Indonesia needs to invest more in human resources

Siwage Dharma Negara, Jakarta | Opinion | Sat, August 09 2014, 10:48 AM

The 2014 Global Innovation Index (GII) ranks Indonesia 87th out of 143 countries in terms of innovation capability. In this aspect, Indonesia still lags behind several of its ASEAN neighbors, such as Singapore (7), Malaysia (33), Thailand (48), and Vietnam (71). Indonesia’s ranking is only better than Brunei Darussalam (88), the Philippines (100), Cambodia (106) and Myanmar (140).

This report generates concern about the future competitiveness of Indonesia’s economy as the largest economy and most populous country in Southeast Asia. With a population of about 250 million people, and more than a third of its population under the age of 15, Indonesia should not waste its young human resources, which could potentially transform its economy from resource-based to knowledge-based.

Before the release of GII 2014, the 2013-2014 global competitiveness index highlighted that in order to transform an economy from factor-driven to innovation-driven, a country needed to improve several aspects, including its institutions, health and primary education, higher education and training, labor market efficiency, technological readiness and innovation capacity. Most, if not all these factors are, to some extent, seriously lacking in Indonesia.

Various development agencies have asserted a clear and consistent message. For Indonesia to sustain its future economic growth and to improve social welfare, it needs to invest more in its human resources. Highly educated and well-trained human resources are critical for an innovation-driven economy. GII 2014 shows a positive correlation between a country’s development stage and the percentage of the population that has completed higher education. Economies at the catching-up stage are often trapped in a vicious circle, where economic development fails to provide sufficient incentives for their young to pursue higher education, and without enough skilled people, these economies will not be able to move up to a higher development level. In view of this, Indonesia can learn from other countries that have succeeded in preparing their human resources to support economic transformation.

The experiences of Singapore and South Korea, the two perceived highly innovative Asian economies, underscore the importance of human resource investment. Both Singapore and South Korea have strong and committed governments that proactively set policy and provide incentive to push human capital development. They strongly believe that high-quality human capital is key to maintaining their global competitiveness and to sustain growth. Even as the political landscape changes, their governments consistently continue investing in education and skills training for their young people.

In South Korea, for instance, because of its persistent high human resource investment, the country has a good stock of well-trained human resource professionals. With support from its well-educated and well-trained human capital, Korea has moved away from dependency on technology imports and reverse engineering to become more actively engage in product engineering and product design technology. High spending on research and development (R&D) together with a highly educated workforce with a high degree of interest in S&T and innovation make “technology leapfrogs” possible in this country. The latter has helped transform Korea from being one of the poorest countries in the world to becoming one of the elite members of OECD within less than three decades.

The Singaporean government realizes the critical role of human resources and the institutions that prepare future human capital for the country. It tries to build an innovative ecosystem in which higher education institutions play a crucial role not only in providing education and training but also to act as knowledge factories to support industry. The government promotes the creation of R&D facilities, including tech-parks and incubators built using public funds in universities. The goal is to leverage universities as a part of its knowledge infrastructure in order to attract foreign direct investment (FDI) from multinational companies and to generate local knowledge-intensive enterprises.

In both economies, state intervention played a big role in industrial development, including the import or transfer of foreign technology during the catch-up period. However, recently, they have turned to more market-led industrial policy and emphasize indigenous and private sector-driven R&D and innovation. They both are imposing education reform, particularly in higher education, to meet global changes. After first building a critical mass of higher education graduates, Singapore and South Korea emphasize improving the quality of their higher education, which is critical for the advancement of their capacity in R&D and innovation.

In addition to universities, government research institutes also play a critical role in diffusing product and process technology to industry. In Korea, for example, the Korean Institute of Science and Technology (KIST) facilitated rapid foreign technology acquisition and adaptation in the 1970s, which helped identify and acquire foreign technologies and assisted Korean firms in adapting and adopting their use. Moreover, the Korean government introduced many initiatives to increase research capacity at universities and strengthen their links with government research institutes. For example, students receive training in multidisciplinary research at universities, participate in research projects at government research institutes, and switch across various government research institutes. In Korea, students are required to take general courses focusing on technology management, research management and planning, technical writing and entrepreneurship. The skills and knowledge they acquire as well as the networks they build prepare them for successful careers in R&D and innovation business.

