Is Indonesia’s education sector finally opening up to foreign universities?

Posted on February 16, 2018 By Kevin Evans

Over recent weeks there has been a flurry of statements and announcements about “opening the Indonesian tertiary education sector to foreign universities”. I have seen this discourse ebb and flow over the past 25 years. The following summarises some of the most common arguments for and against this proposition.

Proponents of the proposition argue in favour of the need to “raise standards” of education and also argue that there is a huge market in Indonesia, with the implied assertion that this would not “crowd out” Indonesian tertiary education centres. Another argument is that it would be better to have young Indonesians, who would otherwise study overseas, studying in Indonesia by having the international campuses operating inside Indonesia.

Opponents often question the basic premise that bringing in foreign universities would raise academic standards. Others worry that the presence of international universities would undermine Indonesian culture, values and standards. Additional arguments include concerns that international campuses would draw in the best students and academics thus sapping the growth potential of the Indonesian owned sector (state or privately owned).

The current re-energised public discourse on this issue can be connected to recent statements by the President. He has stated that improving the country’s human resource base was critical for the Indonesian economy to develop further and to raise the standards of living of its people.

A number of balloons have now been floated, including suggestions about allowing foreign campuses to open and operate in selected special development zones such as on Batam Island (near Singapore). Some suggest limiting international campuses to areas other than Java, as part of efforts to boost these lesser-developed areas. Others argue having no restrictions on locations but providing for more focus on centres offering courses in selected areas such as post-school vocational education and training.

The proposing of such an opening, coming as it does at a time when Indonesian public discourse is increasingly isolationist, even ultra-nationalist, is quite intriguing. There can be little doubt about the need for raising the skills base of the workforce as part of wider efforts to raise work place productivity – both representing key elements to raising and sustaining higher levels of living standards. However, this is not a new revelation.

A fascinating new interjection into the traditional discourse has come from Vice President Jusuf Kalla. He notes that the Indonesian Government now invests very heavily in sending its young people on scholarships to study at overseas universities. In his classic pragmatic style, the Vice President posed the question as to why the country needed to spend so much of its budget sending its young overseas to study when they could bring in these foreign centres to establish centres here – surely a big saving for the Indonesian tax payer.

The biggest loss from conducting such education inside Indonesia is that the students would now miss out on developing life skills which come from having to survive outside their home cultural zone. Nonetheless the Vice President’s point is well made that it would be less costly to educate them in-country.

A separate issue that Indonesian policy makers need to consider more seriously is the growing number of foreign students who now study in Indonesia. While many people may consider that foreign students here are doing so under some kind of social or cultural exchange program, I am so often delighted to discover that there are so many full-fee-paying students studying in both state and private tertiary education centres in Indonesia.

While the foreign student stereotype is that of a few Malaysian medical students, the reality is far more varied. I have met Japanese and Koreans studying in areas like dentistry and in other sciences. Put bluntly, Indonesia is already an exporter of education, not merely a consumer. Education is thus a source of foreign income for this country. Is this an export that Indonesia wishes to grow?

Of note, too, is that the establishment of foreign campuses in countries like Malaysia has not only worked to reduce the number of Malaysians studying abroad but it has also worked to attract many foreign students to study in Malaysia, thus further boosting Malaysian education exports.

This dynamic – the Indonesian Government shouldering more of the burden for educating its young through funding foreign scholarships – is a relatively new development. Indeed nowadays more Indonesians are sponsored by Government funds to study abroad than from all donor-supported programs combined, a major and important step forward for the nation. The extent to which this new dynamic tilts the overall debate in favour of opening the system to foreign campuses is yet to be seen.

A cursory reading of the Law on Higher Education (Law 12/2012) does not actually indicate that it is impossible for foreign interests to establish a tertiary education centre in Indonesia. Article 90 of the law establishes the ways and means for foreign entities to do so. Furthermore, Article 50 outlines the means by which other forms of international collaboration can be established. As always, however, the devil is in the details.

There are a couple of examples of foreign-originated centres offering degrees, including the International University Liaison Indonesia. This university, based in one of the satellite cities around Jakarta, pools efforts from a number of mostly European universities to offer degrees in a number of disciplines. The German Swiss University (also located in a satellite city near Jakarta) is perhaps another such venture, although many of its principals were foreign individuals rather than foreign institutions. There are of course, any number of other arrangements in place, such as sandwich programs, joint programs, or Foundation programs that articulate to studies in the connected foreign university.

Among concerns connected to operating a foreign-sourced tertiary education centre is the need to be not-for-profit in structure. This is actually the same principle that applies to private Indonesian owned and operated tertiary centres. From discussions with people involved in foreign education provision in other countries, I discovered that this is not an unusual approach to establishing and operating centres in other countries.

One potential issue that may emerge in discussions on practical matters of operationalisation could relate to some of the key principles and priorities that can be found in the law to inform tertiary education. For example, references to excellence only appears four times in the law, and references to integrity and ethics appear only once. References to religion and God, however, appear some 42 times. Even reference to the nation’s overriding philosophy (Pancasila) only appears four times. Finessing these varied ‘weights’ of concern and priority outlined in the law may represent a challenge to some would-be participants.

Sitting beyond the perceptions of whether or not the regulatory environment would allow some respected foreign university to attempt to establish a presence in Indonesia is the issue of whether it is viable from a commercial or quasi-commercial perspective.

While the law states that a campus in Indonesia cannot be driven by profit, the investing campus will need to be confident that the campus is also not going to become a financial black hole. Decisions here will be based less on what laws and implementing regulations demand but rather on whether a sustainable business model can be developed that makes any effort to take up the interest by Government leaders to further open up the sector.

This in turn raises the issue of what kind of partnership the foreign centre would utilise. For example, would it be with a major university in Indonesia? Or perhaps partnering with a small one to grow together? Alternatively, would partnering with a private sector player be better – for example with a property developer or an industrialist? Another new and, to my knowledge, undeveloped potential could be to partner with an Indonesian philanthropist.

Kevin Evans

Kevin Evans

Indonesia Director

The Australia-Indonesia Centre