Indonesia : Advanced Knowledge and Skills for Sustainable Growth Project

Project Name

Advanced Knowledge and Skills for Sustainable Growth Project

Project Number

50395-006

Country / Economy

• Indonesia

Project Status

Active

Project Type / Modality of Assistance

• Loan

Source of Funding / Amount

Loan 3749-INO: Advanced Knowledge and Skills for Sustainable Growth Investment Project

Source	Amount
Ordinary capital resources	US$ 200.00 million

Strategic Agendas

• Environmentally sustainable growth
• Inclusive economic growth

Drivers of Change

• Gender Equity and Mainstreaming
• Governance and capacity development
• Knowledge solutions
• Partnerships

Sector / Subsector

• Education / Tertiary

Gender

Gender equity theme

Description

The proposed project will support advanced skills and knowledge for sustainable economic growth in Indonesia by upgrading three public universities in Sumatra and one public university in Bandung, West Java, as the first phase of higher-education reform. The project will support the construction and/or upgrading of new facilities that incorporate green-building and climate-proofing design features. The project will strengthen staff capacity at the universities and support demand-driven quality education and research aligned with local economic priorities. It will integrate new technologies in teaching programs, strengthen technical and vocational teacher education, and help the government develop a medium-term higher-education investment plan.

Project Rationale and Linkage to Country/Regional Strategy

Strategic context. The government seeks to accelerate economic growth by promoting technology-intensive industries, infrastructure development, and high-end services, while transforming agriculture and fisheries. Indonesia's manufacturing industry aims to grow and integrate new technologies to increase productivity. New technologies such as big data, robotics, and the internet of things will transform the economy, and can create new industries and better-quality jobs, and thus increase labor productivity. However, these new technologies will alter the skills required of the workforce, leading to lower wage growth for less-skilled laborers, or even loss of employment to automation, thereby exacerbating income inequality. Already, demand for jobs that require non-routine cognitive tasks have grown faster than jobs requiring routine and manual tasks. Without adequate skills development or retraining, workers with weaker skills face hurdles in seizing the opportunities that new technologies provide. As of end-2017, only 11% of the labor force had completed higher education, and in 2017 fewer than 20% of graduates held degrees in technology-relevant fields like engineering, with few women among them. Half of the labor force is underqualified for the jobs they are performing. About 10% of the labor force is overqualified, most of whom hold degrees, indicating an increasing risk of mismatch between demand and supply. Indonesia needs more higher-education graduates-both men and women-with degrees that better match emerging opportunities in the labor market.

Higher education needs to accommodate an increasing volume of students. The gross rate of enrollment in higher education increased from 17% in 2004 to 31% in 2018, with student numbers increasing from 4.0 million to 7.5 million. Advanced skills education is provided by higher-education institutions (HEIs) such as universities and polytechnics. The Ministry of Education and Culture, Research and Technology (MOECRT) administers public HEIs and licenses private HEIs. From 2004 to 2018, the number of students per public HEI grew significantly, resulting in very crowded institutions. During the same period the number of private HEIs grew significantly to accommodate more students. While Indonesia has made significant progress in providing access to higher education, additional effort is needed to meet growing public demand.

Education and research in higher-education institutions do not meet current and future industry needs. Indonesia's labor force is underqualified. Employers indicate that higher- education graduates lack reasoning, problem solving, and teamwork skills. Curricula need to focus more on practical and soft skills like communication, teamwork, and work ethic, and should be updated more regularly. With a few notable exceptions, HEIs do not benefit from links to industry and rely for the most part on traditional lectures. Teachers lack the skills to adopt modern teaching techniques that integrate practical skills training with theoretical content. Few HEI staff have doctoral degrees. Moreover, the sharp increase in enrollment has led public HEIs to recruit more temporary, less-qualified staff and to focus mainly on education and neglecting research. Public HEIs are often overcrowded and have outdated and/or inadequate equipment, lecture halls, and laboratories.

