles in international journals, well below Singapore, Thailand and Malaysia, with each country accounting for around 30,000 articles. The Ministry of Education in 2012 tried to remedy this situation by making research publication a compulsory condition for all post graduate and doctoral students to be able to graduate. This has attracted widespread criticism not only for the difficulty in implementing such a measure but also for its failure to address the fundamental barriers to research writing; the lack of funding being made available by the government and the private sector. Furthermore, Indonesia lacks a sufficient number of accredited journals to accomodate such a volume of research publications (Indonesia has only 9 internationally accredited journals) which will lead to poor quality journals being created to meet the demand so that students can graduate.

Better classrooms instead of laboratories

Underlying the lack of spending on research and development by the government has been the more pressing need to invest in better trained academic staff and educational facilities (See Indonesia; Investing in Education). Some 1% of lecturers hold PhDs and are therefore in short supply (See Indonesia’s Brain Drain Pains). Despite this, salaries are low at less than $555 USD on average compelling many to take secondary occupations to make ends meet thus leaving little time for research. A rote learning approach which is typical of the Indonesian education system also does not lend itself well towards the discipline of research, making international collaboration and publication a challenge.

A change in mindset among the academic community and a drastic change in how the education sector is funded by differentiating between spending on education and teacher salaries is therefore required before further spending on R&D would be effective on a broad scale.

Current cooperation in R&D

Research cooperation among scientific institutions and universities has thus far failed to incorporate Indonesian companies and to become part of their long-term investment and development strategy. R&D driven companies are concentrated in the manufacturing sector, which is largely composed of SMEs that lack the resources to invest on developing home grown innovations. In general, local entrepreneurs have also shown a preference for foreign products as they are more familiar with them and are unwilling to entrust Indonesian universities to take the risk and invest in academic research. Many universities and research bodies are therefore forced to appeal to the corporate social responsibility obligations of state owned companies to secure funding for research.

This lack of commercially driven research and development is reflected in the number of patent applications by Indonesian entities. Indonesia ranks the lowest in the number of patent applications filed among the G-20 member nations. In 2012, the country filed 7,032 patent applications, a 14.7% increase from the year prior, yet 87.3% of the filings in 2011 were submitted by foreign filers (Indonesian Intellectual Property Office, DGIP).

Integration offers hope

During his election campaign, Indonesian president Joko Widodo placed education and health as the priorities of his administration. The establishment of the Research and Technology and Higher Education Ministry, which merges the old Research and Technology Ministry and the Directorate General of Higher Education at the Education and Culture Ministry, is anticipated to improve the quality of education, research and scholarship funding. The government plans to improve efficiency, transparency and to establish networks of local and international researchers.

The Minister of Research and Technology and Higher Education, Muhammad Nasir, has set a target of 11-15 Indonesian universities being in the top 500 worldwide within the next 5 years. He has also publicised a more coordinated approach to commercialising research that has completed the proto-type phase and to providing financial incentives to researchers to ensure better remuneration for their work. These are promising signs, however the government’s role and the availability of state funding will be limited, requiring the private sector to step in and make up the shortfall. Universities and scientific research bodies will need to take a more entrepreneurial and commercially minded approach to attract funding from the private sector in order to develop solutions with applications that can accelerate Indonesia’s economic advancement.

Global Business Guide Indonesia - 2015

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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.