Universities were given a central role in Singapore’s transformation into a knowledge-based economy. The government allows greater autonomy and flexibility in university governance. The goal is to allow them to be more productive and entrepreneurial.

The key to Singapore and South Korea’s success is that education has always been a top priority. Singapore and South Korea’s higher education institutions have developed into world-class research institutions because they have been given more autonomy and flexibility to respond to global changes. Initially, their higher education institutions were only producers of skilled workers. And now they are being transformed into producers of knowledge.

In Singapore, many public universities are given status as independent legal entities to give them greater autonomy and flexibility to work with industry. The government also requires universities to generate a fraction of their total funding from private sources as a condition for receiving public funding. In some cases, the government even cuts public funding to force them to work with industry. Collaboration with industry becomes a criterion for faculty evaluation. The government provides national awards and honors for those who excel in collaborations with industry. Finally, universities are working with industry in course development to better equip students with the knowledge and skills that employers need.

Going forward, the new government of Joko “Jokowi” Widodo and Jusuf Kalla should prioritize investment in human resource development through education, especially higher education and skills training. The two are the keys to building a critical mass of well-educated and well-trained workforce for accelerating economic transformation. The government should play a more proactive role in promoting reform needed to transform Indonesia into an innovation-driven economy. Better interaction among higher education institutions, government research institutes, and industry must be developed. For this, the government can consider providing preferential policies and incentives to promote collaboration in R&D and innovation.
The writer is a researcher at the Indonesian Institute of Sciences (LIPI), Jakarta.

Education 2.0 in Indonesia: Bamboo innovators

Kee Koon Boon, Singapore | Opinion | Sat, May 11 2013, 12:31 PM

Paper Edition | Page: 7

“What use is an esoteric academic theory like Einstein’s theory of relativity?” scoff street-smart students and “practical” businesspeople. Answering this question using the Bamboo Innovator framework can help foster resilient value creators in varied disciplines and remake Education 2.0 in Indonesia as we walk through the seemingly unrelated stories below and be amazed by how the dots connect toward the end.

Without Einstein’s modern physics theory, it would be impossible to use your iPhone to find your location on a map. The transistors in the phone rely on effects predicted accurately to several decimal places by quantum mechanics.

The Global Positioning System (GPS) that the phone uses to determine locations incorporates in its software the deformation of space-time predicted by relativity theory to achieve navigation accuracy within about 15 meters of one’s actual position.

Without the proper application of relativity, GPS would fail in its navigational functions within about two minutes. Thus, this theory plays a critical role in the multi-billion growth industry centered on GPS.

GPS, in turn, has enabled the development of the Geographic Information System (GIS) to revolutionize the way we capture and analyze all types of geographical data for multiple applications from urban planning, disaster response, epidemic planning, mining and oil exploration to location-based services.

ESRI is the GIS software pioneer, founded by Jack Dangermond in 1969. ESRI has an installed base of more than 1 million users in more than 350,000 organizations with over US$1 billion in annual revenue achieved by 3,000 employees. ESRI grew by focusing on its users and employees, eschewing incentives such as sales commissions.

ESRI, in turn, is linked to Singaporean entrepreneur Wong Fong Fui, who runs the conglomerate Boustead, which has an exclusive country license to ESRI GIS software in Southeast Asia and Australia.

Wong is known as a turnaround specialist, having helped the loss-making unfocused QAF with a market cap of US$15 million;
then in 1988, built the Gardenia bakery brand in Singapore into a $500 million food business by the time it was sold, and now Boustead, which he bought for $14 million in 1996 has a current market value of $580 million.

