Indonesia's Ministry of Education on the path to producing a more educated and skilled workforce

Over the past few decades, Indonesia has made enormous strides in ensuring most of its children get a basic education. Now the focus turns to quality, and preparing them for life in the 21st century. President Joko Widodo made education a key part of his election campaign and, after taking office in October 2014, embarked on a series of reforms designed not only to make the education system more appropriate for contemporary Indonesia, but also to help the government meet its goal of raising per capita incomes from $3500 in 2011 to $14,250-15,000 by 2025.

In July 2016 Widodo shuffled the Cabinet, appointing Muhadjir Effendy as minister of education and culture. Responsibility for tertiary education falls to Muhammad Nasir, the minister of research and technology and higher education. Religious schools are under the purview of the Ministry of Religious Affairs.

Foundation Level 

Under a 2002 constitutional amendment, all levels of governments are required to spend at least 20% of their annual budgets on education. In practice, however, authorities have tended not to meet that target, with spending peaking at 18.1% in 2012 and declining to 17.5% in 2014, according to UNESCO. District authorities generally cover most of the costs of basic education, contributing 61% of spending at primary and junior high levels, while the central government pays 38% and the provincial authorities 1%, according to the World Bank.

Indonesia has more than 250,000 schools, 2.6m teachers and 50m students. From June 2015 (the start of the school year in Indonesia), the government made it compulsory for all children to complete 12 years of schooling, starting at the age of seven ( previously it was nine years of compulsory schooling). Early learning remains exclusively private, and thus is generally the preserve of better-off Indonesians.

In the past 20 years, the school participation rate has risen from 94.4% to 98.6% for 7-12 year olds in primary education, from 75.8% to 94.6% for 13-15 year olds in junior high school and from 47.6% to 70.3% for 16-18 year olds in high school. The literacy rate for all adults over 15 is now 92.6%, rising to 99.5% for those aged 15-24. However, the numbers mask stark regional differences, as well as a divide between urban and rural areas. While this has been gradually narrowing, further challenges are raised by the country’s ethnic and linguistic diversity, with Indonesia home to some 700 active languages, eight of which are considered major. Many children are not able to speak the national medium of instruction – Bahasa Indonesia – by the time they start school.


Spending per student has shown steady growth, with primary level expenditure rising from $808.47 (in purchasing power parity terms) in 2007 to $1291.29 in 2014, while at secondary level it rose from $667.88 in 2007 to $1046.68 in 2014, according to UNESCO. However, despite the headline-grabbing 20% benchmark, Indonesia’s spending-to-GDP ratio for education remains relatively small. South-east Asia’s biggest economy spent 2.3% of GDP on non-tertiary education in 2012, only slightly more than Russia (2.2% of GDP) and less than South Korea’s 3.2% of GDP, according to the OECD. The proportion of spending relative to GDP is also lower than many of Indonesia’s regional peers. In Vietnam education spending was 6.3% of GDP in 2012.

Additional spending is available under the School Operational Assistance programme introduced in 2005, with this coming directly from central government on a “per student” basis, as well as under district support programmes.

Most Indonesian children attend state-run primary schools (83.2% in 2010), but the proportion in private institutions rises as children get older. At junior high level, the percentage in public schools drops to 63.7% and by upper secondary level it is 50.2%. Key exams take place at the end of primary school and at the end of junior high, with the latter used to stream children into either academic or vocational studies. In an attempt to address skills shortages, the government has been encouraging young people to enrol in technical and vocational training, as an alternative to more traditional academic study.

When it comes to tertiary education, young Indonesians who want to study at the country’s top public universities face a high-stakes examination for a place. In 2010, 447,000 students sat the national entrance examination with just 80,000 places available. Most students end up going to private universities, which dominate the sector but do not carry the same prestige as their public counterparts.


Despite the intense competition for places, Indonesia’s 30 publicly run universities are not highly ranked by international standards.

In Universitas 21, a global network of research universities, the country slipped to the bottom of the 50 nations studied in 2016 (from 48 the previous year), ranking at 50th place in terms of resources, output and total expenditure per student.

“The score is well below that expected at its income level,” the report’s authors observed, but noted that Indonesia performed better in terms of publications with international academics (28th) and knowledge transfer to business (23rd).

The University of Indonesia (UI), the country’s oldest university, with around 43,000 students, was the only institution in the Times Higher Education World University Rankings 2015-16, where it was placed in the lowest ranking bracket – 601st-800th. In the QS World University Rankings, UI came in at 358th overall and 67th in Asia. Its performance has been declining since 2012, when it was ranked in 273rd position.

