Education and training to Indonesia
Trends and opportunities
Strong economic growth in Indonesia is driving increased demand for quality education. As Indonesia’s economy grows, its education and skills needs are diversifying. Currently, industry demand for quality training is unable to be fully met by local providers. Skills shortages exist in industries that are important to Indonesia’s continued economic development. These include industries that align with Australian expertise in skills development.
Australia is the most popular international destination for globally mobile tertiary students from Indonesia. (Source: Indonesian Ministry of Research and Technology, 2018 Annual Report, May 2019).
Despite Indonesia’s economic growth and emerging middle-class, onshore student enrolments have grown by just 8.5 per cent since 2015, and, prior to the COVID-19 pandemic, had only recently returned to the peak levels recorded in 2002 (21,000). (Source: Department of Education, Skills and Employment, International Student Data 2019, August 2020)
The Indonesian Government recognises that economic growth aspirations need to be supported by reform in education, training and research. National priorities include improving the quality of vocational and higher education, increasing student and academic mobility, and commercialising research.
Career success is a key factor driving student choice in Indonesia. Students expect more experiential learning opportunities such as internships, volunteering and other professional development.
With 40% of the population aged under 24 years (Source: CIA World Factbook, Indonesia People and Society 2020, August 2020), and half its population aged under 30, (Source: Asialink Business, Doing Business in Indonesia 2020, August 2020) Indonesia is looking to maximise the benefits of its demographic dividend, including through increased access to globally relevant education and training.
Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA)
Australia and Indonesia have agreed to a skills development package of outcomes that guarantees Australian vocational education and training providers can establish majority-owned training institutions in Indonesia.
The skills package also includes a work and holiday visa outcome, reciprocal skills exchange program and workplace skills training program. This will help build people-to-people links and increase the Indonesia literacy of Australian business – leading to deeper and broader relationships and opportunities for both Indonesia and Australia.
For the first time in any free trade agreement, Indonesia has offered commitments on a wide range of technical and vocational education, guaranteeing that Australian providers can establish majority Australian-owned joint ventures in Indonesia, and guaranteeing the conditions in which they can operate.
- IA-CEPA guarantees that Australian suppliers can own 67% of investments in the vocational education and training sector (known in Indonesia as work training)
- IA-CEPA will provide certainty for Australian providers that they can establish a work training business anywhere in Indonesia and that the qualifications for Australian trainers are accepted in Indonesia
- Australian training providers in this sector benefit from commitments that guarantee they can offer all Australian Qualifications Framework qualifications and Indonesian Qualifications Framework qualifications levels 1-5 in subject matters including technical engineering, business administration, languages, tourism, management, information technology, art and agriculture.
Reciprocal Skills Exchange Program
A Memorandum of Understanding on the Indonesia-Australia Skills Development Exchange Pilot Project responds directly to a suggestion from the Indonesia-Australia Business Partnership Group – representing both Australian and Indonesian industry – to give businesses from each country the opportunity to send people with tertiary level skill qualifications to work for up to six months in the other country.
With IA-CEPA now in force, the pilot project will apply to the following sectors:
- financial and insurance services
- mining, engineering and related technical services
- information media and telecommunications services.
The pilot program will start with up to 100 exchanges in each direction in the first year, rising to 500 exchanges in the fifth year. This is an excellent example of how the IA-CEPA and related agreements will help businesses develop the capabilities of their staff, while also building stronger people-to-people links and promoting cross-cultural awareness.
Work and Holiday Arrangement
Australia and Indonesia have a separate arrangement that allows Australian and Indonesian travellers aged between 18 and 30 to work and holiday in the other country for up to 12 months.
The annual limit of Work and Holiday visas for Indonesians will expand from the current 1,000 places to 4,100 places and will be stepped up each year to 5,000 by the sixth year. The arrangement allows Indonesians to develop their skills through short term work in Australia and also gives Australian businesses and their employees the opportunity to work with young Indonesians and to benefit from the perspectives they bring.
Workplace Skills Training Program
A Memorandum of Understanding between Australia and Indonesia will focus on skills development through a pilot program on workplace-based training.
The pilot will allow up to 200 Indonesians per year to receive workplace skills training in Australia. The participants must be sponsored by an approved organisation in Australia and may undertake workplace-based training in Australia for up to six months in the following sectors:
- infrastructure development
- financial services
- information communication and technology.
This is a further example of IA-CEPA and related agreements providing opportunities for skills development that will help our close neighbour, Indonesia, build the skills of its young people and forge the lasting people-to-people links on which the future relationship of Indonesia and Australia will depend.
(Source: Department of Foreign Affairs and Trade, Outcomes: Skills development 2020, August 2020)
Opportunities exist across all education sectors.
