Source: Based on Clark (1995: 211-39) for levels of change, and Cerych & Sabatier (1986: 247) for definitions of scope of change
1. International assistance and the enabling conditions in the national system
The macro-ecology of Indonesia’s higher education has changed in many ways over the past three decades. Most dramatic was undoubtedly the political shift from a bureaucratic-authoritarian regime to a democracy in progress, with political decentralization and regional autonomy as core features; but also the state of the economy and its financial foundations, the socio-economic fabric (i.e. labor market, industrialization…) and the demographic movements (i.e. growth, urbanization…) co-determine much of that environment. Meanwhile, new laws and regulations have been passed, a paradigm shift was proclaimed, involving changes in management and organization at various levels, staff was upgraded, institutions established, study programs or research units set up or reorganized, and new generations of students entered and left the system.
The influence of international assistance on this evolving environment, in particular its contribution to conditions enabling changes in State-university relations supporting more institutional autonomy, can be summed up in four interrelated but analytically distinct concepts: institutional differentiation (and stratification), diversified funding, performance based competition, and normative frames.
1.1 Institutional differentiation and stratification
International assistance in many ways contributed to the institutional differentiation of the landscape of Indonesia’s higher education system, which was enriched with more and different functional types of institutions and programs. From the late 1970s and the early 1980s and throughout the next two decades, donors helped the government establish new types of institutions such as polytechnics and interuniversity research centres, and set up staff development programs that provided the required personnel for such specialized institutions. The creation of institutional niches (e.g. catering for technical professions, for institutional capacity development or for scientific research) is not a natural process in an environment where cultural and political norms and pressures abound to spread resources across the board, and where institutions are governed by uniform decree. External assistance did effectively provide the necessary pushes, and did so with massive but selective inputs of technical assistance, infrastructure, scholarships and staff development. Nonetheless, and as expected, specific outcomes are the result of more complex processes of negotiation with domestic forces.
Indonesia’s polytechnics parted legally from the initial host universities, ending fears of continued intra-institutional conflicts over limited subsidies. At the system level, however, this outcome provided ammunition for the particular needs and expectations of the evolving sub-sector of technical higher education. Both the World Bank and, later, the Asian Development Bank, assisted first with analytical policy work and labour market studies, followed up with loans for continued institutional development of the Polytechnic sub sector (ref. WB and ADB).
In contrast, the Inter University Research Centres (IUC), which were set up in the 1980s with World Bank loans, remained firmly embedded within the selected host universities, even though, as a result of Government fears for opposition from non-recipients or regionally focused institutions, the centres served other institutions in the region in developing research capacities in particular academic disciplines. This arrangement illustrates rather well the initial domestic resistance against differentiation of funding levels or institutional roles and subsequent stratification at the system level. Nonetheless, the results were challenged both by internal assessments and donor evaluations (see earlier section) in the early 1990s. Notably, the growing concern within DGHE that some of the more prominent private universities had become better equipped for research and quality education than the traditional ‘elite State universities’ contributed to a greater willingness to concentrate resources for research and graduate education at selected places (p.c. Sukadji). Changes within the domestic context thus helped pave the way for the development of the URGE project, discussed in greater detail in Box 4.1, which explicitly supported differentiation and competitive selection mechanisms for graduate education and research at the level of departments. It resulted in the gradual emergence of a selective group of State universities with growing capacities to sustain top level research and graduate education. Differentiation and stratification, in other words, did take place albeit more slowly than perhaps intended by donors. Institutional differentiation provided the required supportive context for niche formation and increased institutional autonomy, at least in two parallel ways. First, from the perspective of the State, institutional differentiation complicates centralized procedures and standardized regulations. Institutions, on the other hand, are encouraged to become active players on the market for status and funds.
Apart from the establishment of new types of higher education institutions, donors –the World Bank in particular— introduced and assisted with the creation of intermediary agencies between government and higher education institutions, typically mixing academic, bureaucratic and political interests and loyalties. National agencies such as the National Accreditation Board (BAN), the University Research Council (URC), later integrated into the Board of Higher Education (BHE), and the Board of Higher Education itself, are outcomes of that policy.
