Financing Future

Could fintech help elevate higher education in Indonesia?

- Ulisari Eslita

Over the past five decades, primary school enrollment rate in Indonesia has been steady at 100%, which means that all school-aged children in the country go to school. And thanks to the government’s universal primary education target set in 1988, which aims to extend the country’s minimum education attainment even higher, Indonesia’s secondary school enrollment rate has gone up to 83%.

Unfortunately, higher education enrollment is growing very slow. In 1970, the enrollment rate was 8% and today it is only 25%. According to the Ministry of Higher Education, as of 2018, only 7.5 millions young people at the age of 19-24 years old went to universities (out of 25 millions of population in that age). Compared with the neighboring countries, Indonesia clearly lags behind. The Philippines’ and Thailand’s higher education enrollment rate is 36% and 49%, respectively.

Indonesia has a growth success story with its GDP increasing five times in size since the year 2000— from $165 billion in 2000 to $903 billion last year. In terms of demography, Indonesia has one of the world’s youngest populations, with 60% of population being young people in their productive ages. However, the demography bonus could turn south if the quality of the workforce is not improved. To maintain the economic growth, the country needs to continue increasing the pool of skilled workforce with skills relevant to address the demand from industry.