Higher-education institutions outside Java need to improve to support local society and the economy. Of Indonesia's 122 public HEIs, 40% are in Java, and so are nine of Indonesia's top-10 public universities. HEIs outside Java cater to poorer parts of the country. They are rated lower in quality, have limited financial resources, fewer qualified staff, and hardly conduct any research. With adequate investment in facilities and human resources, the HEIs outside Java can play an important role in the local economy. They can provide the advanced skills needed for inclusive economic growth, collaborate with local industry to introduce new technologies, and enable a more diverse array of students to attend high-quality universities.

Higher education needs to provide better teachers to meet growing demand for technical education. Senior secondary vocational education (SMK) students are not as employable as they should be, and thus the quality and relevance of SMK education needs to improve. Teachers at SMK schools and HEIs lack the practical skills and industry experience needed for the technical subjects they teach. They rely mainly on traditional lectures, instead of using more interactive, inquiry-based teaching methods. Employment rules for teachers focus on academic qualifications, which hampers recruitment of teachers with practical experience. Only 20% of SMK vocational subject teachers have the required qualifications, implying that 90,000 of such teachers require skills improvement. Teaching universities and institutions lack adequate programs, facilities, and industry linkages, and are ill-prepared to integrate new technologies to prepare teachers for the changing needs of technical education. Indonesia urgently requires better SMK teachers, as the number of SMKs and students has increased significantly since 2012. In response, the MOECRT introduced programs to strengthen teacher education. This includes changing employment rules to allow people with industry backgrounds to become teachers. Given the urgent need for more and better technical-and-vocational-education-and-training (TVET) teachers, the MOECRT is preparing a strategy to educate TVET teachers, which includes integrating pre- and in-service training and increasing industry involvement.

Efforts to improve quality and relevance need to become more effective. The higher education quality assurance mechanism and the Indonesian qualification framework (IQF) are the two main instruments to improve the quality and relevance of higher education. HEIs also operate their own internal quality assurance systems. An independent panel is in charge of assessing and accrediting HEIs at the program level and at the institution level. From 2019, the national accreditation body for higher education will introduce an improved instrument to assess HEIs at the institution level. The new instrument will focus on performance and processes. Under the IQF, which came into effect in 2012, national qualification standards for occupations are developed with inputs from industry to ensure that the education and training institutions provide skills development which meets industry needs. The IQF is meant to be the unifying framework for skills development. While progress has been made, the system needs to be strengthened so that IQF certificates issued under the national assessment and accreditation system become nationally and possibly internationally accepted.

The government's strategy. Higher education is a priority for the government. The National Medium-Term Development Plan, 2015-2019, the MOECRT's strategy for 2015-2019, and the presidential decree on strengthening vocational education set out the directions to improve the quality and relevance of higher education. The government will focus on improving access to and the quality of science, engineering, agriculture, and health education and research; establishing stronger collaboration with industry; and strengthening teacher quality. The MOECRT's investment program aims to strengthen the capacity of HEIs to meet increased demand for higher education. HEIs outside Java are included in the investment to ensure equitable growth. The MOECRT expects each university to become a center of excellence in a specific academic discipline to meet current and future (local) economic needs. The government is preparing its National Medium-Term Development Plan, 2020-2024, with a strong focus on the role of higher education to support technological change, innovation, and entrepreneurship. As part of the 2020-2024 plan, the MOECRT will prepare a medium-term investment plan for higher education. This investment plan will aim to accelerate innovation in new technology and stimulate entrepreneurship at top universities, and will also target the development of advanced skills at regional universities so local economies can also benefit from the technological transformation.

Financing requirements for upgrading higher-education institutions. Since 2010, the government has allocated 20% of the national budget to education, with the MOECRT receiving about 10% of the education budget. This includes revenue that public universities gain from tuition and other resources. However, this budget is insufficient to upgrade facilities to offer quality education to an increased number of students, especially for public HEIs outside Java, which have fewer revenue-generating options. Hence, development partners are financing the HEI upgrades. As part of the initiative, the MOECRT has requested support from the Asian Development Bank (ADB) to upgrade four public universities: the University of Malikussaleh (UNIMAL), the University of Jambi (UNJA), and the University of Riau (UNRI) all in Sumatra; and the Indonesia University of Education (UPI) in Bandung, West Java.

