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Indonesia behind the learning curve JAKARTA - Indonesia is arguably Asia's least well-educated country, and the government is largely to blame. With 30% of its 242 million population school-aged, the world's largest Muslim country ranks lowest among its Asian neighbors in terms of public education expenditure.

A minuscule 0.03% of the Indonesian workforce has earned a university degree, according to government statistics. Only 39% of 12-to-15-year-olds ever make it to secondary school. Addressing a major world conference this month on training and development in Kuala Lumpur, Telkom Indonesia chairman Tanri Abeng lamented that more than 80% of Indonesians have only a primary-school education.

With a record 40 million people unemployed, the education system's failure means that Indonesia's pool of unskilled and increasingly unemployable labor is growing exponentially. That's bad economic and social news for a country that nearly a decade after the 1997-98 Asian financial crisis is still straining to recover from the economic adversity and displacement.

Indonesia has in recent years witnessed a worrying process of de-industrialization, with massive foreign divestment in many of the export-oriented industries that drove the country's spectacular economic growth throughout the 1980s and into the 1990s. In 2003, foreign investors pulled US$597 million out of the country, according to a recent report by the United Nations Conference on Trade and Development (UNCTAD).

Nowadays, the availability of low-cost labor has only a limited bearing on a country's ability to attract foreign capital, particularly in knowledge-based Western industries. The UNCTAD report notes that future foreign-investment flows to top developing countries in Asia will increasingly go toward so-called human-capital-intensive industries. The likely high-growth industries of the future, such as information technology and biotechnology, require an increasingly skilled labor force.

Moreover, Southeast Asia's fragmented markets are a tougher sell nowadays with foreign investors in light of China's and India's growth potential, where untapped unified markets present huge economies-of-scale benefits for multinational manufacturers. In human-capital terms, Indonesia is now viewed less favorably as a foreign-investment destination than Thailand, Singapore and arguably even Vietnam.

Part of that perception, no doubt, can also be chalked up to Indonesia's aging infrastructure, its unpredictable legal system and the lingering threat of terrorist attacks against Western targets. At the same time, Indonesia's decrepit education system and its woefully unskilled labor force are emerging as the largest deterrent to desperately needed new foreign investments.

Poverty of learning

In 2003, Indonesia's education spending stood at about 1.5% of gross domestic product (GDP), compared with 5.3% in South Korea and 2.8% in comparatively underdeveloped Vietnam, according to World Bank data. Thailand, which spends 3.7% of GDP on education, announced this week plans to increase that to 4.5%-5% beginning next year to improve Thai students' analytical abilities.

This year China will spend 13% of its total national budget on education, India 12%, the Philippines 17%, Malaysia 20%, Hong Kong 23% and Thailand 27%. Indonesia's education budget this year, in comparison, represents less than 10% of the government's budget, while the draft budget for 2007 proposes a tiny upgrade to 10.2% of total national spending.

Those meager allocations are in effect bankrupting Indonesia's public education system. For instance, in 2005 the cost of education was Rp71 trillion (US$7 billion), well above the Rp21.38 trillion allocated by the state budget, according to official statistics. A constitutional amendment in 2002 decreed that the government must spend 20% of the annual budget on education - but politicians have been slow to follow up.

Officials say they plan to increase education spending to 14.7% in 2007, as part of a phased plan to achieve the constitutionally mandated 20% by 2009. But as with previous governments, spending on roads, bridges and power stations has once again taken precedence over education under President Susilo Bambang Yudhoyono's administration.

Indonesia's education failures are grounded deep in history. National founder president Sukarno favored a system of mass political education, aimed at unifying the population rather than empowering them with employable skills. Under president Suharto, a compulsory nine-year education program was implemented, but the education system still completely failed to meet the needs of a modern workforce.

Now government funding is concentrated at the primary-school level, where enrollment rates have jumped from 62% in the early 1970s to about 95% today. Yet the lack of a modern curriculum and capable teachers is holding back Indonesia's most ambitious students and in turn the country's future economic prospects.

Across the board, rote learning is emphasized over the development of critical thinking skills. Sector specialists say less than half the country's primary-school teachers and two-thirds of secondary-school teachers possess even the minimum qualifications required to teach effectively. Instructor absenteeism on any given day is reportedly about 20%.