Interestingly, this $500 million market value has been exceeded by Wendy Yap who helped focus her family business, Nippon Indosari, to become a Gardenia 2.0 and the largest mass-market producer of bread in Indonesia under the “Sari Roti” brand, which has a market value of $750 million.

Around the same time FF Wong got into Boustead, Wendy started Indosari in 1995 with her father, Piet Yap, a Salim Group executive who cofounded the Bogasari flour mills. The typical businessman might shrug and point out that for Indosari to be larger than Gardenia is a given, since Indonesia is a far larger market than Singapore.

However, many companies and multinational corporations (MNC), such as SaraLee, had earlier tried to expand in Indonesia but all retreated with heavy losses. So, why was Wendy Yap able to scale up while others with abundant tangible resources failed?

Indosari has adopted an open innovation business model in collaboration with Japan’s Shikishima Baking, which helped Indosari in its technological processes in introducing Japanese-style soft breads that won over the Indonesian

Importantly, Indosari has built trust with retailers and customers to overcome the logistics nightmare that doomed its better-capitalized rivals through its strong distribution network for its highly perishable commodity of more than 2 million pieces of bread daily, resulting in a dominant 90 percent market share.

It sells its products through modern distribution channels and an innovative system of around 3,000 mobile tricycle carts to penetrate more than 17,000 small traditional shops in rural parts of Indonesia.

However, Indosari’s market value of $750 million pales in comparison to Mexico’s Grupo Bimbo’s $15 billion, even though both Indonesia and Mexico have gross domestic product (GDP) of $1 trillion.

Bimbo is also the world’s largest bread manufacturer, making more than $13 billion in sales. So, how was this “small white teddy bear”, Bimbo’s corporate image, which “began with great limitations” in 1945 in Mexico, a country where half the population lived below the poverty line, able to become the largest in the world and compound 24-fold in market value since 1994?

Given that over 80 percent of bread is sold in mom-and-pop stores in Mexico, scattered miles from one another over poor roads, cultivating trust and support among its community of customers, suppliers and employees is critical to overcome the geographical limitations in scaling up.

Small store owners tend to ask for credit, which is provided informally by Bimbo. Its partnership with community bank FinComún leveraged upon the bank’s pioneering expertise in providing micro-loans to extend credit yet reduce bad debt and improve the working capital position to free up more cash to carry out expansions.

In a country known for the exploitation of workers, Bimbo has built an unusually people-oriented culture with its well-known policy of avoiding layoffs even in times of crisis and sponsoring its employees’ education, which has helped foster loyalty and commitment.

As a result, Bimbo was able to resist the 1991 threat from the arrival on the Mexican market of giant PepsiCo. While Bimbo innovated in integrating production-delivery-finance, none of it would amount to much if Bimbo had not offered the country affordable, edible aspiration, spreading this dream to nearly every remote corner of Mexico.

There is a common thread running through these stories: the resilient Bamboo Innovator. The vitality of the bamboo revolves around its empty hollow center in the same way as the “emptiness” of the Bamboo Innovator with its “indestructible intangibles” derives its strength from “know-how” and “trust and support in the community”.

The “emptiness” is why bamboo bends but does not break, even in the wildest storms that snap the mighty but resisting oak tree.

The intangible know-how in relativity theory has led to the multi-billion dollar GPS industry, which in turn enabled the development of the GIS pioneered by ESRI under Jack Dangermond, whose leadership nurtured a culture of empowerment and innovation.

FF Wong was attracted by this intangible know-how of ESRI, having built the “intangible” Gardenia brand. While FF Wong was building Boustead, Wendy Yap developed a larger, more focused Gardenia 2.0 at Indosari by cultivating trust and support among the company’s customers, suppliers, partners and employees, in the same way that this “emptiness” worked wonders at Grupo Bimbo.

In the landscape of Education 2.0 in Indonesia, students can search for facts on Google, but Google and Facebook cannot tell them how to connect the dots in alignment with their talent and personality to pursue what they can excel in.

