A Blueprint for Trade and Investment with Indonesia: An education snapshot

20 Apr 2022

To assist Australian companies to take advantage of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) and deepen their engagement with Indonesia, the Australian Government has produced a “Blueprint for Trade and Investment with Indonesia”.

The Blueprint provides practical and strategic guidance for Australian businesses considering market opportunities in Indonesia for the first time, including international education providers.  

OVERVIEW 

Strong economic growth in Indonesia is driving increased demand for quality education and the government is committed to making vocational education and training a top priority.

  • 50 per cent of Indonesia’s population is aged under 30
  • 20 per cent of Indonesian workers are underqualified
  • Indonesia is seeking to add 57 million skilled workers to its economy by 2030

Successful engagement in Indonesia’s education sector can be achieved by having long-term commitment, strong local partners, and a willingness to forge deep connections in the country.  

Entering the education market through consortia is likely to provide the greatest benefits for both Australia and Indonesia.  

OPPORTUNITIES

Indonesia’s education and training needs are substantial and growing. International education providers have a major role to play in meeting those needs.

  • Indonesia is predicted to become the world’s fourth largest by mid-century, behind China, India, and the United States.
  • Indonesia’s higher education sector is predicted to grow at a compound annual rate of 10.3% between 2016 and 2025, by which time it will be worth US$118 billion. 
  • Indonesia plans to double the number of work-ready graduates (equating to approximately 3.8 million new skilled workers a year).

WHERE TO FOCUS  

The country has developed a 5-year plan, Making Indonesia 4.0, to respond to local challenges including the need for study programs that meet industry needs, industry-oriented curriculums, and improved teaching and facilities. 

Many Making Indonesia 4.0 priorities align with Australian expertise in increasing the digitisation of SMEs, using artificial intelligence and big data, and encouraging enterprise development with technological innovation. 

Priority sectors for Indonesia include:

  • food and agribusiness
  • science and engineering
  • digital transformation
  • healthcare

WHAT IA-CEPA OFFERS 

IA-CEPA seeks to help Indonesia close its skills gap by facilitating training, catalysing TVET reform and strengthening higher education.

IA-CEPA gives Australian businesses major advantages in the Indonesian education market by allowing majority (up to 67%) Australian ownership of VET enterprises anywhere in Indonesia, and via a Reciprocal Skills Exchange program, allowing people with tertiary qualifications from both countries to gain six months’ experience in-market.

Separate to IA-CEPA, a 2021 Ministerial regulation allows top 100 foreign tertiary institutions to open stand-alone campuses in Indonesia with some requirements on the subjects/faculties offered and operating as a not-for-profit. Monash University is the first foreign university to establish a campus in Indonesia under these provisions.

CHALLENGES 

Indonesia’s education system is large and complex, with multiple ministries and agencies involved in oversight, policy and regulation. Fragmented responsibility between different national government departments and sub-national authorities can be challenging to navigate.

Foreign education providers typically operate through a contractual partnership with a local government or private entity by providing expertise and curriculum content, while local partners provide infrastructure and student clientele.

This may risk exposure to local partner decisions and brand reputation if the curriculum is not delivered to the standard expected.

Restrictions on employment of foreign workers can be onerous and there needs to be a demonstrated emphasis on skills transfer from foreign employees. 

MARKET ENTRY MODELS

Consortia-style training models can work productively to deliver integrated solutions to Indonesia’s educational needs, while lowering any potential risks through sharing financial and resource needs. 

Consortia can also offer an extensive range of education solutions from micro-credentials and non-award short courses, to certificates, diplomas and degree programs.

Other delivery models include strategic partnerships using a licensing model or joint program delivery.

More information

For more information, download the Blueprint for Trade and Investment with Indonesia (Department of Foreign Affairs and Trade)