Most of the country's 3 million teachers and university lecturers moonlight to supplement their income. That's because pay scales, set by the government, start at a low Rp1.5 million ($165) a month for schoolteachers and Rp3 million ($330) for college lecturers. According to a recent Ministry of Education survey, about 80% of schoolteachers take on outside jobs to bolster their incomes - to the detriment of their commitment to public-school students.

This inattentiveness was recently exemplified in the failing results of a basic placement examination taken by thousands of graduating high-school students who had already been accepted for university places. Of the privileged few who do make it to university, graduates are criticized by employers for their lack of analytical skills and inability to solve problems - hardly surprising given the political emphasis of the national curriculum.

Worryingly, it appears the situation is set to deteriorate. In Indonesia, families are free to send their children to state, private or Islamic schools, yet the spiraling costs of education and related expenses have recently caused a growing number of dropouts.

Last year the government tried to cushion the effect of fuel-price increases on education enrollment through the so-called Bantuan Operasional Sekolah (BOS) program, which was designed to help cover the cost of tuition, registration, books and exams for needy children aged between six and 15 years. Yet according to Indonesian Corruption Watch (ICW), schools still charged most parents for these items, and in any case, the increased costs of transport for schoolchildren after the abolition of fuel-price subsidies has largely negated any of the BOS benefits for parents.

Indonesia is widely ranked as one of the most corrupt countries in Asia, and state schools are badly plagued by embezzlement and bribery. The Indonesian Coalition for Education claims that corruption permeates the national education system, where budgets earmarked for educational purposes are seldom fully used for school purposes and instead end up in the pockets of institutions' administrators, it contends.

For instance, it notes that textbooks and uniforms are marked up for sale to pupils, and teachers often give low marks in examinations to make students sit for repeats, which, of course, the students have to pay for. Contractor fees for school-building repairs and improvements are chronically inflated.

Islam fills the gap

Significantly, the state's education failure has opened the way for cheaper Islamic-oriented education. Recent estimates suggest that as many as 20% of Indonesia's school-aged children are enrolled in Islamic schools. And enrollment rates are increasing by about 7% every year, though education experts say the quality of instruction and emphasis on religious studies mean most Islamic-school graduates will lack the skills needed to participate in a competitive job market.

The government funds 10% of the secular Islamic day schools, or madrasahs, and an even larger portion of the traditional Islamic boarding schools, known locally as pesantrens. Pesantrens played a key role in national education before and during the early years of independence in the 1950s, but six decades later the standards, curricula and instruction methods are widely considered even lower than at state schools.

Attended by an estimated 2 million pupils, most pesantrens are in rural areas and under the direction of Muslim scholars. The standard pesantren syllabus includes teaching blocks for an understanding of the Koran, the Arabic language and Islamic law, as well as Muslim traditions and history.

Indonesia's 38,500 madrasahs enroll 21% of all students at the junior-secondary level, according to statistics compiled by the Asian Development Bank (ADB). In general, madrasahs serve the rural poor and are most active in isolated areas that offer few other educational opportunities.

These are often in areas of the country affected by chronic unemployment and poverty, a desperate mix that radical Islamic groups have been known to exploit for recruits to their sometimes violent causes. Madrasahs provide schooling for an estimated 5.7 million students nationwide, or 13% of all school-age students and more than half of madrasah students are children of farmers and laborers.

Foreign donors, for their part, are trying to help fill Indonesia's learning gap. The ADB has worked with madrasahs since the mid-1990s, aimed mainly at integrating their curriculum with the secular national education system. So, too, has the United States Agency for International Development (USAID) through a $157 million program aimed at modernizing Islamic schools through teacher training and updating curriculum to include lessons relevant to the workplace. Those efforts, however, have so far met with only limited success.

Notably, USAID in 1997 had prepared to close down its Indonesia-based operations on expectations that the then rapidly growing country no longer needed foreign aid. Now, Indonesia desperately needs to attract new foreign investments to rejuvenate growth and employ its vast, underemployed population. But without substantial domestic investment in human capital, those foreign investments likely won't arrive, and Southeast Asia's largest economy's prospects just grow dimmer and dimmer.

Posted in Economy @ 03 September 2006 10:22 CET by Jeroen · 'Blog' RSS feed · permalink

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