The creation of the Board of Higher Education (BHE) was established in the aftermath of DUE project preparation, with the broad mandate to advise DGHE in the task of overseeing the higher education system, and to further the implementation of competitive funding in research, graduate and undergraduate education. As an official advisory agency, the BHE has increased the complexity of decision making in higher education policy, in the process taking away power from government bureaucrats169. On the other hand, due to its broad mandate, the Board often lacks the capacity to effectively oversee all areas of higher education policy making (World Bank, PCR, 2003). Notably, in matters of finance, and in particular with regard to the financial autonomy of State institutions in terms of their authority over the use of resources from the State budget (especially the recurrent budget) or even the self generated income, the bureaucrats at the Ministry of Finance continue to use their veto powers extensively. More so than the Ministry of Education (the DGHE in particular), or the central planning agency (BAPPENAS), opposition and resistance against the growing decentralization in the management of public higher education from the early 1990s came to be located in the Ministry of Finance170. To the extent that public universities increased their autonomy vis-à-vis the State, the Ministry of Finance came to reaffirm its position in the State-university relationship.
1.2 Performance based competition and quality assurance mechanisms
International donors introduced competitive elements into their programs and activities challenging the way resources and status had been traditionally distributed throughout the higher education system. Some donors, such as the World Bank, explicitly designed programs in which funds were to be distributed on the basis of academic merit rather than by unitary (‘fits all size’) and centralized government regulations. The influence of these innovations on the Indonesian funding system of higher education is discussed in the next section.
Apart from their impact on the system of funding, however, donor interventions in many ways contributed to a more competitive system for the attribution of academic status and to the introduction of quality assurance mechanisms. In many instances this contribution was implicit. For example, by bringing in international expertise and academic policy experience from all over the world, Indonesia’s higher education system was challenged by and at the same time became increasingly socialized into emerging international norms and standards for reviewing and assessing the quality of higher education. Donor supported study tours in the early 1990s brought key decision makers to different countries in the world (the US, UK, Argentina, Australia, Germany…) where they were exposed to new merit based and peer reviewed systems of quality assessments in higher education. It is hard to measure the exact impact of these horizontal study and learning tours. Nonetheless, participants interviewed all confirmed the constructive influence of these activities on the eventual formulation of Indonesia’s New Paradigm in higher education (p.c. Bagyo Moeliodihardjo, Soekadji, Willi Toisuta, Pramoetadi, Tadjudin).
At a more structural level was the international influence on the establishment of the National Accreditation Board (BAN-PT), which was initially announced under the former Education Law (1989), but was formally established only in late 1994, in the wake of the policy dialogues with the World Bank ultimately leading to the formulation of the New Paradigm (cf. supra). The Board was first an operating unit under the DGHE, but since 1998 it has functioned as a relatively autonomous unit directly under the Minister of Education. Proposals to corporatize the BAN-PT have been considered but never approved. BAN-PT now resorts under the R&D department of the Ministry of Education (Sahaenah & Rahardjo, 2006).
As a new and ‘foreign concept’ (dixit the then Chairman of the Board), accreditation was at first met with firm opposition, not only from academics and universities (especially the ‘elite’ public universities), but also among students, as they perceived the possibility of a negative result as a serious threat to their career opportunities (Tadjudin, 2001). The 20-member Board was mandated to oversee the screening and evaluation of individual study programs of various degree levels (ie. diploma level, bachelor, master and doctoral level) offered by 82 public and 2600 private institutions. As of June 2006 a total of 7319 study programs have gone through the accreditation process (figures all from Sahaena & Rahardjo, 2006), involving self evaluations (portfolios), peer reviews, assessments, and site visits. The study programs are accredited according to four levels: A, B, C, and D (not accredited). Although BAN-PT itself does not have the authority to sanction individual programs or institutions, DGHE takes into account the levels of accreditation in some of its financial incentive schemes (e.g. block grants or competitions restricted to a particular level of accreditation). The arrangement indicates the shift from centralized and uniform system of State control to a powerful steering State role.
