The Future of Indonesia's Education System Under Nadiem Makarim

Nadiem's breakthrough is to be likely tech-related, great opportunity lies for edtech startups

Kristin Siagian - 28 October 2019

Nadiem Makarim officially announced as education and culture minister for 2019-2024. President Joko Widodo stated one of the main focus of the Indonesia Maju cabinet is the development of human resources and it's to be solved together. Nadiem is expected to come up with a significant breakthrough in order to achieve the goal.

"We'll have significant breakthroughs in terms of human resource development, to deliver talents prepared for work, linked and matched the education with the current industry," he said on Wed (10/23).

Nadiem also said on this, the President chooses him because he was previously worked for the company with vision. Therefore, there's a belief that he can make it for what the country's need for the future.

"The requirements for the future's job vacancy will be very different. I'll try to make it parallel between the educational institution with what's needed in the industry," he said.

The next reason is, on his behalf, to make the vision comes true not through monotonous ways. It requires breakthroughs and innovations.

"The authority given is very serious and further will be very challenging. I need support from all millennials as I represent them for future innovations."

In the interview session, Nadiem also said he is soon to have farewell with Gojek and the little family he build within the ecosystem. "Honestly, it was the hardest part to leave Gojek."

New breakthrough awaits

Unemployment and talents that link and match the industry are still our current homework from the previous minister.

BPS data per February 2019 showed the decreasing number of unemployed to 5.01% within the last one year. Meanwhile, the unemployment number (TPT) is at 6.82 million people.

Even the number falls down, there are other concerns at the education level. Vocational school graduates still dominate the unemployment rate at 8.92% of the total labor force. Followed by 7.92% of diploma graduates.

In fact, the total workforce has reached 136.18 million or increased by 2.24 million from the same period in the previous year. Based on educational level, most of the workforce are elementary graduates and below (40.51%). Followed by junior high school graduates (17.75%), high school graduates (17.86%), vocational school graduates (11.31%), and university and diploma graduates (9.75% and 2.82%).

The government finally takes this issue seriously by increasing the state budget allocation (APBN) for education from IDR 429.5 trillion this year, up to 20% at IDR 506 trillion in 2020. The number is incredible, therefore, it requires on-target strategies due to the non-optimal experiences.

Speaking of the digital economy, unemployment has affected startup leaders' decision to import overseas talents because the supply does not match the demand. Nadiem's previous company also had a special office in India to acquire digital talent.

If the concern left unclear, Indonesian HR will soon lose competitiveness. The correlation lies here, according to e-Conomy SEA, Indonesia's digital economy this year is projected to touch $ 40 billion, increasing to $ 133 billion in 2025.

Nadiem's expertise is expected to be a support of his obligations, most likely the breakthrough that is going to be tech-related. Nonetheless, Chairman of the Indonesian Teachers Association (IGI) Muhammad Ramli Rahim has doubts upon Nadiem's appointment, because he isn't an educational expert nor have professor title.

He also said the lack of productive teachers and its development, especially in accordance with their educational background is the main problem that is quite blurred to the minister's eyes. "[..] It may be that after trusting many Professors, Jokowi decided to choose a freshman without much theory," he said as quoted from Republika.

Public can have pros and cons with Nadiem's appointment and its leadership system in the next five years. His experience in building Gojek from scratch to its fruition might be the provision to revolutionize our education industry.

Opportunity for edtech companies

Nadiem's entrance to the new cabinet, representing millennials, has created opportunities for startup players, especially those in the edtech industry. Moreover, Nadiem has quite an expertise in the tech-company.

The number of edtech startup players is increasing. Some are locals and some overseas. They penetrated into various segments. We have some particularly focused on vocational, pre-school, academic and non-academic education, and so on.

They offer various educational content, such as video on demand, direct learning through video calls, tutors on-demand, online to offline, and Q&A portals. The business model is a subscription. This method is claimed to be the most profitable way of monetization because one content is available for many people.

Ruangguru, as the largest edtech startup in Indonesia, is reported to be profitable. "Education is a sustainable business sector, and this is our plan to build a sustainable company," Ruangguru's CEO, Belva Devara said.

Technology is said to democratize people in accessing educational content. The impact on consumers is the far price gap to conventional tutoring. As an example, Quipper's regular package subscription for six months is set to Rp540 thousand. If you take a yearly subscription, the price will be much cheaper.

In terms of Ruangguru, a complete subscription package for a year costs Rp1.3 million. However, companies often give discounts to attract more users. Meanwhile, conventional tutoring can have multiple cost per year.

We're kind of waiting for Nadiem's breakthroughs. And wishing for improvement in Indonesia's educational industry.

Original article is in Indonesian, translated by Kristin Siagian

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