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RI needs major change in education to spur growth
Indonesia would require a dramatic alteration of its growth model if the country wants to sustain its robust economic expansion, with a growing need for policy makers to spend more resources on education and innovation, the Asian Development Bank (ADB) has said
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I
ndonesia would require a dramatic alteration of its growth model if the country wants to sustain its robust economic expansion, with a growing need for policy makers to spend more resources on education and innovation, the Asian Development Bank (ADB) has said.
In terms of the education system, there appears to be an 'education and skills mismatch with jobs' that poses challenges for local corporations to expand their business, the ADB noted in a publication entitled, Innovative Asia: Advancing the Knowledge-based Economy, released on Friday.
The ADB warned that if the situation is not resolved soon by policy makers, then by the end of 2020 the gap between supply and demand for middle-level managers would reach as high as 56 percent, something that would act as a constraint against Indonesia's future economic growth.
'The country will need to invest to ramp up appropriate educational opportunities for a large cohort of the youth population, while addressing quality and relevance,' the report said.
The government should give incentives for companies to train employees and set up corporate universities, in addition to preparing at least 10 research-committed universities to spur innovation, it suggested.
ADB said that workers in science and technology account for less than 10 percent of total employment in Indonesia, compared to more than 25 percent in Organization of Economic Cooperation Development (OECD) member countries.
The country's policy makers would also need to expand the educational capacity of workers so that they can gain entry into high-end service jobs in finance and business, as well as promote entry into the creative industries sector, the ADB advised.
According to the ADB, Indonesia would need to increase its investment in research and development to 1.5 percent of gross domestic product (GDP), from the current level of 0.08 percent, which is poor even when compared to other Southeast Asian nations.
To improve Indonesia's human resources capacity, Finance Minister Chatib Basri is now developing a tax incentive scheme for corporations that spend funds for research and development (R&D) purposes.
Chatib also established the Indonesian Endowment Fund for Education (LPDP), a Rp 1 trillion per year scholarship program overseen by the Finance Ministry, which financially supports Indonesian students to get higher education overseas.
The incoming government has also shown awareness of the issue, with president-elect Joko 'Jokowi' Widodo vowing to push for a so-called 'mental revolution' in a strategy where spending on education will also be accompanied by a revamping of character-building programs for Indonesian schoolchildren.
- In the education system, there is an 'education and skills mismatch with jobs'
- Workers in science and technology account for less than 1%
- Indonesia needs to increase its investment in R&D to 1.5% of GDP
An Indonesian law stipulates that at least 20 percent of total state spending, which has been predicted to hit Rp 2,000 trillion this year, must be allocated to education, but economists have criticized the spending spree as poorly targeted and ineffective.
'The ramp-up in spending has not been matched with an increase in quality, with Indonesian students scoring, shamefully, the second-lowest in a recent international PISA [Program for International Student Assessment] aptitude test,' noted Wellian Wiranto, an economist from OCBC Bank in Singapore.
'Infrastructure aside, education will be another area to watch,' he added.
