Investing in Indonesia: Education

Investing in Indonesia and its education sector offers huge opportunities due to a very large unsatisfied market. Many families move overseas for better quality rather than relying on local education pathways. 43% of the country’s population is under 25 years old and there is a bulging middle class that is expected to double to 140 million people by 2030, although in the current climate of Covid-19 we wait to see how quick the recovery will be. Like other developing markets in South East Asia there will be a continued need for quality education in line with middle class aspirations for their children.

Market Potential

Education will play a vital role in Indonesia’s evolution and emerging market status. An educated and skilled workforce has been proven to be a vital component for continued successful economic growth in all developing countries. Improved education is needed in Indonesia as there is a large population of youth who are unemployed and subsequently lacking professional aspirations. This can lead to serious issues such as social and political unrest.

Indonesia need look no further than South Korea, Thailand and Singapore to see how economic growth grows side by side with investments in education. This also helps stop the ‘brain drain’ of Indonesia’s best and brightest leaving the country with their skills.

Changes are taking place, and the appointment of Nadiem Makarim as the Minister of Education goes along way in bringing a new approach to modernising education in Indonesia.

The private sector in education is crucial, despite 20% of the state budget being spent on education, it is not enough to answer for all of Indonesia’s educational needs.

Investing in Indonesia? See how to open a school here

Early Childhood Education

Public awareness to the importance of early childhood education is growing as the number of enrolled students grow year on year as does the number of new private establishments at the same rate. Parents are now willing to pay higher tuition fees to place their children in reputable preschools, in part due to the more women entering the workforce, resulting in a demand for childcare whilst mum and dad are at work. With Indonesia’s young population this is an area where investing in Indonesia can be profitable.

Primary & Secondary

Education is now compulsory for 12 years in the education system due to recent reforms. The number of primary and secondary schools in Indonesia continues to grow, however despite the huge number, many schools lack quality in terms of facilities and teachers, a concern for middle class parents.

The right time for investing in Indonesia is now. The demand is being filled by ‘elite’ schools once reserved for expatriates and the wealthy elite of Indonesia. These schools are growing with demand, and despite government reforms in education in 2015 the market continues to increase. These private institutions are no longer able to call themselves ‘international’ schools and must abide by certain government demands such as cultural, religious and local language classes for all students, whilst local students must still take the national examination alongside any foreign curricula.

More on this….

‘International Schools’

Indonesia has the highest number of international schools in Southeast Asia, mainly due to the fact it is the 4th most populous country in the world. These expensive schools teach some form of foreign curriculum, such as Cambridge, IB or Australian and are mainly in cities like Jakarta. Until 2014 they were attended by the children of expats and wealthy Indonesian elites, but government directives related to strengthening “moral character” of Indonesian youth, barred Indonesian children from joining wholly foreign-owned schools, which were then to be known as “foreign education institutions.” Indonesians citizens could however attend “joint cooperation schools” which are locally owned but accredited abroad. However, and like mentioned before, these schools must incorporate parts of the national curriculum, namely Indonesian culture, religion and language.

Ed-Tech

Indonesia is in the top 5 countries for both smartphone and internet users in the world. Half of these users are school aged children meaning that foreign and domestic investors are coming into the technology sector and more specifically education technology.

In a post Covid-19, world Education Technology will boom. Online class providers, video conferencing apps and others are eying Indonesia’s tech savvy students and teachers. Brainly, Duolingo, Quipper School and Edmodo have aggressively expanded their businesses and are investing heavily in Indonesia. There are still huge challenges with technology in the rural areas of Indonesia but in the urban areas the adoption of technology can be available at many levels of education. Looking back to Nadiem Makarim’s appointment it is expected that this is an area that will continue to grow with his experience in growing tech giant Gojek.

GSE aim to set up and operate new schools within Indonesia as our next plan for expansion across SE Asia. We are looking for suitable partners, developers and investors to meet a growing demand not yet satisfied.