Why Monash Opening a Campus in Indonesia Is a Big Deal

In early February, Indonesian President Joko “Jokowi” Widodo was in Canberra cheerleading the recently ratified free trade agreement between Indonesia and Australia, and generally engaging in a charm offensive to bolster the relationship between the two countries. He delivered a speech to Parliament (in Bahasa) and my Twitter feed was soon abuzz with photos of Australian politicians in their finest batik. 

Then Monash University announced that it would be opening a campus in Jakarta, the first foreign university to be allowed to open a branch in Indonesia.

In the context of Indonesia’s domestic politics, and especially given what Jokowi is trying to accomplish in his second term, this is a big deal. Jokowi has made it clear what his goals are for his second term in office: boost manufacturing and exports through trade deals, draw in more foreign investment, and develop Indonesia’s human capital. The free trade deal with Australia is obviously an important component of that plan.

The sticking point, for Jokowi, is that Indonesia has a long history of economic nationalism and protectionism. Domestic industries and state-owned firms have long been shielded from international competition, and calls to liberalize trade are often portrayed as a betrayal of Indonesia’s national interest. For years Indonesia has had a Negative Investment List, which places strict limits on foreign ownership in most sectors. Over the years, Jokowi has chipped away at the Negative Investment List, and opened up more and more industries to full or partial foreign ownership. This is a trend he would like to see accelerate in his second term, and as I wrote in New Mandala, he has secured the buy-in of most of his political enemies and formed a super-coalition in order to ensure that Indonesia continues to open up economically, with minimal domestic political interference. We are starting to see some of the results of this strategy.

What the Monash announcement shows us is that he’s not just serious about opening the economy in order to build factories and boost exports and FDI, but also for the development of human capital.

Indonesia’s system of higher education does not have a sterling reputation. It’s underfunded and the incentive structure is misaligned. Scholars are pushed to publish as much as possible, which creates pressure on them to cut corners and cheat rather than produce quality work. There is a lack of financial and institutional support, and there are almost no foreign faculty in Indonesia.

University rankings should obviously be taken with a grain of salt, but they can give a general idea of educational quality for comparative purposes. Universitas Indonesia, the nation’s flagship university, ranked 296th in the 2020 QS World Rankings. Monash, by comparison, clocked in at 58th. Paradoxically, this is precisely the reason that foreign universities have struggled to find a foothold in Indonesia — there are certain people who are afraid that if foreign universities are allowed to set up shop they might cast a spotlight on the chronic underperformance of local schools. There is also the tricky question of attracting good quality foreign faculty — they would surely have to be paid a higher salary than what most Indonesian university lecturers command at present (this is not a knock on Indonesian academics, but on wage structures in Indonesia more generally).

That the Monash campus in Jakarta has been given the green light tells us that Jokowi and his administration are willing to take on those challenges in the interest of getting improved educational outcomes. It’s a tricky domestic landscape to navigate, and they will step on some toes — but they are focused on the goal of improving educational outcomes, have the political support to take on entrenched interests, and are willing to take some blows to get these things done. That they have moved so quickly to approve this campus, and announced it in the middle of Jokowi’s visit to Australia to champion the free trade deal, indicates a high level of commitment on the part of this administration to opening Indonesia up in order to accelerate economic growth and improve the climate of higher education. And that’s what makes it a big deal.