Jakarta, Indonesia -- American-style business education has become Indonesia’s newest growth industry.
Responding to calls from the country’s booming private sector for the preparation of enterprising managers, at least 15 master’s-degree programs in business administration have sprung up over the past six years. In addition, many new undergraduate programs in banking and finance have been established, as have special business courses offered by individual companies to their employees.
The demand for such programs is consistent with Indonesia’s transition from government-led economic growth to more of a market economy. There is a conflict, however, between the government and the private sector over who should set the standards for business education.
In addition, some critics have questioned whether the new programs, which emphasize independent analysis and research, can be effective for Indonesian students, who have been heavily influenced over the years by an emphasis on rote learning.
The conflict over control of the programs is an outgrowth of old patterns coming up against new needs.
Indonesia ranks among the world’s top 10 petroleum-producing countries, and for many years state investment fueled by oil revenues exceeded private investment. But in 1983, after a slump in oil prices, the government urged private companies to take the lead in developing other exports.
Because of the changing economic climate, private institutions took the lead in creating business programs. The institutions “read the market signals much more rapidly than the government,” says Mayling Oey-Gardiner, a lecturer in economics at the University of Indonesia in Jakarta.
Historically, however, public universities have set the pace for curriculum offerings at Indonesia’s private institutions, and so far the Ministry of Education and Culture here has not accredited any private business schools -- not even the Institut Pengembangan Manajemen Indonesia, a prestigious clone of the Harvard Business School that is chaired by Indonesia’s Minister of Cooperatives, Bustanil Arifin.
In 1988, in fact, the government established its own accredited “master of management” programs at two premier public institutions, Gadjah Mada University in Yogyakarta and the University of Indonesia, which is known here as UI.
Sukadji Ranuwihardjo, the Education Ministry’s director-general of higher education, says the government has withheld accreditation from all private business schools because they offer graduate programs without undergraduate studies.
But according to Harja Bachtiar, a high-ranking ministry official who drafted recent changes in Indonesia’s education law, the government has the authority to accredit schools that have only graduate programs.
The current problem, he says, is that Indonesia’s restructured education system calls for four years of undergraduate work, while some business programs have been accepting students with three-year degrees earned under the old system.
“Personally, I think it is very good to have more M.B.A. programs, and it’s even better to have these programs initiated by the private sector,” says Mr. Bachtiar.
What bothers people in the ministry, he says, is “that the way these M.B.A. programs have been organized by some private universities disrupts the system of education we are trying to develop.”
The private sector takes a dim view of those explanations. An official of one private business school insists anonymously that, while government officials are “fully convinced that there is real demand” for the new programs, “they want to reap all the benefits and get everyone else out of the market by accrediting only their own programs.”
According to Ms. Oey-Gardiner, private schools were hurt when the University of Indonesia’s government-approved program began. She says the private market apparently still wants the “legal stamp” of accreditation.
In any case, the University of Indonesia’s master’s program -- which includes a one-year, full-time course and a two-year, evening course -- is booming. In a system otherwise described as strapped for funds and declining in quality, business education is providing a heady combination of self-financing and blue-chip ties.
According to the program’s director, Wahjudi Prakarsa, its full-time faculty members are paid 10 times the salaries of those in other departments, while its students are charged 20 times the fees of other programs.
In addition, major companies often foot the bill for their employees to enroll.
The problems facing some Indonesian business students are seen at the Institut Pengembangan Manajemen Indonesia, or IPMI, where they are expected to undergo a kind of “shock treatment,” says the institute’s executive director, Siswanto Sudomo.
“We are getting them used to analyzing problems, used to a world of uncertainty, used to a context where information is never complete,” he says.
As a former managing director of a major computer distributor, Mr. Sudomo says he became familiar with Indonesian business leaders’ complaints about passive university graduates.
Students would wait for people to “tell them what to do,” he says. “They were so insensitive to problems, or the symptoms of problems. They were just useless that way.”
According to a Western academic specializing in Indonesian studies, such difficulties are rooted in Indonesian culture and education, where students have been “taught to obey.”
Says Mochtar Lubis, director general of the Press Foundation of Asia and an outspoken critic of the Indonesian government: “Our society has been, for the last half-century, a closed society. The sense of creativity has been lost for so many years. People don’t take the initiative. This kind of thing has been drummed into [students’] souls, so how can they be imaginative, creative M.B.A.'s?”
At IPMI -- which has 55 students, compared with about 260 in the University of Indonesia’s business program -- students remain on the campus from 8 a.m. to 10 p.m., five days a week. The medium of instruction is English, and the curriculum borrows heavily from case studies used at Harvard.
To make the imported curriculum more relevant, the institute asks students to collaborate on research involving Indonesian companies. It also brings in about 50 guest speakers a year.
“We invite people with political vision -- members of the Armed Forces, political groups, and ambassadors from major trading partners,” says Mr. Sudomo.
The participation of such people boosts students’ morale and confidence, he says, because “a lot of Indonesians are not confident enough in expressing their views to people higher in rank.”
Other Indonesian management schools seem to impose fewer demands, leading a resident Western expert on higher education to comment: “What you see now are a lot of schools claiming to offer M.B.A.'s that really shouldn’t be. They are diluting the value of the degree and confusing the picture.”
The picture is further muddied by the presence of graduates of foreign business schools of dubious quality.
“We’re getting to a point in Indonesian society that we’re making judgments on potential workers based on the degree they hold and the school they attended,” says an American business executive here. “Cookie-cutter M.B.A.'s are not going to significantly add to a dynamic economy.”