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n this era of rapid economic, social and technological change, countries rely more heavily on their universities than ever before to give their economies a competitive edge.

A quick glance at the most commonly cited metrics suggests that Indonesia'€™s higher education system is still failing to make the grade. Even acknowledging that global university rankings are inexact and often unfair, it is chastening that the fourth largest country in the world does not have a single institution in the Times Higher World University 400. Research performance, as measured by scientific publications and citations, is woeful, trailing not only Malaysia and Thailand, but also poorer countries Vietnam and Bangladesh.

The universities are not producing enough engineers and scientists to support the 16th largest economy in the world; employers report that Indonesian engineers are paid twice as much as their Indian counterparts but need more on the job training. Nor has access improved for low and middle-income households.

Fifty-six percent of students enrolled in bachelor degree programs come from households in the richest fifth of the population, while the poorest forty percent '€” households living on less than US$1.50 per person per day '€” contribute only 10 percent of students.

It is not all doom and gloom. Gross tertiary enrolments passed the 30 percent mark in 2012, double the level recorded in 2000. A larger share of the relevant age cohort attends some form of higher education than most other countries in the region. Indonesia has also successfully closed the higher education gender gap: now, for the first time, more women are enrolled in tertiary institutions than men.

Still, the sense of perpetual crisis remains. Since the earliest days of the republic, commentators have identified a remarkably consistent set of problems: substandard facilities and underqualified faculty; bureaucratization and political interference; obsolete teaching methods; relative neglect of science and technology in favor of '€œsoft'€ subjects like management; a poor track record of research and publishing; inattention to labor market requirements and the employment prospects of graduates and, tuition fee, scholarship and admissions policies that systematically disadvantage low-income students and students from rural areas.

One could go on. That these problems have been around for such a long period of time and that they have persisted under both autocratic and democratic governments suggests that they have deep roots in the academy and in society. Seventeen years after the fall of Soeharto, New Order-era repression is no longer an adequate explanation for the sector'€™s underperformance.

Academics often claim that the main issue is inadequate public funding. The situation would improve if government would just spend more money on universities. Indeed, a good case for more funding can be made to help Indonesia reap the benefits of the new knowledge economy.

On the other hand, public spending on higher education doubled in real terms between 2007 and 2012 without measurable improvement in the quality of teaching and research.

Before investing more money, the government should give institutions and lecturers good reasons to use public resources more efficiently. Successive governments have designed higher education policy to remove all traces of competition from the sector. Lecturers are promoted based on seniority rather than research or teaching performance.

The rules make it difficult for lecturers to change universities, which effectively eliminate competition to hire the most productive scholars or the best teachers. Academic departments routinely hire their own graduates as lecturers, a practice that encourages patronage and favoritism and discourages competition. With limited exceptions, government funds are delivered to universities as block grants and without reference to research output or student outcomes.

Under Soviet Communism, the workers used to joke that as long as the bosses pretended to pay them, they would pretend to work. Much the same can be said for Indonesian lecturers, who cope with low pay by moonlighting at the private colleges and universities that have sprung up to absorb excess student demand.

Absenteeism is rife and teaching quality is poor. Conscientious lecturers cannot improve their salaries by updating their lecturers or helping students to achieve better results.

Indonesia'€™s policy of limiting collaboration between international and domestic universities and scholars is similarly self-defeating. Unlike other countries in the region, Indonesia has ruled out the establishment of international university branch campuses. Even joint degrees and teaching programs are prohibited except under highly restrictive conditions.

These policies protect domestic institutions from external competition, but at the cost of putting unnecessary obstacles in the way of Indonesians seeking to acquire global knowledge and limiting student choice. It is the academic version of cutting off one'€™s nose to spite one'€™s face.

Reforming the system will not be easy. Most institutions and academic will actively oppose changes that attempt to introduce more accountability and competition into funding arrangements, remuneration, hiring and promotions.

Perhaps we should look to investment policy for a possible way forward. Reducing barriers to investment is often politically difficult because the beneficiaries of protection use their political clout to block reforms. Rather than challenge vested interests head on, policy makers have successfully used Special Economic Zones (SEZ) as policy experiments to achieve controlled liberalization of investment opportunities in specific places, for example near major ports or international borders. SEZs are often seen as a politically non-threatening way to attract needed investment in the absence of deeper reforms.

In education it makes less sense to create openings in specific geographic places because reform-minded scholars and institutions are not necessarily located near one another. Instead, the government could create Special Science and Technology Programs that allow international and domestic universities to establish new teaching and research partnerships in selected disciplines that are currently under-represented in Indonesian universities.

According to the World Bank, 30 percent of 30 to 45 year olds in the Indonesian labor force need retraining. The government could encourage national and international academies, colleges and universities to work with industry to establish Special Vocational Programs to address specific skills shortages in the labor market.

One could imagine similar experiments that create controlled opportunities for innovation but do not require taking on the established academic political interests. The point is that reform of higher education will probably begin with small steps rather than giant leaps.

With time, Indonesian scholars will hopefully come to realize that competition and openness are good for the country and for their institutions as well.