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Jakarta Post

Costly LPDP scholarship should be reviewed, House demands

  • Satria Sambijantoro

    The Jakarta Post

Jakarta   /   Fri, September 19, 2014   /  09:43 am

The House of Representatives is looking to review the Indonesian Endowment Fund for Education (LPDP) as members argued that the funds in the Rp 16 trillion (US$1.3 billion) scholarship program could instead be earmarked for more productive uses.

In a House Budget Committee meeting on Thursday, lawmakers agreed that the LPDP would be necessary to boost Indonesia'€™s human capital in the long term, but argued that the scholarship program might require thorough evaluation, given the massive amounts of money it allocates.

The loudest complaint came from the Indonesian Democratic Party of Struggle (PDI-P) faction, with lawmakers from the party questioning the necessity of increasing the LPDP budget allocation to Rp 20 trillion next year.

For next year, the government should not increase the funds and instead give more attention to the economy'€™s more pressing needs, such as infrastructure, PDI-P politician Yasona Laoly suggested.

'€œWhat we are complaining about here is: who are the ones supervising the funds?'€ said Laoly, who is also a deputy chairman of the House Budget Committee.

The history of LPDP traces back to 2010 when the then-finance minister Sri Mulyani Indrawati, apparently concerned about the quality of Indonesia'€™s human resources, started implementing an idea wherein the government would allocate a significant amount of money for educational and research purposes.

The LPDP is classified as an '€œeternal fund'€, the principal of which cannot be disbursed, in line with its purpose to finance the education of Indonesia'€™s younger generations in the very long run. The LPDP is co-managed by the Finance Ministry, the Education and Culture Ministry and the Religious Affairs Ministry.

By the end of December, the LPDP'€™s total assets stood at Rp 16.9 trillion, or higher than the annual budget of the Foreign Ministry and the Forestry Ministry combined. The funds had piled up through gradual deposits by the government: Rp 1 trillion in 2010, Rp 2.6 trillion in 2011, Rp 7 trillion in 2012 and Rp 5 trillion in 2013. Funds had also increased through some returns on investments.

The funds stay untouched, but some of them are invested in various forms of financial instruments, such as government bonds, with the investment returns '€” estimated to stand at more than Rp 2 trillion annually '€” being used to finance Indonesian students for their higher education and research projects.

Qualified students who succeed in passing the LPDP'€™s series of tests will be fully funded for their research projects or study overseas, with the condition that they agree to return to Indonesia after they complete their projects.

'€œIndonesia must shift from a cheap labor-based economy to a skills-based economy,'€ Finance Minister Chatib Basri said, when asked about the huge funds earmarked for the LPDP. '€œI'€™m really proud to see Indonesian students able to study overseas.'€

However, lawmakers have complained that the LPDP'€™s successful applicants come from affluent and well-educated students in Java, as youths in eastern Indonesia lack the academic abilities and English skills required to pass the scholarship test.

A case in point is Susi (not her real name), a student who succeeded in convincing the LPDP to pay a $30,000 per year tuition fee for her overseas Master'€™s degree program, despite her wealthy family background.

'€œI actually have a fear that they [the LPDP assessors] would find out about my true family situation,'€ said Susi, who lives in a posh house in the affluent area of Pondok Indah, South Jakarta.

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