Higher Education Reform Toward Autonomous University : Lesson Learned from Indonesia Satryo Soemantri Brodjonegoro Director General of Higher Education Ministry of National Education, Indonesia

Background 82 state owned higher education institutions (HEIs), treated as part of the ministry (government entity); 2750 private owned HEIs, treated as the business arm for the foundation; There is no independency for the HEIs in carrying out their mission as the moral force; The HEIs become less accountable and less innovative due to the current status.

State Owned HEIs Current regulations : state treasury, education system, and civil servant law; Financing scheme : 60% from the central government and 40% from the students and other non-binding sources; Financing level : under financed both for operation and investment (development); Cost effectiveness : low due to the rigid organizational structure, rigidity in staffing (recruitment, promotion, termination), inflexible budget allocation and disbursement.

Private Owned HEIs Current regulations : foundation, and education system law; Financing scheme : partly by the foundation while most of the budget is collected from the students; Financing level : under-financed due to low purchasing power of the community; Cost effectiveness : high due to the survivability where sometimes quality is sacrificed.

Higher Education Reform A new law is necessary for the establishment of a HEI as legal entity, so that HEI becomes autonomous; Under the new law, HEI is able to take legal actions, govern the institution according to the good governance principles, and responsible for all of the undertakings; Currently the legal entities are the government ( state owned HEIs) and the foundations ( private owned HEIs)

Autonomy and Accountability Good governance principles require the institutions to be accountable to the public since they are using public money (directly and indirectly); Accountability will be achieved if the decision making process is quick, applicable, and the decision is implemented immediately to create a positive impact; Autonomy should then be given to HEIs to achieve accountability.

Reform Process In 1999 a government regulation was enacted to allow the status shift from the state owned HEIs to become legal entities; In 2000 there were 4 stated owned HEIs approved to be legal entities with transition period of 10 years; In 2004 there were additional 2 state owned HEIs approved to be legal entities with transition period of 10 years; Another state owned HEI was approved in 2006 under the same condition.

Reform Process (2) The approval to be a legal entity is based on the readiness of the HEIs, they were evaluated based on their ability to conduct good corporate governance; Some assistance will be provided for the HEIs; Government put a special effort to enhance the HEIs to become legal entities by the provision of appropriate incentives; It is actually the corporatization of HEIs.

Constraints There is a need for a law on educational legal entity to provide the HEIs with autonomy; The current government regulation (1999) is not adequate; It is difficult to shift the mindset of the HEIs staffs from being secured employment to become merit based employment;

Constraints (2) It is not easy to change the organizational paradigm from the previously hierarchical structured organization to become flat collegial flexible organization; It is quite an effort to shift from the input based planning to outcome based planning; The current reform has not yet touched the state treasury, fiscal, and the civil servant laws and regulations, and therefore the HEIs are facing the dilemma.

Constraints (3) Corporatization tends to be misunderstood by the community as privatization, and then people protested against the concept of the new law for educational legal entity; The facts are that some HEIs increase their tuition fee, is it a privatization ? They increased it due to the current under-financed situation and many people are ‘rich’ Good corporate governance and accountability are needed to convince people that appropriate budget is necessary to deliver quality education.

Promises The new law on educational legal entity which assures HEIs autonomy and accountability should be enacted early 2008; The transitional period for the current 7 autonomous HEIs provides lesson-learned both for the government ( in preparing the law) and for the HEIs ( in mind-set change and capacity building and preparation of structural change)

Conclusions The reform toward autonomous HEIs is necessary to enable their competitiveness, and there is no point of return; The reform process will be painful especially in the political environment in which Indonesia is experiencing reform in many aspects and sectors; Political will and commitment is necessary by all stakeholders for the success of the reform.

Thank You