There are fewer international students in Indonesia than elsewhere in ASEAN, and more Indonesian students are heading overseas to get their degrees. The government wants more foreign academics to work in Indonesia as a way of addressing the problem – under the Indonesian Lecturer’s Scholarship, 40 distinguished professors will be invited to teach in Indonesia, with scholarships also available to Indonesian lecturers to pursue postgraduate degrees, including doctorates. A government proposal to hire foreigners to run universities, both state-run and private, has proved highly controversial, however.

Private Institutions 

The majority of students study in the country’s 3000 private institutions, which are more variable in quality and more expensive than their state-run rivals. Only 3% of the 427 programmes at private universities evaluated by the National Board for Higher Education Accreditation (Badan Akreditasi Nasional Perguruan Tinggi, BAN-PT) achieved an “A” rating, compared with 22% of 1274 programmes at public institutions, according to a 2015 study co-authored by the OECD and the Asian Development Bank (ADB).

Accreditation is valid for five years, but the expansion of the sector, coupled with a shortage of staff at BAN-PT, means many institutions have been given temporary accreditation to get them up and running without going through the proper process of accreditation, according to the OECD-ADB study.

“The actual accreditation results point to marked differences between public and private institutions, with the differences growing from undergraduate diplomas to postgraduate degrees,” the report stated. “There is a need for a strong focus on the weakest private institutions, not least because for the foreseeable future they will continue to play an important role in implementing the expansion plans.”

Beyond The Mainstream 

Indonesia also has a thriving network of Islamic religious schools known as madrasah, offering education from primary (madrasah ibtidaiyah) to lower (madrasah were also told they would have to sit Indonesia’s national exams. Ibnu Hamad, a spokesman for the Ministry of Education, told The Wall Street Journal that 114 schools had been affected by the changes, which were necessary to safeguard standards of education, with schools unconnected to diplomatic missions designated as Collaborative Education Unit schools. Institutions that were once international have been reclassified as “intercultural” schools and are no longer allowed to admit Indonesian students.

Private schools are operated largely by local companies and the foundations of some of Indonesia’s biggest conglomerates, including SinarMas, the Lippo Group and BINUS. The so-called “negative investment list”, which previously limited foreign investment in educational institutions to 49%, was revised in 2010 to allow foreign entities to hold full ownership, although a special licence is required and in practice there is little foreign investment.

Although some Indonesian institutions have sought out partnerships and alliances with international counterparts, Indonesia has no branch campuses of foreign universities, in contrast to Malaysia, where China’s Xiamen University in 2016 joined institutions including the UK’s University of Nottingham and Australia’s Monash University.

Skills Training 

Vocational and skills training is more likely to attract the interest of foreign companies, although the investment cap is 49%, and some subsectors are subject to certain conditions, such as restricting investment to small businesses or requiring cooperation with a local partner. Demand for language courses, particularly English, remains robust, while young Indonesians are also eager to develop skills in technology and hospitality.

In 2013 a Boston Consulting Group report estimated that, due to the skills deficit, companies in Indonesia would find it hard to fill as many as 60% of middle-management positions and half of all entry-level positions by 2020. With the number of administrative and managerial roles forecast to rise to 55% of all positions by 2020, the country needs to rapidly increase its number of skilled graduates.

Some specialised colleges are aiming to fill that gap. Courses at the Perbanas Institute, which was founded in 1969, focus on banking, finance and accountancy, where students can secure professionally accredited qualifications. The institute has about 5000 students and is rated “A” by the country’s accreditation board for banking and accountancy. Most students on these courses are employed within three months of graduation, according to Perbanas.

Tourism is also proving a popular choice. The number of applications to the four specialised tourism institutions under the Ministry of Tourism reached 9800 in 2016, with only 4631 places available. In 2015 there were 8200 applicants. “It’s important to train people to match the requirements of the market, which is one of the biggest challenges for Indonesia’s human resources today,” Victor Hartono, president director of Djarum Foundation, told OBG.

Areas For Improvement 

Indonesia has long had a rigid education system skewed heavily towards rote learning and testing. However, it is increasingly lagging behind countries in South-east Asia and elsewhere. As stated in the OECD-ADB report, “The top priority for Indonesia is to improve learning outcomes and enable students to form core skills and understanding. The key to success will lie in addressing teaching and school leadership standards.”

The country lies at or near the bottom of the rankings of both the Programme for International Student Assessment (PISA) and Trends in International Mathematics and Science Study international benchmark tests on maths, science and reading skills. They are behind their competitors in the region, including Malaysia and Vietnam, and at least three years behind the OECD average in PISA. More than half of Indonesian 15-year-olds do not have basic skills in reading and maths, according to the OECD-ABD report.

