Hairpin turns: The road to educational reform has been winding

Indonesia has a sizeable higher education system, encompassing some 92 public universities and 3000 colleges. The country has tried a number of different structures in an attempt to make these institutions both financially strong and effective in educating people regardless of economic background. So far, at least, it has not found the right mix of public control and private participation.

Measured by head count, the country’s tertiary education is hitting a clear growth patch. Aided by its demographics and rapid economic expansion, Indonesia is expected to have one of the largest university populations in the world by 2035. The chief issue, though, is funding. Most of the great sums the country is committing to education will be spent on primary and secondary schooling. The World Bank estimated in 2010 that spending on higher education was just above 1% of GDP, which is low by international standards. Public expenditure on universities was about 0.3%.

Telling Figures

One fear is that, unless local universities are improved, the country’s brain drain will be exacerbated. At present more than 36,000 Indonesian students study overseas, mostly in Malaysia, Singapore and Australia. The lack of qualified graduates, meanwhile, is leading to a severe labour shortage that threatens the country’s prospects. In May 2013, a report by the Boston Consulting Group said that Indonesia was facing a talent gap: half of all jobs, it said, will soon be managerial or administrative, up from 38% today.

Research and development (R&D) is another concern. The country’s institutions tend focus only on their core mandates, and subsist on fees and government funds. As a result, they are little able to invest in long-term projects and programmes. On the whole, the country spends very little on R&D – 0.08% of GDP in 2009, compared with 1% in Malaysia and 2% in Singapore.

To & Fro

The road to change has been a winding one. In 1999, Government Regulation 61 transformed seven universities from public entities to independent legal ones: the University of Indonesia, Bandung Institute of Technology, Bogor Agricultural University, Gadjah Mada University, Indonesia University of Education, University of North Sumatra and Airlangga University. The idea was to improve their operations and finances. As independent bodies unencumbered by obligations to the bureaucracy, which was seen as inefficient and obstructive, they would be free run their own accounts, raise their own funds and build their own endowments. This would in turn allow them to pursue research apace. This treatment was extended to all universities in 2008, via the Law on Educational Legal Entity.

Both laws generated a great deal of concern. Educators and students fretted that universities would eventually be privatised. Corporate interests, ran the argument, would take over and run them with too much emphasis on profit. That would lead to tuition hikes, putting education out of reach to the poor.

So, in 2010, the Constitutional Court annulled the law, on the grounds that educational legal entities would not best serve the interests of all levels of society. Universities were once more placed under the direct administration of the Ministry of Education and Culture.

A fresh attempt came in August 2012, when a new law gave universities fiscal autonomy again, this time with conditions. The ministry is to evaluate whether each institution is managing its finances properly, and intervene if it finds commercial considerations to be interfering with a university’s primary mandate. In early 2013, the government also reverted the seven public universities back to being state-owned.

Going International

The state has taken two other steps toward reform. First, it is giving universities more freedom to internationalise. Foreign institutions are now allowed to set up branches in the country, and domestic ones are encouraged to hire more foreign lecturers. Second, the government said it plans to build 500 community colleges in five years. This, it says, will better balance the supply of graduates to fit the economy’s needs. Such reforms are not so much about educating new leaders as helping train a future workforce.

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The Report: Indonesia 2014

Education & Health chapter from The Report: Indonesia 2014

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