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Establishing Foreign Higher Education Institutions in Indonesia

By Nadia Fairuza Azzahra & Natasya Zahra

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Key Messages

  • The government has granted authority for foreign higher education institutions (FHEIs) to establish a physical campus in Indonesia as first stipulated in the Minister of Research, Technology, and Higher Education Regulation (MRTHE) No. 53/2018. Given the poor quality of the local higher education institutions (HEI), which is attributed to several factors such as the low quality of teaching, research and human resources, limited funding, and poor governance, the arrival of FHEIs in Indonesia provides an opportunity for Indonesian students to acquire a world-class education at home, which would otherwise not be provided.

  • The MRTHE regulation No. 53/2018 required all FHEIs to form a partnership with a local HEI in academia, research, and innovation. However, this regulation does not apply to FHEIs established in Indonesia’s Special Economic Zone as stipulated in the MOEC Regulation No. 10/202. As these partnerships could potentially be difficult to initiate without a regulating provision, there is space for the Ministry of Education, Culture, Research, and Technology (MOECRT) to take on a leading role in facilitating these partnerships.

  • FHEIs may play an important role in encouraging local universities to increase their quality and become strategic partners to help increase the quality of Indonesian HEIs as well as improve the local economic development. The partnership between Monash University Indonesia and Universitas Sultan Ageng Tirtayasa reflects such a case through the organization of various joint activities from research to student and academic mobility programs, and Monash University’s commitment to develop Banten’s local talent and potential.

  • In order to fully utilize the presence of FHEIs in Indonesia, the Ministry of Education, Culture, Research, and Technology (MOECRT) needs to facilitate productive engagements between FHEIs and Indonesian HEIs. This facilitation is important to foster knowledge and technology transfer and help nurture the research ecosystem in Indonesia through various and mutually beneficial arrangements between both parties. At the same time, this requires MOECRT to pay special attention to improving the capacity of local university’s human resources and ensure that they are equipped with the necessary skills to meaningfully collaborate with FHEI.

  • The MOECRT should also incorporate the FHEIs in Indonesian higher education programs such as including them as a postgraduate scholarship destination and mobility programs to expose other Indonesian students and academics to world-class quality education.

The Overview of Higher Education in Indonesia

The Directorate General of Higher Education (DGHE) of the Indonesian Ministry of Education, Culture, Research, and Technology (MOECRT) has emphasized the importance of improving the access and quality of higher education[1][2] to unlock the potential of local talents in order to further drive the country’s productivity and economic growth. Unfortunately, the ministry continues to face persistent challenges in increasing participation in higher education as well as improving the quality and competitiveness of the local institutions.

In 2021, the MOECRT aimed to increase the higher education participation rate from 30.3% in 2019 to 34.6% in 2021 as stated in its 2020-2024’s strategic plan (Rencana Strategis/Renstra). This target was not achieved, as Directorate General of Higher Education (2021) reported that the gross participation rate in 2021 has only reached 31.2%. In comparison to other developing countries, Indonesia’s higher education participation is among the lowest. According to OECD calculation (2021), only 5.0% of Indonesian adults between the ages 25 to 64 have completed a bachelor’s or equivalent tertiary education degree compared to 9.3% in India, 7.0% in South Africa, and 17.4% on average across G20 countries in 2021. At the regional level, Indonesia also underperforms compared to other neighboring countries in the percentage of the population aged 25 and over that completed at least a Bachelor’s degree or equivalent. Indonesia’s share of the population with a tertiary education qualification is 9.4%, trailing behind Thailand’s at 14.9% and Singapore’s at 31.6% (UNESCO Institute for Statistics, 2018, cited in World Bank, 2019).

In terms of quality, Indonesia has only made slight improvements despite various policy efforts in revamping the quality and competitiveness of its higher education level in more than a decade (Jarvis & Ho Mok, 2019). The recognition of Indonesian Higher Education Institutions (HEIs) as a World Class University (WCU[3], indicated by their presence in the global rankings, particularly the Quacquarelli Symonds (QS) World University Ranking (WUR)[4], is among the ministry’s targets in its 2020-2024’s Strategic Plan.

In 2022, only four Indonesian universities are listed in the Top 500 of the QS WUR[5], a slight improvement from a decade ago when three Indonesian institutions made the list. This achievement is incomparable to neighboring countries like Singapore, which has two universities in the 11th and 12th rankings, and Malaysia, which has five institutions ranked among the Top 200 in 2022(QS Top Universities, 2022). Only 99 (3.65%) of the 2,713 accredited Indonesian universities in 2020 are accredited with an A rating and unggul, reflecting the low quality of Indonesian HEIs (DGHE, 2020)[6]. Furthermore, the majority of public universities with A and unggul are concentrated in Java Island while those located in Sumatera, Kalimantan, Sulawesi, Maluku, and Nusa Tenggara are predominantly accredited with B and baik sekali. In contrast, the majority of private universities in Indonesia have not yet received accreditation, demonstrating a significant gap in quality between public and private universities in Indonesia.

