JAKARTA – In a workshop overlooking paddy fields on the eastern edge of Java, Mr Dimas Firmansyah is tinkering away on a large truck engine. A lanky 18-year-old in a hard hat and work shirt, he hopes to find a job repairing coal machinery when he graduates in a few months. Thanks to his school’s revamped curriculum and corporate partnerships, he almost certainly will.
Indonesian President Prabowo Subianto – who has advertised ambitious, industry-heavy growth goals for the coming years – needs many more like Mr Firmansyahs. South-east Asia’s most populous economy has the world’s fourth-largest workforce, but more than a third of Indonesians over 15 have only a primary school education, or less. Vital vocational training, like this class some 400 miles (roughly 640km) east of Jakarta, too often falls short because of poor teaching and a dearth of basic equipment.
The result is a pressing shortage of qualified workers and high unemployment among young people who find themselves lacking the skills companies need, even with a diploma in hand. The rate of youth that are out of both a job and education, a good indicator of wasted human resources, is one of South-east Asia’s highest, at more than a fifth.
That gap threatens Mr Prabowo’s ambitions to turn a wealth of natural resources into a thriving electric-vehicle and clean-energy industry. Discontent with paltry education funding is already fueling youth protests on Jakarta’s streets, the largest demonstrations of popular discontent since the president took office in October 2024.
“Indonesia has invested heavily on infrastructure,” said Dr Alpha Amirrachman, a director of the climate center of Muhammadiyah, an Islamic organisation which runs thousands of schools in the country. “Investment in human capital, education and healthcare has not kept pace.”
Inadequate schools, ill-qualified teachers and a poor return on government spending on education are problems familiar to many emerging economies and Indonesia has made some effort to address the problem, including for vocational colleges.
But complications ranging from out-of-date syllabuses to tangled oversight mean it continues to lag, even by the standards of the region. Labor productivity, an indicator linked to growth and competitiveness, sits alongside Venezuela, according to the International Labour Organisation. That’s below regional peers like Thailand and Malaysia, which both made earlier bets on manufacturing.
“If companies like Apple come here and open big operations, the concern is they wouldn’t have enough highly skilled labor – which they do in other countries, like Vietnam,” said Mr Martyn Terpilowski, chief executive officer of Jakarta-based software firm PT Bhumi Varta Technology, referring to one of the highest-profile names courted by Indonesia. “Yes, we have some good people now, but we don’t have the number of good people that we need.”
Apple Inc. and its suppliers have invested at least US$16 billion (S$21.3 billion) in Vietnam since 2019, according to figures provided by the company last year. By contrast, even after bans and threats from Jakarta, Apple will put just at US$1 billion into Indonesia. A long courtship of Tesla Inc. boss Elon Musk, meanwhile, has yet to yield a significant manufacturing investment.
Metal processing has seen significant inbound investment in recent years, but the problem is no less acute there – large Chinese nickel producers bring in skilled industrial workers from China or, in some cases, take Indonesians to China to receive the necessary training.
Reforms to date, designed to ensure Indonesia makes the most of its demographic “dividend” before a peak around the end of the decade, include increases to compulsory education and skill development programs with incentives, introduced under Mr Prabowo’s predecessor. But deep changes to curriculums and teaching standards have been far harder to implement. According to the latest Program for International Student Assessment, which tests 15-year-olds in dozens of countries in math, reading and science, most Indonesian children fell below the baseline level of proficiency.
“There’s a lack of teachers with expertise in emerging fields,” said Dr Amirrachman. “Many institutions still lack access to modern technologies such as those needed for EV production.”
Mr Prabowo himself came into office with promises for schools, but the most high profile has been a headline-grabbing US$30 billion free lunch program, aimed at alleviating malnutrition. The cuts to finance that policy have impacted other budgets including primary, secondary and higher education, at a time when money is also being funneled to Danantara, a new state investment fund – prompting the “Dark Indonesia” movement and last month’s large youth demonstrations against what are seen as hasty, inconsistent austerity moves.
The Ministry of Primary and Secondary Education and the Ministry of Higher Education, Science and Technology did not respond to requests for comment. Officials have said efforts to improve education will not be affected by the cuts.
Stop gap measures
Mr Firmansyah’s school – a neatly maintained, low-rise complex of bright blue buildings – is something of an exception, with even a forklift and excavators for students to work on. That’s thanks partly to a partnership with one of the companies seeking just such qualified workers, United Tractors Tbk, the largest distributor of construction equipment in Indonesia.
“There was a big lack of supply of certified people, competent people, capable people to fulfil the needs of our industry,” said Mr Edhie Sarwono, human capital and sustainability director at the company. “We had to solve the problem by ourselves.”
Shortages common to many schools are particularly acute for vocational colleges trying to produce employment-ready mechanics and technicians to operate metal smelters and electric-vehicle factories, creating a wide gap between students’ capacities and what employers require. Young graduates from technical high schools face unemployment rates almost four times higher than those with only primary education.
Mr Sarwono, speaking in Jakarta, says companies have a role to play. United Tractors works to align teaching at the school with skills needed in the workplace and donates equipment. But he warns this will only be a stop-gap measure for Indonesia’s wider needs.
“For the low- to medium-level technology, we can solve that with the competencies of the vocational schools,” he said. “For high tech, we do not have specific schools that can anticipate and face those challenges.”
Mr Prabowo’s predecessor Joko Widodo, known popularly as Mr Jokowi, did attempt a revitalisation program for vocational schools during his decade as president. But weak political commitment and the decentralised nature of the education system have made change slow at best.
That stands in sharp contrast to his US$800 billion program to expand roads, airports and railways, which left a visible legacy across the archipelago nation.
The risk for Indonesia is that it loses out to neighbors with better trained workforces, including Vietnam. While it has twisted the arms of nickel producers to bring in large-scale investment, its dominance of other metals is less stark – meaning leverage with foreign producers is not as overwhelming.
Former bright-spots, such as steel, textiles and ceramics, are already contracting in the face of brutal competition from Chinese imports.
“The policy of pushing some big companies to invest in Indonesia, like they pushed Apple, is a short cut,” said Ilimiawan Auwalin, an economics lecturer at Universitas Airlangga in Surabaya. “Far better to improve competitiveness.”
In eastern Java, Mr Firmansyah and a handful of fellow students still working on machinery parts at the end of the school day have a more pressing concern: jobs. Most are realistic. They expect to serve the metal and coal industry that has sustained the economy for decades – not clean cars.
“My father is a carpenter, but the business is not stable,” said Mr Firmansyah. “In mining, the salary is large.” BLOOMBERG
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