Globalization is prompting many Asian governments to rethink higher education policy. They are enacting reforms and forging links with Western educational institutions. Yet Indonesia, Southeast Asia's largest country, remains reluctant to open up to the rest of the world, maintaining a protectionist attitude that is holding back its universities and its economy.
Foreign universities are keen to establish beachheads in Asia, where a combination of rising incomes and favorable demography means that college enrollments are set to grow for years to come. Branch campuses, partnerships with local universities and online education offer these institutions an alternative to the traditional path of recruiting international students to attend the home campus.
For the host country, the entry of global universities expands the choices available to students and opens up opportunities for local scholars to collaborate with international researchers. Although they account for a tiny share of student enrollments, the presence of foreign institutions can motivate domestic universities to raise standards and pay closer attention to student outcomes.
Singapore, a pioneer in the internationalization of higher education, now hosts 13 branch campuses and has numerous international partnerships. These include the Asia campus of the Paris-based Insead business school and outposts of U.S. institutions such as Duke University Medical School, the University of Chicago, Stanford University and Yale-NUS, a collaboration between Yale University and the National University of Singapore. Government planners have positioned the city-state as an education hub, attracting students to its universities and multinational companies on the lookout for highly skilled staff and links to global research institutions.
Other countries have followed Singapore's lead, including China, which now hosts more than 30 branch campuses from the U.S., the U.K., Germany, Japan and Australia, among others. Malaysia has invested heavily in its own universities and also opened its doors to foreign institutions, including several British and Australian branch campuses, such as Newcastle University Medical School and Nottingham University's Malaysia campus. The Massachusetts Institute of Technology's Sloan School of Management has announced a partnership with Malaysia's Central Bank to open a new Asia School of Business in Kuala Lumpur in 2016. Even Vietnam has gotten in on the act with a branch campus of the Royal Melbourne Institute of Technology and two planned Vietnam-Japan Medical Schools, among other ventures.
Indonesia does not host branch campuses and it has no international partnerships where local students can obtain a foreign degree. The reason is simple: Such partnerships are against the law. Under the Higher Education Law of 2012, international university branch campuses, and even joint degrees and teaching programs, are prohibited except under highly restrictive conditions. Foreign academics are, for the most part, not allowed to teach in Indonesian universities.
Indonesia's higher education policies follow the logic of its industrial policy. Like its manufacturers of cement and steel, Indonesia's colleges and universities are protected from foreign competition because the government assumes they are too weak to stand on their own. By offering unchallenged access to the domestic market, "infant industry protection" buys time for local institutions to learn new technologies without fear of competition from more experienced and technologically advanced foreigners.
The problem with this strategy, in industry as in education, is that the "infants" have no incentive to grow up as long as governments can be persuaded to keep protectionist policies in place. So these industries spend most of their time and effort lobbying government rather than learning new technologies or lowering costs.
Consumers are the main losers, paying higher prices for domestically produced goods and services, many of which do not meet international quality standards. In higher education, the "consumers" are the students who must either make do with substandard domestic universities or leave the country, and employers, who have to cope with skill gaps in the labor force. Those who hire Indonesian engineers, for example, complain they earn twice as much as their Indian counterparts but need more on-the-job training.
Even accepting that university rankings are imperfect, it should give Indonesian leaders pause that their country, the fourth most populous in the world, does not have a single university in the top 400 of the London-based Times Higher Education World University Ranking. This puts Indonesia behind not only China, Singapore and Malaysia, but also India and Thailand. Research performance, as measured by scientific publications and citations, is woeful, trailing not only these countries, but also poorer ones such as Vietnam and Bangladesh.
One justification for protecting local universities is that the government is prioritizing equal access to tertiary education over facilitating world-class education for students from better-off households. But on this score, too, protection is not working. Figures show that 56% of students enrolled in bachelor degree programs come from households from the richest fifth of the population, while only 10% come from the poorest 40% of households -- those living on less than $1.50 per person per day.
It is not only competition from foreigners that is frowned upon in Indonesia's higher education sector. Even competition among local universities and academics is discouraged. Promotions for lecturers are based on seniority rather than performance, and the rules make it difficult for them to change from one employer to another, which eliminates competition among universities 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 few exceptions, government funds are handed over to universities as block grants, without reference to research output or student outcomes.
Change will not come easily, mostly because there is no obvious constituency for reform. Academics fear that if foreign institutions were allowed to operate in Indonesia they would draw off the best students and faculty members, at a stroke transforming prestigious local institutions into also-rans. Politicians are ill informed about global trends in higher education, and in any case find it easier to wave the flag than to tackle deeply entrenched political interests. Wealthy households get around the problem by sending their children to Singaporean and Australian universities, if not to Europe and the U.S., where they acquire skills that are in short supply in the domestic labor market.
Perhaps the analogy of industrial policy offers a way forward. Unable to tackle protectionism head-on, reformers seeking to boost exports have set up special economic zones in which the normal rules are suspended in closely defined locations, often near a port or airport. These zones function as policy experiments, too small to represent a threat to interest groups, but large enough to demonstrate the benefits of an outward-oriented strategy.
"Education cities" have sprung up across Asia and the Middle East, including some in India, China and Malaysia, to attract international institutions to the academic equivalent of special economic zones. Like these, they co-exist with the unreformed domestic system, while at the same time offering students more choice and providing opportunities for international integration to interested institutions and scholars. Similarly, Indonesian policymakers could open specific disciplines, for example civil engineering or medicine, to foreign participation, while leaving protection intact for the rest of the system.
Small policy experiments, even if resisted at first, have the potential to demonstrate to scholars, political leaders and the public that competition and openness would be good for the universities and for the country as a whole. After 50 years of protection, it is time to grow up.
Jonathan Pincus is president of the Rajawali Foundation, a philanthropic organization, and senior adviser to the Jakarta-based Center for Public Policy Transformation.