In other words, accreditation in Indonesian higher education was set up initially with international assistance money and technical assistance, and was directly linked to the new paradigm of managing higher education. Specifically, accreditation helped create an environment conducive to reforms in funding (i.e. competition, block grants restricted to accreditation levels, performance based funding), institutional differentiation (i.e. according to degree level, taking into account difference between general, professional, technical and academic programs) and stratification (i.e. according to accreditation levels), and management reforms at the institutional level, where notions of quality based stratification and competition between study programs provide a new dynamic for institutional decision making. Whereas the initial accreditation effort was focused primarily on the level of the individual study program, the accreditation agency in 2005 was given a new mandate to develop and implement an accreditation system for institutions of higher education. Although outcomes of this change towards accreditation at the institutional level are hard to predict at this stage, the levels of competition (also between public and private institutions) and stratification are not be likely to decrease.
1.3 Decentralized funding systems
In terms of higher education funding, international assistance interfered with Indonesian academic culture, which traditionally valued equality between and within institutions, and ascribed status hierarchies according to centralized rules and regulations rather than academic merit or performance. Implicitly, the selectivity of foreign assistance investment budgets challenged the prominent tradition of centrally funding institutions ‘across the board’, along lines of uniformity and equality. Table 7 in annex not only illustrates the spread and concentration of international donor funds in a limited number of institutions, but at the same time suggests the relative size of these resources in relation to the total development budget of these institutions.
Further, and at a more structural level, multilateral donors, notably the World Bank, explicitly incorporated alternative mechanisms of development funding into their operations and policy advice. The long term impact of these efforts are not yet easy to discern in their entirety, as financing innovations have been introduced gradually and continue to evolve. Furthermore, much of higher education funding is entangled with more systemic changes ranging from legal statutes regarding the civil service status of university personnel to the general economical and financial situation in the country. However, what can be affirmed is that assistance helped effect changes within the Indonesian funding system in its move away from centrally designed line-item budgets, input based objectives, and top-down planning towards more decentralized and output oriented approaches. Some of the more specific outcomes are summarized as follows.
First, building on modest domestic beginnings of competitive funding in some of Indonesia’s research programs in the early 1990s, the World Bank began to promote and use the practice in various of its lending operations with the Indonesian government. Competitive funding mechanisms have now become common practice for awarding higher education investment funds in Indonesia, and they have become internalized and mainstreamed up to the point that in fiscal year 1999/2000 about 22% of the government’s investment allocations were effectively awarded on a competitive basis (University Autonomy Team, 2004: 10). This share has even continued to grow further as for FY 2006 not less than 60% of the capital budget was to be allocated through competitive schemes (DHHE, 2006)171. The move to competitive funding mechanisms for the allocation of investment funds was part of the government’s strategy to decentralize authority, increase autonomy, and further accountability at institutional levels. From the perspective of institutional financial autonomy, it is noted that only part of these competitive funds are administered by the central administration of institutions, as departments and even individual study programs within these institutions still have authority to administer funds. Also, some of the Bank’s own projects (ie. URGE, QUE) explicitly targeted the sub-unit levels. I will return to the implications of these choices in the following sections.
Secondly, the introduction of decentralized block funding schemes and more transparent mechanisms for assessing budget proposals in projects such as QUE and DUE, are currently firmly integrated in the government’s own national follow on programs, often carrying names explicitly referring to former donor programs (cf. the ‘DUE-like’ or the ‘Semi-QUE’ development budget program). In addition, procedures for granting block grants are now being related to the status of accreditation. Even the Ministry of Finance made exception for block grant continuation when the Indonesian government in the aftermath of the financial crisis in 1998 decided to reduce development funds for higher education. Meanwhile, and as mentioned above, procedures for granting block grants are now being tied into the status of accreditation and/or to performance based competitions.