Successive Pearson surveys of the education system in 40 countries worldwide placed Indonesia at the bottom of its overall rankings in both 2012 and 2014. In the most recent survey, Indonesia also came last in terms of educational attainment and only fared marginally better in cognitive skills, where it was placed 37th between Colombia and Mexico.

Education analysts say corruption and poor management are part of the problem. The system has been the subject of allegations of financial leakages, exam cheating and teacher absenteeism. In May 2016, Indonesia Corruption Watch, the country’s leading NGO fighting graft, estimated that Rp1.3trn ($94.9m) was lost to corruption in education. In June 2016 the Ministry of Education expressed doubt about the results of the most recent national examinations, since many students scored highly despite poor school-level semester tests.

“Getting kids to school is easier,” said Daniel Suryadama, education research manager at Innovation for Indonesia’s Schoolchildren, an Australian aid-funded project. “Getting kids to learn is much harder. Indonesia remains close to the bottom in international tests and not many people know how to improve learning outcomes in developing countries.”

Reforms & Incentives 

However, the government is taking steps to raise standards. In an attempt to address the poor status of teaching in the country, where in 2008 the starting salary in primary or junior high was 60% less than the national average per-capita income, a decade ago it embarked on a programme that it hoped would raise teaching standards and attract better qualified people to the profession.

Under the Teacher and Lecturer Law, implemented in 2005, professional teachers are those who hold a bachelor’s degree and pass a teaching competency test. Those who received the designated qualifications would receive an additional allowance to effectively double their salary. The initiative proved successful in increasing the level of training, with the majority of the country’s 2.6m teachers taking steps towards being assigned with professional status. However, a 2014 World Bank study concluded that the programme did not significantly improve learning outcomes, and made recommendations for increased monitoring across the teacher training programme and improving teacher selection processes.

The increased salaries paid under the programme also put a strain on the education budget, according to the study. In 2013, 13% of the entire education budget – nearly $4bn – went on teachers’ allowances.

Nevertheless, the World Bank praised the initiative for its goal of attempting to “re-professionalise a de-professionalised occupation,” and noted that teaching reforms also depend on teacher motivation. It welcomed the creation of cluster-based teacher working groups and attempts to bring together parents, schools and communities to help children.

Revisions to the curriculum have also been controversial. In early 2015 the 2013 curriculum introduced by the government of former President Susilo Bambang Yudhoyono was suspended. The curriculum was meant to herald a move towards more creative thinking and problem solving, but critics worried it put too much emphasis on moral and religious education. Teachers, meanwhile, said they were not prepared and did not have the sufficient materials.


Recognising struggles in the ICT sector to fill highly skilled positions as a result of the shortcomings in the education system, Anies Baswedan, minister of education between October 2014 and July 2016, said in May 2016 that coding would form part of the school curriculum from 2017 onwards.

The ministry has also shown a willingness to adopt new technology in the classroom (see analysis) as a way to improve learning for remote communities by collaborating with established tech giants such as Google and Microsoft. The government is also taking action to improve literacy: in 2015 the Ministry of Culture and Education launched the School Literacy Movement, a mandatory programme that promotes the reading of non-textbook material for a minimum of 15 minutes before the start of the day’s lessons.

Bridging The Gap 

Despite the fact that Indonesia has made great progress in reducing poverty – the proportion of the population living below the poverty line fell to 15.9% in 2012, according to the ADB – the costs associated with schooling remain a problem.

Widodo’s government has attempted to address the issue through its Indonesia Smart Card initiative. One of its earliest policies launched on taking office, the programme provides fees and stipends to children from low-income backgrounds to ensure they complete their schooling. The School Operational Assistance programme has also helped millions of poorer children stay in school by paying their fees – from 34.5m in 2005 to 44.7m in 2012. The government is also working closely with NGOs and corporate foundations to raise standards in Indonesian schools, especially for the most disadvantaged.

According to Juli Adrian, managing director at Provisi Education, an education quality improvement consultant that works with companies’ corporate social responsibility units, NGOs and governments, the authorities welcome corporate assistance and nearly all large Indonesian companies focus their corporate social responsibility programmes on education. “The ministry’s position is that if a company wants to help, they are open to it,” Adrian told OBG.


Indonesia has recognised the challenges posed by an education system that is struggling to equip its students for the fast-changing demands of the global economy. The adoption of the ASEAN Economic Community in 2016, theoretically enabling the free movement of labour, will increase the pressure on Indonesia to compete effectively, provide opportunities for its people and nurture human capital with the skills to feed its economy. In an archipelago of more than 17,000 islands and 250m people, change will take time, but the country is on the right path.

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The Report: Indonesia 2017

Education chapter from The Report: Indonesia 2017

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