- IA-CEPA guarantees that Australian suppliers can own 67 per cent of investments in the vocational education and training sector (known in Indonesia as work training).
- IA-CEPA automatically locks in future liberalisation for Australian universities setting up in Indonesia.
- There is demand for in-market English-based training, particularly around key growth industries such as tourism and hospitality.
- Indonesia’s Government has identified the need for an industry-responsive VET system.
- Indonesia is looking to enhance the quality of its higher education and research through stronger industry links and internationalisation. There are opportunities to diversify field of study and level of qualification for onshore students from Indonesia.
- Management and Commerce courses account for around half of all enrolments from Indonesia. This presents opportunities to raise awareness in Indonesia of Australia’s capability in the delivery of alternative fields of study such as Science, Technology, Engineering and Maths (STEM) – priority fields for Indonesia’s Government.
- There are opportunities to diversify higher education levels of study. Postgraduate coursework and higher degree by research studies could be encouraged through stronger links with Indonesian Government scholarship providers.
- There are opportunities to diversify vocational certificate and diploma programs in priority areas for Indonesia’s industry and government.
- Opportunities to grow English language and degree pathway programs also exist. Only 30% of higher education and 40% of VET students from Indonesia complete pathway courses in Australia. This compares with 44%(higher education) and 50% (VET) for all other international students.
Indonesia’s fintech and edtech sectors are growing and the digital economy is open to international business. Indonesia’s rapid digital transformation makes it a cost effective, high impact market for digital marketing.
Notwithstanding this, digital marketing of high-cost services such as international education must be complemented by face-to-face engagement. Success in this market requires strong on-the-ground relationships.
In Indonesia, an overseas education is seen as a way of developing life skills such as independence, resilience and self-management. As such, drivers encompass more than financial and career related returns. Extended family, friends and alumni are very influential in deciding where to study.
Indonesian students and young people are often very entrepreneurial. The Government of Indonesia is keen to ensure graduates obtain the skills to succeed in small business.
Australia’s long relationship with Indonesia has resulted in extensive people-to-people connections. Australia is seen as cosmopolitan and welcoming and has the key advantages of geographic proximity and English language education provision.
Australian education has a reputation for quality and the opportunity to work while studying is a key advantage in a highly price sensitive market.
Indonesian Government agencies
Indonesia’s education system is complex, with many individual parties taking responsibility for specific elements.
Ministry of Education and Culture (MoEC)
Responsible for research, policy and oversight for tertiary education, as conducted by universities and polytechnics. It is also responsible for preschool, primary school (Years 1-6), junior secondary (years 7-9) and senior secondary (years 9-12). Includes senior secondary vocational education and special education.
Ministry of Religious Affairs (MoRA)
MoRA run a parallel system from pre-school through to tertiary level. They are responsible for around 20 per cent of students. A number of religious institutions, such as Muhammadiyah or the Catholic Church, manage their schools and universities not through MoRA but through the MoEC – the difference being that these organisations’ religious schools teach the same material as state schools, instead of acting as schools of theology.(Source: Australia Indonesia Centre, Stronger Education Partnerships 2019, August 2020)
Ministry of Manpower (MoM)
The VET sector is jointly governed by the Ministry of Education and Culture (MoEC), and the Ministry of Manpower (MoM). The MoM is responsible for education policy related to the labour sector, including skilling and work training initiatives. In 2019, the MOM supervised 303 training centres, called Balai Latihan Kerja (BLK), with a capacity to train 275,000 students. 19 BLK are under the direct management of the MoM, while 284 are administered by provincial or regency level governments. (Source: Indonesian Ministry of Education and Culture, Indonesia Education Statistics in Brief 2018-2019 Table 1, February 2019)
Other Indonesian government ministries maintain their own institutes, schools of higher learning and polytechnics to support and develop skills related to the job functions of staff within the ministries. For example:
- The Ministry of Industry operates the Textile Technology Polytechnic in Bandung (Politeknik Sekolah Tinggi Teknologi Tekstil Bandung) and the Polytechnic Academy of Corporate Leadership Jakarta (Politeknik Akademi Pimpinan Perusahaan Jakarta)
- The Ministry of Tourism operates the Academy of Hospitality in Bandung and Bali (Sekolah Tinggi Pariwisata Bandung, Bali)
- The Ministry of Health operates the Health Polytechnic in Bandung, Denpasar, Jakarta, Makassar, and other locations.
The non-government sector is also involved from preschool through to tertiary level education provision.
Indonesia Investment Coordinating Board (BKPM)
Indonesian Association of Private Higher Education Institutions (Indonesian language only)
Australia Indonesia Business Council (AIBC)
Indonesia Australia Business Council (IABC)
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