Third, international donors successfully equipped and encouraged public higher education institutions to generate more external revenues from outside the government budget while pleading with the Indonesian bureaucracy to eliminate existing barriers for them to do so. The World Bank in particular has insisted on increased cost recovery since the early 1980s, and started to urge government to increase the financial autonomy of institutions to attract and manage their extra-budgetary resources. In Indonesia, self generated income (DRK172) includes tuition and fees, local government assistance, contract and consulting services and private donations. Figures in table 4.2 provide information on the size of these resources in relation to the recurrent income of public institutions, ranging from a low 5% to an extremely high 78%, and an overall average of 41% for public institutions (data for FY 1999). While it is not obvious to exactly measure the influence of international assistance on the relative size DRK resources173, there are at least some indications that external influence effectively contributed to the growth of self generated income. Figures from our dataset (see graphical analysis of historical data in chapter 3, and more recent figures in tables 4.1, 4.2 and 4.3) not only show that the share of government funding has been drastically reduced (from an estimated 88% in the mid-1980s to a real 59% in 1999), but also indicate that high receivers of international assistance have been most successful in attracting funds from the market. Still, and perhaps even more important than the purely quantitative impact of donor investments, are the mechanisms, which some donors introduced to commit both bureaucrats and institutions to diversify resources for higher education by generating income from non-government resources. For instance, incentives for universities to retain 100% of earnings from contracts established on the basis of donor supported research; or the institutional counterpart funds from DRK resources, not only ensuring institutional commitment but also encouraging institutions to generate more income from external resources.
Fourth, the diversification of institutional resources and the resulting financial autonomy has encouraged institutions to increase the share of private funding through significantly increasing fees for incoming students. One study speaks of a “doubling of fees of incoming students to 40% of the operational costs” (Berk, 2002). A case study of the four public elite universities, carried out in the late 1990s, indicated that the share of student fees in the recurrent budget at these institutions ranged from 32% at IPB to not less than 60% at UI174. A more recent survey compares the total cost to parents at Indonesia’s public universities with those at private universities, and calculates that the private contribution of students and parents to the cover the cost of a first degree academic year at public universities is coming close to that at private institutions 175. Admittedly, it is near to impossible to make a hard assessment of the direct influence of international assistance on the development towards increased private funding of public institutions, as similar developments have occurred countries and regions where there was little or no international assistance (e.g. in Europe). Nonetheless, it is not because similar developments have taken place at other locations (without international assistance treatment), that no empirical case can be made to suggest influence of international assistance on policies of increased private funding of public institutions. On the contrary, recent case study analyses from scholars of international organizations have indicated the more prominent structural impact of international agency’s institutional norms and discourse on national policies and structures world wide176. In other words, it can be safely argued that the institutional norm of cost recovery for public higher education as it was put forward and disseminated on a global scale since the early 1980s by multilateral organizations such as the World Bank, the IMF and even OECD, did not remain without effect on policy and practice in Indonesia.
Still, we acknowledge that international assistance was more successful in terms of visible effects on the allocation of the development budget (i.e. new programs and investments) than on the allocation of the recurrent budget (i.e. personnel and operational expenditures), much of which remains more dependent on legal reforms and is tied into deep structural reforms, for instance with regard to the status of university personnel (i.e. currently under civil service status) or alternative funding formula’s and implementation procedures of the Ministry of Finance (MOF). Whereas the allocation of the investment budget has been drastically changed by the introduction of competitive funding mechanisms, little change has been introduced so far in the MOF’s allocation of the recurrent budget. Only recently, under the higher education long term strategy paper for 2003-2010, the government started to consider introducing performance based funding systems and formulas (DGHE, 2003, 12). The document candidly acknowledges the “legacies of previous strategies, which have resulted in the condition that many institutions are over-invested, particularly in physical and human resources, beyond capacities to effectively utilize and maintain”. It calls for a restructuring of the recurrent budget allocation according to a formula based block grant funding mechanism, which on the one hand recognizes the cost for producing graduates but also includes performance based components. The introduction of a new funding system is currently (December 2006) still under review177. And again, the World Bank is participating as a key partner and guide with a multi million dollar investment loan and credit, but also including technical advice and recommendations based on international experience with performance based funding systems (Managing Higher Education for Relevance and Efficiency Project, Project Completion Report, 2005).
