We explore the economic and political forces in Indonesia that are pushing an influx of new students to obtain degrees from other countries.
Jakarta is booming. Changing. Stretching.
Anyone who’s stepped foot in Indonesia’s capital in the last five years can see this immediately. The skyscrapers seem to keep springing up out of nowhere and green-helmeted motorcycle taxis have converged upon the streets in great number. Things are on the move in Indonesia, which, may we add, is the fourth most populous country in the entire world with the largest Muslim population.
Here are two facts that no one disputes:
- The Indonesian economy is growing, big time.
- The Indonesian workforce is looking for better higher education than what is (currently) available at home.
At Admissionado, we’ve seen an increasing number of applicants from Indonesia (as well as neighboring countries such as Thailand, Vietnam, Singapore, and Malaysia) and we think it’s an incredibly interesting case study of higher education trends and those who are seeking education abroad in Southeast Asia.
What are the economic and political forces at hand that are pushing this influx of new students (undergraduate, Masters, MBA, or otherwise) to obtain their degrees abroad?
Indonesia is Investing in the Success of its People
The number of students leaving Indonesia to study abroad has increased by 35% over the last decade, driven by an Indonesian government scholarship: the Indonesian Endowment Fund for Education (LPDP), founded by the Finance Ministry in 2012.
This year, the Indonesian Ministry of Finance has increased the budget from Rp 1 trillion to Rp 22.5 trillion (US$1.68 billion) for students pursuing undergraduate and postgraduate degrees. This increase will allow the government to fund 6,000 students’ education with hopes of making a powerful move towards closing the education gap in Indonesia this year. One of the primary goals of this scholarship, according to President Director Eko Prasetyo, is to help the country reach its target of becoming a developed country by 2030.
Indonesia’s Population is Young and Hungry for Quality Higher Education
In Indonesia, the the average age is 28 years old, and nearly half of Indonesians are under 30. At the same time, the country’s middle class is growing in spurts alongside its economic development, and the country’s consumer class is expected to double to 140 million by 2020.
Indonesia’s service sector is growing quickly as well, and the increasingly educated workforce is hungry for more higher education opportunity. According to the World Bank, in order for the country’s labor supply to catch up with its economic demand, the percentage of workers with higher degrees would need to almost triple.
Currently, data from UNESCO on the global flow of tertiary-level students indicates that, in 2016, about 42,000 Indonesians were enrolled in higher education abroad. The most popular destination countries were Australia, the US, Malaysia, Egypt and Japan.
What we’ve noticed in our own personal work with these applicants is that, although Australia pulls the highest number of students, many Indonesians applying to top universities still end up going to the US or Europe. Take, for instance, two of Jakarta’s hottest young entrepreneurs who just happen to both be HBS grads: Nadiem Makarim (Founder and CEO, Gojek) and Ferry Unardi (Founder, Traveloka).
Indonesia’s Current Education System Leaves a Lot to be Desired
The gap to be closed is a huge one… The World Economic Forum’s Human Capital Report 2015 ranks Indonesia 69th out of 124 countries in terms of human capital development, lower than that of all its ASEAN neighbors (Singapore (24th), the Philippines (46th), Malaysia (52nd), Thailand (57th), and Vietnam (59th).
Going abroad for for higher education needs will be a boost for those studying in what is currently, according to Al Jazeera, one of the weakest education systems in the world. Improving education at home and in developed countries is key to Indonesia’s future prosperity, a belief mirrored by official policy, as can be seen in the growing amount of investment in education and in scholarships abroad. Indonesia needs to globalize its talent and bring work processes up to international standards, and is working to do so.
And the appeal for individual students is as great as it is for the country of Indonesia as a whole. The opportunity to learn more languages and cultures, to interact and learn from colleagues with different perspectives and experiences, and to inspire interest from businesses, investors, and institutions from around the world.
What We’ve Learned from the Indonesian Applicants We’ve Worked With
For many of our own clients, leaving Indonesia to study in the US or Europe has been a great opportunity to get an education that offers a plethora of opportunities, not only academically, but extracurricularly through clubs, sports events, social events and so on that would have been otherwise unavailable to these students.
The inherent desire remains, both for the personal opportunities for success, but also to help make Indonesia a stable economy. Many of the young students studying abroad wish to return to Indonesia and give back to their country and want to see a change in the hierarchical work culture.
And as we see in the multitude of successful new Indonesian startups (such as Gojek Grabtaxi, Traveloka, Tokopedia, Tiket) coming home and bringing new, dynamic and game-changing ideas.