Global Business Guide Indonesia

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Business Updates | Indonesia’s Brain Drain Pains

Indonesia in recent years has been criticised for its inability to retain the country’s brightest minds. Having failed to provide the academic community with the necessary financial support, the country as of 2011 ranked 64th in the release of scientific publications and frequency of citation in academic literature (See Addressing the Brain Drain in Indonesia). Since then, it would appear that not much has changed. The same ranking system now places Indonesia 61st among 238 countries (SCImago Journal & Country Rank) and government spending on research continues to lag behind that of regional counterparts. As things stand, Indonesia runs the risk of suffering from a widening gap to its key ASEAN competitors in innovation, technological advancement and scientific discovery.

This fate, however, is not written in stone. Faced with the impending consequences of an exodus of talented human resources, the private sector has become more active in putting in place the incentives and facilities needed to attract advanced degree holders back to Indonesia. This bodes well for the country’s ability to synergise business with research and builds towards ensuring Indonesian competitiveness as a more advanced economy.

A State Priority?

The Indonesian government does not shy away from voicing its desire to improve upon the current standard of research in the country. In 2012, the Ministry of Education laid out its plans to produce 4,000 PhD recipients per year, so as to increase the number of PhD graduates in Indonesia by a further 52,000 individuals by 2025. This sentiment was echoed in March of 2014, when the ministry restated its commitment to increasing “research in all sectors so that we [Indonesia] can improve our education system and the quality of our human resources,” (Jakarta Globe, 05/03/2014).

These plans have thus far not involved the substantial and immediate increase to public spending on research needed to spark the return of more than 2,000 Indonesian scientists currently carrying out research in institutions abroad. Government expenditure on research as of 2013 stood at 1% of its total budget, or 0.08% of GDP; a figure that trails behind neighbours Singapore (2.36% of GDP), Malaysia (0.63%) and Thailand (0.25%).

The lack of government funding acts as a significant barrier to the return of Indonesian academic talent overseas. Anecdotal evidence from the education sector suggests that most would choose to work in Indonesia if not for the substandard financial backing and lack of state of the art laboratories equipped to undertake high quality research. In truth, the brain drain phenomenon in Indonesia is entirely understandable considering that researchers with PhDs in the country can earn as little as 3 million IDR a month while similarly qualified colleagues in Malaysia earn closer to 30 million IDR (Indonesian Institute of Science). And while the Indonesian Economic Masterplan (MP3EI) details the government’s commitment to increase spending on research and development to 3% of its total budget by 2025, this initiative is too long in coming and leaves Indonesia vulnerable to stasis as a low-skill industry driven economy in the meantime.

Waiting for a Private Sector Superman

The immediate future of Indonesia’s research capabilities and its viability as a destination for PhD graduates therefore lies in the hands of the private sector. Through the setting up of foundations to develop new research facilities as well as finance research projects, local businesses and multinationals are thus far moving in the right direction.

More specifically, initiatives to provide scholarships to young intellectuals and then make available a working environment conducive to scholarly pursuits have great potential to directly advance the quality of research coming out of Indonesia. As an example, the Indonesian Scholarship & Research Support Foundation (ISRSF) through funding from the Rajawali Foundation, Adaro, Bank Central Asia, and Djarum will send Indonesia’s brightest minds to Northwestern University to obtain PhDs and at the same time construct the Indonesian School of Public Policy & Social Sciences. The idea behind this being that when the scholarship recipients have graduated, they will take upon positions as core members of this institution’s faculty and benefit from access to first-rate resources.

Other private sector programs include the ongoing establishment of Surya University, a 1 billion USD educational institution funded by Indonesia-based businesses. Founded with the goal of driving research and developing Indonesian product patents, the university has already succeeded in recruiting many of its 200 PhD holding faculty members from institutions abroad. In what is a more long term approach to the issue of inadequacies in research and Indonesians with doctorate degrees, Surya University also actively seeks out the most intelligent children from underdeveloped parts of the country to nurture their growth into future PhD candidates.

For contributing private sector players, this type of project yields limited short term, tangible benefits. However, by advancing the standard of teaching in a country in which less than half of all lecturers have doctorate degrees, the private sector has everything to gain from a better educated pool of human resources ready to step into the current void in management level labour. Investing in Indonesia’s education system thus stands as a better focused area for CSR activities and has considerable potential to bring about positive long term results.

Moreover, stemming the brain drain tide will allow for greater opportunities to collaborate with Indonesia’s leading minds to conduct research into industry specific topics particularly suited to the country. Geothermal energy and palm-based biofuels are but two fields of immense commercial potential in Indonesia to be unlocked by the emergence of synergies between science and business. The development of such industries will be crucial to the economy’s maturation in the years to come, given that the erosion of present competitive advantages in low-skill manufacturing is to be exacerbated by regional integration and the rise of competition in this line of business from Vietnam, Cambodia and Myanmar. 

Global Business Guide Indonesia - 17th March 2014

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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.