The poor quality of higher education in Indonesia is attributed to several factors such as the low quality of teaching, research, and human resources, poor governance, and limitation in terms of academic and management autonomy (Rosser, 2018; Yasih & Mudhofir, 2017).

According to Higher Education Data Center (2020), the number of academics with a Ph.D. degree in Indonesia only accounted for around 14.5% of the total academics in 2020. This is lower than in other countries such as Malaysia which had 37% of doctorate-level academics in their public universities alone in 2015 (Ministry of Education Malaysia, 2015). The low number of Ph.D. holders in academia presents challenges in producing the desired quantity and quality of research outputs.

Allegations of low research productivity among Indonesian academics point to a lack of confidence, financial incentives, and competencies in writing scientific papers and English, as well as the limited time allocated for writing due to administrative burdens and structural position responsibilities in the university (Purwanto, Ardiyanto & Sudargini, 2021; Rakhmani & Siregar, 2016). Still, the number of Indonesian research published in the international publications registered in Scopus[7] has surpassed other ASEAN countries such as Singapore, Malaysia, Thailand, Philippines, and Vietnam in 2019-2020 (Putera et al., 2022). At the same time, Indonesian academics are the second-highest contributors to predatory journals that accept low-quality papers without proper quality assurance mechanisms (Macháček & Srholec, 2021). This suggests a tendency for Indonesian scholars to prioritize the number of published papers more than producing academically robust and impactful research.

Furthermore, the poor performance at the higher education level is possibly related to the low quality of schooling at the primary and secondary levels. According to the Programme for International Students Assessment (PISA) result in 2018, fifteen-year-old Indonesian students scored among the lowest in numeracy (73th), literacy (74th), and science (71st) out of 79 countries (OECD, 2018). The low competencies of fundamental skills at the school age make it even more difficult to learn an advanced set of knowledge and skills or even conduct research at the higher education level.

With the current industrial development that puts emphasis on a manufacturing-based and service-led economy that also requires rapid adoption of new technology, demand for skilled workers, particularly those with higher education degrees, continues to increase. Indonesia HEIs are under pressure to meet this demand. Skill mismatches caused by low educational attainment and poor-quality schooling have become more prevalent in the Indonesian labor force (World Bank, 2020). Approximately 51.5% of Indonesian workers have been deemed underqualified due to low educational attainment and poor quality of schooling (Allen, 2016; World Bank, 2020). As a result, nearly 80% of Indonesian firms report difficulty in hiring skilled and sufficiently productive professionallevel workers to fill managerial roles (Wihardja & Cunningham, 2021).

Therefore, MOECRT must look to expand efforts to improve the quality of the country’s higher education in order to equip the labor force with the cognitive and technical competencies required to support economic development (Allen, 2016).

Initiatives to Improve HEIs Quality

The Indonesian government has outlined goals to improve the quality of the HEIs, and therefore, boost their competitiveness at the global level. MOECRT stipulated a number of programs to improve the ecosystem of teaching and research in Indonesia.

The Ministry of Finance, through the Educational Fund Management Institute (Lembaga Pengelola Dana Pendidikan/ LPDP), manages an endowment fund for education which, among others, includes an endowment fund for research and higher education. As of 2022, the endowment fund for research has supported 1,668 research projects amounting to IDR 1.4 trillion and has significantly increased the participating universities’ research outputs (PANRB, 2022). For instance, the University of Indonesia’s research output for 2022 alone recorded a 20.0% increase from the previous year due to LPDP’s research endowment fund (Yamin, 2022).

Furthermore, an endowment fund specifically for higher education was launched in 2022. This program supports public universities with a legal entity status (Perguruan Tinggi Badan Hukum/PTN-BH) to set up an endowment fund for their institutions (Dana Abadi Perguruan Tinggi/DAPT) (Indonesian Cabinet Secretariat, 2022). The endowment fund is important to drive research and innovation at the university level especially given the limited funding from the MOECRT. While PTN-BH has been authorized to conduct self-governance, it was only recently that they are allowed to manage its own endowment fund and have the freedom to allocate a significant proportion to research and innovation. However, despite the premise of authorizing universities to conduct self-governance, it has been noted that the practices are far from effective considering the academics are categorized as civil servants and are therefore still subject to government bureaucracy. Furthermore, they have yet to produce meaningful results in improving the university’s research environment and management (Jarvis & Mok, 2019; Rakhmani & Siregar, 2016).

