Challenges need to be overcome for

Indonesia's education sector to reach

its full potential
Indonesia’s government allocates one-fifth of its budget to the education
sector, with the goal of boosting its international rankings and pupils’
progress. However, certain challenges have impeded the full potential of this
policy from being realised. For example, decentralisation of education policy
undermines standardisation of curricula at all levels and creates regional
disparities in teaching quality and student attainment.

Successive administrations have nevertheless made considerable strides in

increasing the number of pupils in school, although more progress is needed
with regard to ensuring students finish their education with the skills required
to compete in an economy that is transitioning towards innovation and value-
added activities.

Structure & Oversight

Prior to the 1997-98 Asian financial crisis and President Suharto’s subsequent
resignation, Indonesia’s education system was highly centralised under the
Ministry of Education and Culture (Kemdikbud). After Bucharuddin Jusuf
Habibie took office, a political shift towards decentralisation emerged, with
the aim of increasing the political authority of provincial and regional
governments, in recognition of Indonesia’s ethnic, cultural and economic
diversity. In 2001 the central government transferred much of the authority for
education policy and management to district governments as part of the “big
bang” decentralisation effort, although higher education remained under the
control of the national government through the Directorate General of Higher
Education, a department of the Ministry of Education and Culture.

Decentralisation constituted an attempt to respond to Indonesia’s vast cultural

and linguistic differences. In total more than 700 languages are spoken in the
country. In addition, various different religions and cultures exist across the
archipelago, which consists of over 17,000 islands with diverse levels of
wealth and development. This vast size makes the lack of a standardised
national curriculum even more challenging. In particular, the quality of
education available in the outer islands, especially in the east, is considerably
lower than on the island of Java, including in critical subjects like maths and
science. Indeed, 71 of Indonesia’s top universities are located on Java. Under
the current spending regime, about two-thirds of the education budget is
managed by governments at the provincial and district level. In accordance
with a 2002 constitutional amendment, the central government is mandated to
allocate 20% of the annual budget to education, a target that has been met
every year since 2009. Total national education expenditure has increased
nearly 11-fold in nominal terms, and quadrupled in real terms, between 2001
and 2016, according to World Bank figures. However, while that period saw a
23% increase in student enrolment, it was accompanied by only a modest
improvement in quality and attainment. President Joko Widodo has
acknowledged that educational shortfalls and severe skill gaps in the
workforce have the potential to derail efforts to cultivate high-tech, value-
added industries if they are not properly addressed.

Budget

In 2018 the Indonesian government allocated a total of Rp444.13trn ($31.5bn)

to the education sector, or around 20% of its total state budget of Rp2220trn
($157.4bn), in line with the constitutional mandate. The 2019 budget is more
generous still, allocating the sector Rp492.56trn ($34.9bn). This is indicative
of President Widodo’s renewed commitment to developing Indonesia’s human
capital in tandem with investments in infrastructure, with the intention of
unlocking the economic potential of even the most remote regions of the
archipelago. According to figures released by the World Bank, basic education
received the greatest share of the overall education budget allocation in 2017,
at 56%, which is almost double the amount that secondary education receives.
By comparison, vocational education – a smaller segment in terms of
enrolment – received 9% of the total education budget. Indonesia’s secular
school system begins at primary, which comprises grades one to six; the next
stage is junior secondary, grades seven to nine; followed by senior secondary,
grades 10-12; and finally higher education. After completion of secondary
school, students that opt for higher education undertake national exams that
are used for university admission. Private education accounts for about 48% of
schools, 31% of students and 38% of teachers. As the world’s most populous
Muslim nation, Indonesia also has an extensive religious education system.
Islamic religious schools, or madrasas, fall under the jurisdiction of the
Ministry of Religious Affairs and include vocational and technical schools,
most of which are privately run.

Outlook

Although Indonesia has a long way to go in terms of delivering quality

education at all levels and in all regions, gradual improvements are being
made, backed by significant annual budgetary funding allocations. As the
Making Indonesia 4.0 initiative boosts demand for technology training and
grassroots innovation, Indonesia’s pupil progress will need to improve at a
faster pace. With the central government constitutionally mandated to allocate
at least 20% of its budget to the sector, much will depend on the ability of
policymakers to ensure this funding is used to effect real change in what and
how students learn, to ensure they are equipped for the demands of a rapidly
evolving economy. As a vibrant democracy that is already home to dynamic
digital industries, the time is right for the creation of a classroom environment
that promotes critical analysis and abstract ideas. If the country can overcome
the challenges of a decentralised system and a legacy of didactic teaching
approaches, Indonesia has the potential to develop into a regional leader in
innovation and creativity over the medium to long term.