1.4 The normative framework (dominant ideology and legislation)
The basic tenets of the ideology of Indonesia’s higher education system were left untouched by international donors, and instead now have become part and parcel of the rationale for change towards autonomy. The core idea of functional unity of teaching, research and service to society (i.e. the ‘tridharma’) and, more prominently, the concept of the university as a “moral force in society” are key examples of continuity, but at the same time illustrate how ideology is now used to make a convincing argument for change towards more autonomy. The concept of seeing the university as a ‘moral force in society’ originated in the late 1970s as a reaction to the increasing State involvement in campus life. Under the New Paradigm, higher education policy documents (as well as university plans) typically and consistently refer to the need for a “credible moral force” in the current transition process towards a more plural and democratic society. University campuses can only play this role, so the argument goes, if they can act autonomously in relation to the State, but also in relation to market and international environment. And the latter arguments were to become crucial in the response of the higher education leadership to the growing opposition during the political transition period in the late 1990s and early 2000s, when students as well as parts of the academic community began to criticize the “privatization” (‘swastanisasi’ in Indonesian), the “McDonaldization”, and the “hot IMF recipes” for Indonesian universities178. At the same time, State universities used the argument against the State in order to urge government not to expect higher education institutions to become fully self-financing under the new legislation. When the prestigious Universitas Indonesia in 2001 submitted its formal proposal regarding the offer to become a legally autonomous institution, it mentioned both the positive arguments and the risks associated with “accepting the government’s offer of the new legal autonomy status”, but insisted that it would not accept an arrangement by which it would need to become self-financing: “UI sees autonomy as a multiyear contract with government in which State funding is supplied as a block not linked to salaries and at roughly current levels in exchange for delivering improved performance.” (UI, 2000: 4).
Aside from the continuities at the level of ideology, new practices and mechanisms introduced by international assistance projects also helped introduce and promote new values and ideas, such as meritocratic values (as opposed to bureaucratic hierarchy or age status), transparency (e.g. in allocating or reallocating resources), competition, market orientation, decentralization, and, more recently, pluralism and democracy. Although a thorough cultural values study was not part of this dissertation, I did find instances and cases of deep cultural change. Most notably, the tendency of international donors to target graduate training efforts to young men and women effectively challenged the bureaucratic or age based road to academic promotion. In some of the Bank projects (i.e. DUE), there was an explicit requirement to staff Local Project Implementation Units with young academics, thereby providing another mechanism to empower a new generation of academics, apart still from the project’s approach to decentralize institutional planning, which involved junior faculty in the overall university strategic planning process.
Of more recent date is the influence of international donors on the legal framework of Indonesia’s higher education. As indicated in section 2 (discourse analysis), bilateral agencies often explicitly chose to stay away from the ‘domestic’ politics of higher education management. Even the multilateral donors (including the World Bank) did not want to get involved too far into formal policy during the 1980s and much of the early 1990s, instead preferring to focus on the more technical issues of cost recovery and funding mechanisms. Even the World Bank at the time seemed to recognize its lack of expertise as to the domestic legalities (interview Sachi Takeda), and instead followed a strategy of growing pressure and pushing the margins of the system. Its call for financial autonomy during the 1990s in particular led to a situation, which helped expose the structural barriers of the existing state financing laws (the so-called ICW regulation, cf. section 1 of this chapter) and resulted in a new set of regulations and legislation which created the possibility for public higher education institutions to become separate legal entities (as opposed to ‘units of government’).
Table 4.3 provides an overview of conditions pre- and post- reform and legal changes, referring to four basic dimensions of autonomy: financial autonomy, academic autonomy, administrative autonomy and autonomy in relation to human resource management. The legal change process started with the introduction of regulation 61 in 1999, which opened the possibility of becoming a separate legal entity. From the beginning it was decided by DGHE that the formal granting of the new autonomy status would follow a selection process in which initially only the four top universities (UGM, UI, IPB and ITB) were invited to submit an extensive plan for autonomy. I arrived in Jakarta for interviews exactly at the time the guidelines for proposal submission were being reviewed and was able to witness or observe many of the exchanges (i.e. e-mails and meetings) between staff from DGHE and World Bank staff at first hand.