Table of Contents

  • Indonesia is one of the major economies of Southeast Asia and the government has set itself ambitious goals for its social and economic development, for which human capital development is crucial. Despite great regional divergences which limit access to quality education for many, Indonesia has made impressive progress on many fronts in the education sector since the 1997-98 Asian crisis such as coverage of basic education. Many challenges remain including expanding enrolment in secondary and tertiary education, increasing quality and relevance and making governance and finance more responsive.

  • Education and skills are central to Indonesia’s growth prospects in the next decade. It now has the opportunity to capitalise on the very substantial progress that has been made in expanding access to education. At the turn of the century, over 1.5 million students were out of school but today, Indonesia is close to achieving universal basic education. These efforts have involved relatively high levels of investment on educational facilities, teaching personnel and learning materials.

  • Indonesia is well-positioned geographically in terms of world trade flows, with extensive natural resources and immense potential, deriving not least from its large young population – some 43% of its 250 million people are under 25 years old. It will not realise its potential as one of the world’s major emerging market economies, however, if it relies merely on exploiting its natural resources and its demographic structure. It will need to develop its human capital through education that leads to effective learning and skills formation. It must do so urgently, given the lead that comparator and competitor nations, especially in the Association of Southeast Asian Nations (ASEAN) but also in other regions, have over Indonesia on many indicators of physical infrastructure, educational attainment and performance, advanced human capital and research capacity, and the pace and scale at which they are moving ahead.

  • Indonesia is an archipelago stretching some 5 000 kilometres between the Indian and Pacific Oceans and encompassing three time zones from its western to its eastern end. It comprises 17 508 islands, only around 6 000 of which are inhabited, and is the fourth largest country in the world, with a widely distributed population totalling more than 250 million. It also has the 16th largest economy in the world, and the largest economy in the Association of Southeast Asian Nations (ASEAN). One of the world’s major emerging market economies, Indonesia is a member of the G20 group of major economies. It is also the world’s most populous Muslim nation.