With the Bamboo Innovator in their hearts, they will experience the uncanny: The raw sensual data reaching their eyes before and after are the same, but with this pertinent framework of meaning, the chaotic features and anomalies in the marketplace are visible.

Instead of producing “grades”, “checklist-based holistic CVs” and “high graduation salaries”, the education system inspires students to be the Jack Dangermond inventor, the FF Wong and Wendy Yap entrepreneur, the quantum mechanics engineer and physics expert, the geography-based business and trade specialist, the teacher and the value investor, and so on.

Their fates all intertwined as Bamboo Innovators to forge their own larger-than-self path to create value for Indonesia and the world.

The writer is an investment professional and a former accounting lecturer at the Singapore Management University (SMU).

Future of Indonesia depends on new curriculum: Minister

Bagus BT Saragih, The Jakarta Post, Jakarta | National | Tue, February 19 2013, 9:56 AM

Paper Edition | Page: 4

Education and Culture Minister Mohammad Nuh says that the ministry will go ahead with its plan to implement the new national curriculum in July this year, despite mounting criticism from teachers and education experts.

Speaking at a discussion held by the Golkar Party faction at the House of Representatives complex on Monday, Nuh said that the ministry would not postpone the implementation of the new curriculum later this year, as it could further cause the deterioration in the country’s education quality.

“The future of this nation depends on the new curriculum,” Nuh said.

The new curriculum has come under a barrage of criticism for dropping science in favor of civics and instruction on religion. As previously reported, the new curriculum will consist mostly of civic education and religion with science being integrated into the two subjects.

Details from the new curriculum have also become the target of ridicule by activists. An sample civics lesson states that a 10th grade student must learn discipline from the behavior of an electron, which always moves within its orbit.

It also has lessons that require students to learn to live in a heterogeneous society by studying linear and non-linear equations.

Nuh insisted that there was nothing funny about integrating civics and religious education with chemistry. “Students haven’t been taught enough to think creatively. Education should be both accurate and offer the best lesson, and this can be achieved by teaching them to be creative,” he said.

Nuh also defended the ministry’s decision to add extra hours for religion.

He said that the ministry hoped the additional two hours allocated for religious studies could help the nation’s terrorism eradication program.

“Terrorism is not triggered by long hours of lessons on religion. The growing acts of terrorism were basically due to incomplete religious education. Therefore, we need to add more hours for religious subjects,” he said.

To prepare for the implementation of the new curriculum, Nuh said that the ministry would give teachers 52 hours of training, as well as mentoring sessions during the first few months of the 2013/2014 academic year.

Separately, Retno Listyarti, the chair of the Jakarta Teachers Discussion Forum (FSGI), said that 52 hours of training would not be enough to prepare teachers for the new curriculum.

“It would be very hard to instruct and force teachers to apply this new curriculum, with the hope of teaching about heterogenous society from math,” Retno said.

Indonesian Teachers Association (PGRI) chairman Sulistyo concurred with Retno, saying that teachers would not be ready by July, when the new curriculum would be implemented.

“The ministry should have first focused on improving teachers’ competence, as there are still a lot of teachers without sufficient training,” Sulistyo said. “And now the government wants to prepare the teachers for the new curriculum. I suppose that will be very difficult.”

Nuh denied suggestions that the ministry rushed to implement the new curriculum by disregarding teachers’ preparedness.

He also said that books both for students and teachers would be ready by the end of February, as they were already in the hands of proofreaders.

Meanwhile, President Susilo Bambang Yudhoyono applauded the new curriculum, saying that it could be used to improve religious tolerance.

“Education should not only make people smart but also to train Indonesians to be mentally tough, physically healthy, tolerant and willing to live in harmony with others with different religions, race, and tribes. By preparing a tolerance-centered curriculum, intolerance, which can be violent, can be stopped upstream,” Yudhoyono told ministers during the opening of a plenary Cabinet meeting at the State Palace.