Government expenditure on education and enrolment rates in Indonesia in the new millennium: an East Asian perspective

Abstract

This note examines the likely impact of increased government expenditure on education in Indonesia resulting from new policy initiatives since the year 2000. These initiatives were consolidated in 2003 following the enactment of a new ‘Law on National Education System’. The effectiveness of this policy is questioned by comparing the expenditure and enrolment rates between Indonesia and other High Performing Asian Economies (HPAEs) – Singapore, Hong Kong, South Korea, Thailand and Malaysia from 2000 to 2007. Privatisation of educational institutions, not greater government involvement, has been the norm across most of the other HPAEs during the 2000s. Privatisation leads to improvements in the quality and cost of education. Enrolment rates indicate that the quality of education has not improved in Indonesia as compared to other HPAEs. Improvements in quality will become a particularly important issue for Indonesia as it continues to cope with the challenges brought about by China and India's unprecedented growth as labour-intensive manufacturing powerhouses.