Opportunities in Indonesia’s Education Sector

The education sector in Indonesia presents an investment opportunity for growth in one of Southeast Asia’s most dynamic economies. With a large, youthful population and an increasing demand for quality education, Indonesia is set to become a center for educational development.

The government is currently increasing its focus on educational infrastructure and improving access to learning. This effort, alongside rising private sector involvement, makes the country attractive to those considering investment in education.

Is Education Open for Foreign Investment?

Foreigners can own up to 100% of educational institutions. The investment depends on whether the education is formal or informal and the specific model and structure involved.

Indonesia’s educational policy encourages foreign participation, especially in higher education and education technology. This makes the situation a favorable market for global education players. With over 3,000 institutions serving 8.5 million students, enrolment rates are expected to rise as secondary education improves. 

The sector’s value is projected to reach USD 118 billion by 2025. This growth is creating vast opportunities for education partnerships, particularly with the rise of Foreign Higher Education Institutions (FHEI) and universities aiming to integrate cutting-edge fields such as robotics, AI, and green technology.

What is the Market Size of the Education Industry in Indonesia?

Indonesia has one of the world’s largest education systems, with over 52 million students, three million teachers, and 400,000 schools. Over the years, the government has increased its education budget to build a world-class system, incorporating modern and educational technology. 

The demand for better educational infrastructure and higher-quality institutions presents opportunities for investors to contribute to this transformation.

Regarding the educational system, Indonesian students must complete twelve years of compulsory education, including six years of elementary school, followed by three years of junior and senior secondary education. After junior secondary, students can choose between general senior high schools and vocational schools.

In Indonesia, primary education is predominantly provided by public schools. However, more than half of high schools and 96% of universities are privately operated. 

Public schools are generally free, while private Indonesian schools are more affordable than international schools, with fees starting at around IDR 15 million per year. In comparison, fees for mid-tier international schools typically begin at IDR 50 million annually.

Steps to Invest in Education in Indonesia

Three schemes are available under the country’s regulatory framework if you wish to invest in Indonesia’s education sector. Which are:

Establish a Branch Campus

Foreign universities can set up a stand-alone branch campus in Indonesia through a non-profit foundation (Yayasan). Monash University was the first to do so, receiving approval from the Ministry of Education, Culture, Research, and Technology in November 2020.

As Yayasan Monash University Indonesia, it offers master’s and doctoral programs, executive courses, and micro-credentials at its new postgraduate campus in BSD City, Southwest Jakarta.

Form a Partnership to Create a New University

Foreign universities can also collaborate with Indonesian institutions to establish new universities by jointly creating Yayasan. A consortium of universities could also do this, provided there’s a local partner.

One example of this model is the International University Liaison Indonesia (IULI), founded by a European University Consortium led by Germany’s Technische Universität Ilmenau.

Deliver Joint Study Programs

A foreign university can work with a local institution to offer joint programs, including dual degrees, and require less investment than the other two models.

This option appeals to students who want to earn an international qualification without going abroad. For instance, the University of Indonesia (UI) has partnered with foreign universities on international programs since 2012. Swiss German University (SGU) has collaborated with European universities since 2000, allowing students to earn dual degrees.

How Does the Foundation Model Facilitate Foreign Investment?

Foundations in Indonesia, particularly those in the formal education sector, must comply with specific requirements. Foreign investors can establish a foundation under Government Regulation No. 63 of 2008, amended by Regulation No. 2 of 2013. This allows foreign investors to control school operations and access opportunities for growth in education partnerships.

Is It Possible to Operate Schools Without Using a Foundation?

Formal schools, including primary, secondary, or high schools, can only be operated through a foundation. However, for non-formal education models, such as online learning or training programs, a Limited Liability Company (Perseroan Terbatas/PT) can be established, offering greater flexibility and up to 100% foreign ownership.

Can Foreigners Establish Foundations and Serve on the Board?

Yes, foreigners can set up a foundation in Indonesia. This is essential for those wanting complete control over their educational ventures. Under the right legal structures, foreign investors can also serve on the management board.

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Indonesia’s education sector is rapidly evolving, presenting significant growth opportunities for investors who want to make a lasting impact.

Whether you plan to open a school, a training center, or an educational technology platform, InCorp has the expertise to help you navigate the regulatory landscape and establish a successful business.

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• Company Registration: Set up your business efficiently and in compliance with local regulations.
• Business License: Obtain the necessary licenses to operate legally and successfully.

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