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Education | Second Class: Indonesia’s Higher Education Sector In Need of Reform

One of President Joko Widodo’s first surprise initiatives when he took the presidential hot seat in 2014 was his decision to divide the Education Ministry into two separate ministries; the Culture, Elementary and Secondary Education Ministry and the Research and Technology and Higher Education Ministry. While the Culture and Elementary and Secondary Education Ministry was expected to assume most of the tasks of the old Education and Culture Ministry, the role of the Research and Technology and Higher Education Ministry was not as clear. The ministry carried the responsibilities of the old Research and Technology Ministry, but is additionally also in charge of the development of higher education institutions. What later became apparent was that the formation of this new ministry was driven by the President’s eagerness to enhance research and technology in the country. He wanted to not only improve the cost-effectiveness of research budgets but also make research more transparent and credible. Most importantly, he has stressed that he wanted research impacts to be ‘measurable’ (See Making Research & Development Part of Indonesia’s Vision for Growth).

Second Class: Indonesia’s Higher Education Sector In Need of Reform
Minister Muhammad Nasir has spoken of plans to allow foreign universities to establish a branch in Indonesia, to recruit foreign rectors and to make the English curriculum compulsory for universities

The decision to merge research and higher education in one ministry was clearly to encourage more research to be conducted in universities – something that over the years Indonesia has failed to excel at. In 2012, Indonesian university researchers published 16,139 articles (ranked 63rd in the world), and 126 patents were awarded to them. The figures were significantly lower than those of neighbouring countries. According to the 2013 Global Innovation Index, Indonesia is grouped between “under performers” (Venezuela and Algeria) and “learners” (Malaysia and Thailand) based on the innovation outputs.

Coupling research and higher education is good news for the development of research but has not done wonders for the reform of higher education institutions. Under the leadership of President Joko Widodo, the development of quality higher education institutions seems to have been somewhat overlooked. Coming into his second year in office, very little has come in the way of breakthrough policies, programmes or initiatives regarding higher education.

Having said that, the Research, Technology and Higher Education Minister has verbalised some ideas and plans to improve the quality of higher education institutions in the country. Minister Muhammad Nasir has spoken of plans to allow foreign universities to establish a branch in Indonesia, to recruit foreign rectors and to make the English curriculum compulsory for universities – all of these initiatives, however, are still waiting to be implemented.

Lack of quality concerning

Indonesia’s universities currently serve over 5.1 million students. This is a considerable increase from the figure of 3.8 million students in 2009, which is a credit not only to the nation's maturing perception of education over the last six years, but also the country’s growing economy. With Indonesia’s population of 252 million and purchasing power parity income of $10,157 USD, its existing gross enrolment ratio will likely increase significantly within the next few years. Unfortunately, the rapid rise in demand for higher education is not matched by a rise in the quality of the universities across the country. According to the Directorate General of Higher Education, in 2014 only 25 higher education institutions obtained 'A' accreditation at the institutional level, representing only some 0.5% of the total institutions in Indonesia. 

Ironically, the lack of quality is made worse by the increasing number of private universities opening up to absorb the increasing demand for higher education. Most of these new private institutions are small universities that cater for a small number of students. This becomes problematic because these universities rely solely on tuition fees, which makes it difficult to survive, let alone maintain quality standards. There are now over 4,000 higher education institutions in Indonesia, with private institutions accounting for more than 70% of them.

Attracting foreign universities

Driven by the rapidly increasing middle class, Indonesian parents are becoming more selective when it comes to quality of education, including that of universities. While many low and middle-class income parents are still happy to settle with local universities, despite their shortcomings, more parents are prepared to dig deeper into their pockets to send their children abroad to study in established universities with a more guaranteed quality of education.

There are 34,999 students leaving Indonesia to study abroad. With average fees of $12,000 USD per annum and assumed living expenses of $10,000 USD a year per student, this represents an estimated foreign exchange outflow of close to $1 billion USD for Indonesia. 

The alarming numbers have prompted the government to address the problem. In early 2016, in an effort to significantly raise the quality of local higher education up to international standards, the government started working on a ministerial regulation to regulate the establishment of foreign universities. The regulation is meant to complement and emphasise Law No. 12/2012 on Higher Education (See Indonesia’s Higher Education Act 2012) which was designed to make it easier for foreign institutions to set up on a non-profit basis in collaboration with local universities.  

The bill was passed back in 2012, but has yet to attract foreign universities to open up a branch in Indonesia due to a lack of regulatory clarity in a country with a reputation for having a restrictive regulatory environment. Among the stipulated requirements for foreign universities looking to open a branch in Indonesia is that the university must be accredited and/or recognised in its home country, be non-profit and collaborate with an Indonesian university, and are required to hire Indonesian lecturers and staff. The bill also states that foreign universities were only allowed to open branches in certain areas of Indonesia, and offer limited types of courses and disciplines. The Indonesian government, however, had not specified further on these points, leaving question marks hanging for foreign universities looking to invest in Indonesia.

The upcoming ministerial regulation, the Research, Technology and Higher Education Ministry said, will make clear all the uncertainties surrounding Law No. 12/2012. The deliberation of the regulation has involved a number of ministries including the Law and Human Rights Ministry and the Foreign Affairs Ministry, discussing various aspects such as immigration and the status of foreign arrivals. The regulation is slated to be wrapped up and issued in 2017.

Facing regional competition

The issue of higher education quality, and subsequently the quality of higher education graduates, has come under further scrutiny this year following the implementation of the ASEAN Economic Community (AEC), a regional economic integration which opens the door to a free flow of capital, trade and workers across ASEAN member countries (See Higher Education: Indonesian Academia Must Open Up). 

Indonesia has over 3,000 higher education institutions of varied quality. The government needs to manage these institutions and their areas of focus better to ensure that Indonesia is not only a market but a player on the global stage.

In order to improve the quality of higher education in Indonesia and produce better quality of university graduates that can compete against its regional counterparts, the Research, Technology and Higher Education Ministry has suggested that it may appoint experienced foreigners to become rectors of state universities. In a country that prides itself in its spirit of nationalism, this idea has understandably been greeted with strong criticism. However, the ministry has argued that such bold moves are needed to turn Indonesian universities into world class universities. China, Singapore and Saudi Arabia are good examples of countries that have been successful in using the foreign rector policy, the ministry said.

Another idea that the ministry has made public but has yet to implement is the plan to make it compulsory for university students to interact in English. This, it is hoped, will also prepare them to compete in the AEC. The plan, which the Research, Technology and Higher Education Minister shared last year and is supposed to be in effect in 2016, involves a dual language curriculum which will require students and lecturers to use both Bahasa Indonesia and English in campus settings. The minister also said that the system would be implemented in stages at every university in Indonesia beginning of 2016. The policy has been met with scepticism by universities and, as of mid-2016, there has not been signs of the policy being seriously implemented. That being said, these offer promising signs of progress that should be taken notice of by international universities seeking to gain access to Indonesia’s higher education market.

Global Business Guide Indonesia - 2016
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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.