Additionally, an initiative to improve the capacity of Indonesian professors has been introduced since 2017 through World Class Professor (WCP) program. This program aims to provide access to collaborations between Indonesian academics and international professors who have published papers in reputable academic journals. Given that academic reputation and the number of citations play a significant role in determining the quality of universities, the WCP program is designed to gradually improve Indonesian university performance (DGHE, n.d.). It is expected that this program will open opportunities for knowledge exchanges, improve the development of quality research, introduce Indonesian HEIs to the wider, more global academic community, and perhaps encourage more collaborative research in the future. However, doubts remain whether this program is effective in leveraging the quality of Indonesian HEIs considering the Indonesian HEIs’ relatively stagnant positions at the global level in years.

To support the professional development of academics, the MOECRT established a program forIndonesian university lecturers to take their master’s and doctoral degree abroad under the LPDP and Indonesian Education Scholarship (Beasiswa Pendidikan Indonesia or BPI) programs. These conditional programs require the recipients to return to Indonesia with the intention that the knowledge and international exposure from world-class universities abroad will help them to develop their teaching at their home university[8]. Furthermore, since 2012, the DGHE’s MOECRT has been offering a program to send Indonesian professors to HEIs and research centers abroad in a program called Scheme for Academic Mobility and Exchange (SAME) (DGHEb, 2020).

To monitor the research performance, the DGHE launch a web database called SINTA (Science and Technology Index) that keeps track of the outputs of Indonesian researchers by storing and analyzing their papers’ citations. SINTA was merged with the WCU analysis, a platform that provides information on the progress of Indonesian HEIs in order to observe and support Indonesian universities to improve their global rankings. However, SINTA’s role in measuring research performance has been criticized because researchers with the highest scores are those who published papers in unreputable journals and performed excessive self-citing (Rochmyaningsih, 2019). This indicates that there are limitations to measuring the quality of registered papers in the SINTA platform and it is not a reliable indicator to measure the research outcome.

While there are several efforts to support research and innovation as well as facilitate lecturers to foster engagements with the international academic community on a global level, these programs are still only accessible to a handful of academics and institutions. The majority of the recipients predominantly come from universities in Java as they tend to have the upper hand in terms of information, and connections with the central government, donors, or even industry representatives (Rakhmani & Siregar, 2016).

For example, the WCP program requires the prospective recipient to come from a university with a minimum B accreditation. In contrast, the SAME program prioritizes professors from universities that already have an MoU with International HEIs. These requirements are seen as a barrier by institutions outside of Java, particularly the unaccredited private ones, because of their institutional and academic limitations.

MOECRT’s DGHE’s policies and programs to improve the quality of Indonesian HEIs have not been very successful in facilitating the institutions to make significantprogress, thus impeding them from taking up strategic opportunities that could improve their academic capacity and reputations.

The Presence of FHEIs in Indonesia

The arrival of foreign campuses in Indonesia could fill the gaps and provide more access to quality education at home to Indonesian students. The government has granted permission for foreign higher education institutions (hereafter FHEI) to establish a physical campus in Indonesia.

Through its initiative to host world-class universities, the government aims to increase their reputation in the global education landscape and demonstrate that its economy has already undergone modernization (Lane, 2011).

The Ministry of Research, Technology, and Higher Education (MRTHE) Regulation No. 53/2018, was the first regulation that stipulated the authorization of FHEIs establishment in Indonesia[9], to which Government Regulation No.40/2021 specifies that the FHEIs could establish their physical campuses in Special Economic Zones or SEZs (Kawasan Ekonomi Khusus or KEK)[10], However, provisions related to FHEIs in the Special Economic Zone in the MRTHE Regulation No. 53/2018 have been revoked and further specified by MOECRT Regulation No. 10/2021.

Therefore, FHEIs established in the Special Economic Zone are subject to different provisions compared to the FHEIs located outside the Special Economic Zone. Primarily, this includes stringent requirements on the operation license and academic standard of the FHEIs (Table 1).

Differences between FHEIs Located in the SEZ and outside SEZ

Despite some differences in the MOEC Regulation No. 10/2021, all FHEIs are nevertheless governed by the same provisions in the MRTHE No. 53/2018. For instance, all FHEIs are required to open at least two STEM-related programs and offer Indonesian courses such as Pancasila, religion, Indonesian language, and Civic Education (the MOEC Regulation No. 10/2021 further specifies that the latter applies to undergraduate students). Furthermore, the quality of education and facilities of FHEIs must be comparable to that of the host campus’ and students must be able to receive the same credentials as students from the host institutions. This further demonstrates how the presence of FHEIs in Indonesia may open up the opportunity for Indonesian students to better access a world class education without having to pursue their studies abroad (MOECRT Representative, 2022).