The Sumatran universities are mid-tier universities providing higher education to support economic development in their regions. Financing is needed to provide lecture halls, laboratories, and other facilities to meet increased demand for higher education, improve quality and relevance of education and research, and ensure an inclusive, conducive, and gender-friendly teaching and learning environment. UNIMAL caters mainly to students from East Aceh, a post-conflict and post-tsunami area in which agriculture is the main economic activity. It will focus on Biodiesel Innovation and Technology. UNJA, the only public university in poor but natural-resources-rich Jambi Province, will focus on Biodiversity and Land-Use Transformation Systems. UNRI, located in Riau Province, which has seen strong economic growth, aims to strengthen its capacity in Wetland Ecosystem and Disaster Management.

UPI, a teaching university, will become a center of excellence for educating TVET teachers. The center will prepare TVET teachers to teach emerging technologies to meet current and future industry needs. The center will collaborate with other universities that specialize in TVET-teacher education; with other HEIs in Bandung; and with SMKs, and the MOECRT. UPI will establish a special unit to strengthen industry relationships within the center of excellence.

Lessons learned. The project design incorporated lessons learned from the ADB-supported Polytechnic Education Development Project and the Education Sector Analytical and Capacity Development Partnership. First, programs designed by industry and individual HEIs generally produce better results. Second, to reform an institution, a piece meal approach focusing at a few programs does not sustain. The design should address all stakeholders and units within an organization, and ensure interconnectivity between these units so reforms reinforce each other and sustain. Third, education institutions should design their skills development programs based on the skills needs of the local industry, as each location and each industry is unique.

Impact

Income and productivity of the working age population increased

Project Outcome

Description of Outcome

Access, relevance, and quality of targeted universities strengthened.

Progress Toward Outcome

Implementation Progress

Description of Project Outputs

Market-responsive programs delivered

Training of TVET teachers improved

Status of Implementation Progress (Outputs, Activities, and Issues)

Ouput 1a. UNIMAL, UNJA, and UNRI upgraded through constructing and equipping 33 new buildings, and finishing and equipping one unfinished building (including gender-responsive, inclusive, and sustainable infrastructure) by 2023. Status: Ongoing as follows: (i) 33 buildings (7 contracts, namely CWM-01, CWM-02, CWJ-01,CWJ-02, CWR-01, CWR-02, & CWR-03) are under construction; (ii) 3 of 29 goods packages have been contracted and are ongoing

Output 1b. At least 586 additional teaching, management, research, and support staff of UNIMAL, UNJA, and UNRI trained, resulting in increased understanding of market-responsive programs and research. Status: Achieved as follows: (i) ODT= 22 staff (PhD program), consisting of 15 from UNIMAL and 7 from UNJA; (ii) Training: 3,497 persons consisting of 1,155 from UNIMAL, 1,156 from UNJA, and 1,186 from UNRI (with 53% men and 47% women).

Output 1c. At least 40 upgraded or new curricula delivered by UNIMAL, UNJA, and UNRI COEs. Status: Achieved with total 88 upgraded or new curricula delivered (UNIMAL: 20; UNJA: 7; UNRI: 61).

Ouput 1d. At least 21 new research programs connected to the COE launched by UNIMAL, UNJA, and UNRI. Status: Achieved with total 81 new research programs connected to COE launched (UNIMAL: 35; UNJA: 29; UNRI: 17).

Output 1e. At least 65 additional training or service programs connected to the COE conducted by UNIMAL, UNJA, and UNRI. Status: Ongoing with total: 28 additional training/service programs connected to COE conducted (UNIMAL: 2; UNJA: 23; UNRI: 3).

Output 1f. At least 21 additional memorandums of understanding with industry and other stakeholders signed by UNIMAL, UNJA, and UNRI. Status: Achieved with total: 143 additional MOUs signed (UNIMAL: 11; UNJA: 110; UNRI: 22).