FHEIs may also increase competitiveness and encourage local campuses to improve their quality and service (Hou, Hill, Chen & Tsai, 2018; Interview with MOECRT Representative, 2022). According to Article 2 of the MRTHE Regulation No. 53/2018, the aim of establishing FHEIs is to increase the competitiveness of Indonesian graduates and by extension its higher education institutions. In addition, its presence may also foster closer engagements between local universities and FHEIs, thereby providing an opportunity for Indonesian HEIs to improve their quality and leverage their reputations (Sutrisno, 2019). It is expected that the activities of FHEIs in Indonesia could lead to positive spillover effects on the performance of local HEIs through partnerships, such as the increase in knowledge and technology transfers, skills, and the adoption of innovation (Farole, 2011). However, partnerships between FHEI in the SEZs and local universities could be more difficult to initiate given the absence of the provision in the regulation.

Case Study: Monash University Indonesia

Although there have been discussions about establishing foreign campuses for years, it wasn’t until the ratification of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA)[11] that Monash University formally announced the establishment of a branch campus in Indonesia. With the opening of Monash University Indonesia in 2021, it is also envisioned that other eligible FHEIs will be able to establish and operate their campus branches in Banten and other parts of Indonesia, creating education hubs that may attract local and international students.

As of 2022, Monash University Indonesia offers postgraduate and executive programs in Public Policy and Management, Data Science, Urban Design, Business and Innovation, Cybersecurity, and Public Health (Monash University Indonesia, n.d.). Some of the courses offered are not yet available in the Indonesian HEIs and therefore could attract prospective students to join the programs at a cost-effective price that otherwise only be accessible if they pursue their studies abroad.

In December 2021, Universitas Sultan Agung Tirtayasa (Untirta), the public university in Banten Province, was granted the opportunity to start a partnership with Monash University Indonesia. The partnership led to various kinds of collaborative activities such as research cooperation, exchange of academic resources, scholars, and students, as well as joint academic activities from seminars, workshops, to community service (Untirta, 2022a). These kinds of partnerships have also been implemented in Singaporean universities with their foreign branch campus partners. It is a ‘selling point’ for the HEIs that allows them to differentiate their position from other institutions and thus attract prospective students and potential collaborators (Olds, 2007).

A Memorandum of Understanding (MoU) between Monash University Indonesia, Untirta, and Banten Province was signed in the same year; signifying the commitment of Monash University Indonesia to help develop Banten’s local talent and potential which is in line with the local government’s programs that focus on food security and food diversification and tourism development (Regional Development Planning Agency, 2021). It was manifested through planned activities such as the development of Banten’s local agricultural product (talas beneng) organized by two institutions’ agricultural research centers as well as an international community outreach program in Banten’s villages (Untirta, 2022b)[12]. The tripartite MoU demonstrated that cooperation is not only related to academia and research but also addresses the local community, seeks to promote local excellence, and improves the economy in Banten. This also aligns with a case study by Pohl and Lane (2018) in Qatar, the United Arab Emirates, and Malaysia. It showed that foreign campuses significantly contribute to the rapid growth of research and development established in the host countries.

On the other hand, cooperation with local universities will benefit FHEIs to build and expand their presence in Indonesia. The knowledge from their university partners can help the FHEIs to design their teaching and research to be more locally relevant while maintaining the standard quality from their home campus (Girdzijauskaite &Radzeviciene, 2014).

According to the Untirta Representative (2022), their collaboration with Monash University Indonesia will also act as a bridge to Monash’s home campus, which may promote greater cross-border higher education cooperation.

However, the Untirta Representative (2022) also noted that embarking on and sustaining a partnership with a foreign campus is challenging as it requires the HEIs’ campus staff and academics to have a certain capacity and skills, such as basic English proficiency to foster communication and nurture the relationship between personnel of the two institutions. This is supported by Hunter et al.,(2018) who argued that campus’ stakeholders should be equipped with skills such as language capacity as well as effective communication in a multicultural environment. Therefore, improving the universities’ internal capacity to seize wider international exposure is even more important given the plan to invite more international branch campuses to Indonesia in the near future.

Policy Recommendations to Optimize the Presence of FHEIs in Indonesia

Incorporate FHEIs in Indonesia into the Higher Education policy and programs

The MOECRT should include FHEIs in Indonesian higher education policy and activities in order to make the most of their presence. For instance, the Indonesian Endowment Fund for Education and Indonesian Education Scholarships should include the FHEI in Indonesia as a postgraduate destination or even provide opportunities for local university students and academics to experience international exposure to FHEIs through an exchange, scholarship, or even joint-research programs.

Foster engagements and collaborations between local universities and FHEI

The MOECRT should continue to help initiate partnerships and opportunities to build closer relationships between FHEIs and Indonesian HEIs, especially for upcoming institutions in the SEZ, to promote knowledge transfer and possibilities for future collaboration. As demonstrated by the partnership between Monash University and Untirta, such collaborations can lead to research cooperation, exchange of expertise as well as joint academic activities that may provide more opportunities to improve the overall quality of the higher education sector in Indonesia. Given that more FHEIs are set to operate in Indonesia in the future, the Ministry should facilitate these engagements to help improve the quality of HEIs, such as those outside Java, increasing their competitiveness and making the most of the FHEIs presence in Indonesia.

Improve the HEI’s human resources to enable them to benefit from opportunities to engage with the global academic community, particularly FHEI in Indonesia

The MOECRT must prioritize continuously improving the capacity of Indonesian HEIs to stand on an equal footing with the FHEIs through capacity-building programs for academics and build a conducive research ecosystem in Indonesia. Academics are the focal points of the institution’s efforts toward quality improvement. Therefore, equipping them with the necessary skills and helping them to focus on teaching and research is crucial to support their work. The MOECRT and the Indonesian HEIs must consider facilitating capacity-building programs for academics to develop their knowledge and expertise and increase their job ownership as well as individual capacities that would foster smoother engagements with international partners such as collaboration, negotiations, and even foreign language proficiencies. In the long run, this will build a meaningful and mutually beneficial engagement, particularly in research, between FHEIs and Indonesian universities that fit the national and institutional strategies of both parties.


  1. Higher Education refers to the level of education from diploma programs, undergraduate programs, master programs, doctoral programs, and professional programs, as well as specialist programs, organized by universities.

  2. According to the National Education System Law No. 20/2003, higher education in Indonesia is divided into several types, such as university, polytechnic, institutes, academies, and specialized college. This brief, however, will mostly focus on the university type.

  3. World Class University (WCU) is an initiative by the MOECRT to support Indonesian leading universities to make into the list of the top university rankings. 4 The QS WUR is one of the universally-recognized publications which rank the quality of higher education institutions around the world. It measures the quality of the university in several indicators such as academic reputation, employer reputation, faculty/student ratio, citation per faculty, and international students and faculty ratio.

  4. Namely Gadjah Mada University (254th), University of Indonesia (290th), Bandung Institute of Technology (303rd), and Airlangga University (465th).

  5. Indonesian higher education accreditation system consists of three tier rating: A, B, and C, with A being the highest rated and C with the lowest rated. In 2022, DGHE slowly introduced the new accreditation system which consists of unggul (A equivalent), baik sekali (B equivalent), and baik (C equivalent). As of now, only a few universities converted to the new accreditation system as their accreditation period has met its expiration date.

  6. An international bibliograprahic database containing abstracts and citations for academic journal articles.

  7. The recipients of these two programs are expected to come back to Indonesia and apply the knowledge and expertise they obtain with the intention to help improve the quality of Indonesia’s education system.

  8. In 2014, the Directorate General of Higher Education was merged with the Ministry of Research and Technology, however, it returned back to the Ministry of Education and Culture in 2019. In April 2021, the Ministry of Research and Technology was merged with the Ministry of Education and Culture.

  9. Special Economic Zone (SEZ) is a designated area intended to maximize activities that hold significant economic and geostrategic advantages to promote national economic development. This area is subject to certain fiscal and non-fiscal incentives different from other regions in order to attract investment flows into the country. As of December 2022, Indonesia has 19 SEZ, of which 12 of them have already operated and the rest are still in the development phase.

  10. IA-CEPA is an economic cooperation between Indonesia and Australia which further provides wider opportunities in the area of trade and investment, including higher education investment. IA-CEPA officially came into force on July 5th, 2020.

  11. In order to address the growing concern of food shortage in Indonesia, CIPS recommends the importance of research centers establishment in local universities where they can collaborate with other stakeholders–such as private sectors and other institutions alike–to develop local agricultural products that fits the need of local communities. See: Expanding Hybrid Rice Production in Indonesia.


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Interview 1: Representative from MOECRT’s Directorate General of Higher Education (2022). Personal communication.

Interview 2: Representative from Universitas Sultan Ageng Tirtayasa (2022). Personal Communication.

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