Output 2a. UPI upgraded by completing construction and equipping six new buildings (including gender-responsive, inclusive, and sustainable infrastructure) to become COE in TVET-teacher education. Status: Ongoing: (i) 3 buildings under package CWP-01 completed in May 2022; (ii) 3 buildings under package CWP-02 is under construction.

Output 2b. At least 53 teaching, management, research, and support staff trained, resulting in increased understanding of designing and delivering accredited TVET-teacher-education programs. Status: Achieved with 1,132 staff trained (with 654 men and 478 women).

Output 2c. Six new bachelor TVET-teacher-education programs established by UPI. Status:

Achieved: (i) 6 new bachelor study programs established; (ii) 3 new bachelor study programs planned; and (iii) 3 new master study programs S2 established and operating.

Output 2d At least 240 SMK teachers at UPI completed in-service training programs, in collaboration with MOEC, polytechnics, SMKs, and industry. Status: Achieved with total 1,246 SMK teachers completed in-service training programs.

Output 2e. At least 300 teachers and other participants certified by the Professional Certification Body and the Center of Competency Testing established in UPI. Status: Achieved. UPI Professional Certification Agency (LSP) has received license from BNSP in 2021. In 2021, 141 (62 female and 79 men) of 697 non-degree training participants are lecturers who are certified as competency assessors in the context of developing UPI Professional Certification Agency. Competency Certification Target of 200 Students in 2022.

Output 2f. At least two case studies on models to improve TVET-teacher education disseminated by UPI. Achieved with: (i) 8 case studies disseminated; (ii) Roadmap for CoE TVET-RC development is available; (iii) CoE TVET-research Centre available; and (iv) 10 research/studies related to CoE TVET-RC, consisting of 8 national research, and 2 international research conducted.

Geographical Location

Aceh, Jambi, Riau, West Java

Safeguard Categories

Environment

B

Involuntary Resettlement

C

Indigenous Peoples

C

Summary of Environmental and Social Aspects

Environmental Aspects

The project is classified as Category B for environment given that the environmental impacts associated to the development of lecture rooms, teaching laboratories, and other academic facilities in the four universities are assessed to be location-specific, can be readily mitigated, and the locations are not ecologically sensitive or high risk with respect to community health and safety. The project prepared an Initial Environmental Examinations (IEE) report which includes an Environmental Management Plan (EMP) which list measures to mitigate the identified environmental impacts. Each university has also developed its own IEE and EMP, and these are being monitored for implementation of their respective civil works construction.

Involuntary Resettlement

The project is classified as category C for Involuntary Resettlement impact as all universities will use land within their campuses.

Indigenous Peoples

The project is classified category C for Indigenous Peoples as no indigenous people live within the project area.

Stakeholder Communication, Participation, and Consultation

During Project Design

During Project Implementation

Business Opportunities

Consulting Services

All recruitment of consulting services will be undertaken in accordance with ADB''s Procurement Policy (2017) and Procurement Regulations for ADB Borrowers (2017), as amended from time to time.

There are a total of 13 consultancy packages to be financed by ADB loan and by the government of Indonesia. The procurement plan of the project showing all procurement packages is published.

Procurement

All procurement of goods and works will be undertaken in accordance with ADB''s Procurement Policy (2017) and Procurement Regulations for ADB Borrowers (2017), as amended from time to time.

There are a total of 37 packages of civil works and good/equipment/furniture, to be financed by ADB loan and by the government of Indonesia. The procurement plan of the project showing all procurement packages is published.

Contact

Responsible ADB Officer

Wiryono, Sutarum

Responsible ADB Department

Sectors Group

Responsible ADB Division

Human and Social Development Sector Office (SG-HSD)

Executing Agencies

Ministry of Education, Culture, Research and Technology

Ministry of Finance

Ministry of Research, Technology and Higher Education

Timetable

Concept Clearance

23 Oct 2017

Fact Finding

14 May 2018 to 25 May 2018

MRM

06 Aug 2018

Approval

29 Nov 2018

Last Review Mission

-

Last PDS Update

08 May 2023

Funding

Loan 3749-INO