Report No. 9752

Indonesian Education and the World Bank:An Assessment of Two Decades of Lending

June 28, 1991

Operations Evaluation Department

FOR OFFICIAL USE ONLY

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GLOSSARY

AAETE - Agency for Agricultural Education, Training and Extension(Ministry of Agriculture)

ADB - Asian Development BankBAPPENAS - National Development Planning Board

BPG - Inservice Teacher Training CenterDGHE - Directorate General of Higher Education

(Ministry of Education and Culture)DIKMAS - (formerly PENMAS) Directorate of Community Eaucation

(Ministry of Education and Culture)FTC - Forestry Technician Training Center

(Ministry of Agriculture)GBHN - Guidelines for the Direction of the StateGOI - Government of Indonesia

IEES - Indonesian Education Sector Survey, 1986(undertaken by USAID, see Bibliography)

IKIP - Secondary Teacher Training InstituteINPRES - Presidential Instruction (and Spec±al

Development Programs based on such instructions)ISTC - Inse-vice Training Center (Ministry of Agriculture)IUC - Inter University Cen'-ersLAN - National Institute t! Public Adminlstration

LPND - Non-Ministerial Government Institutes(concerned with science and technology)

NEC - Ministry of Education and CultureMCA - Ministry of AgricultureMPR - People's Consultative AssemblyMPW - Ministry of Public Works

NASTCT - National Steering Team for Overseas TrainingNATI - National Agricultural Training Inctitute

(Ministry of Agriculture)NFE - Nonformal EducationOED - Operations Evaluation Department (World Bank)

OFPIU - Overseas Fellowship Program Implementation UnitOTO - Overseas Training OfficePCR - Project Completion ReportPIU - Project Implementation Unit

PENNAS - (see DIEMAS)PLK - Vocational Training Center

(Ministry of Manpower)PPAM/PPAR - Project Performance Audit Memozandum/ReportREPELITA - Five-Year De-e-pment Plan

SAR - Staff Appraisal ReportSMTP - Secondary Agricultural Technical School

(Ministry of Education)SPG - Primary Teacher Training College

(Ministry of Education)SPMA - (now SPP) Senior Secondary Agricultural School

(Ministry of Agriculture)SPP - see SPNASTM - Senior Secondary Technical School

(Ministry of Education)TOR - Terms of ReferenceTTC - Technical Training Center, i.e.,

Centralized Workshops for Senior Secondary TechnicalSchools (Ministry of Education)

UNESCO - United Nations Educational,Scientific and Cultural Organization

USAID - (United States) Agency for Interuational Development

FOR OFFICIAL USE ONLYINDONESIAN EDUCATION AND THE WORLD ANK:AN ASSESSMENT OF TWO DECADES O LENDING

Table of Contents

Page No.

Preface ..................................... iExecutive Summary .......... ....... ... .. .. ....... *.... ... lii

Part I: Background and Overview of Bank Involvement ......... .

1. Introduction ........ ......... 0..904* ......... 12. The First Phase: 1960s to early 1970. ................ **.. 63. The Second Phase: mid- to late 1970s ...... 9#.... .... too 74. Th*e Third Phaae: the 1980. ....................... 95. Present and Future ........................... 00. 12

Part II: Review of Eup&rience in Subsector/Project Areas ... 13

1. Primary Education ........ too ............... 0 . 132. Secondary Education, including Vocational/Technical

Schooling . .15......... .......... 153. School Quality ................................................. 21

Textbooks ........... ................. * ................... 22Teacher Education ................ .... ....... 24

4. Higher Education ...... ooeoe . ..... ......... * 26Development of the Subsector ................... 26Polytechnics ......... 0*0 ..... .. 29Universities ........ ............. . 30Current Developments in Higher Education:

a Sectoral Approach .... .............. . 315. Out-of-School (Nonformal) Education ......... ... 336. Agricultural Training . . . . . ..... 367. M-anpower and Professional Skill Development 39

Part III: Issues in Bank Involvement ........ 42

1. Manpower Issues .. 42The Early Projects - (1969-83) .................... 42Recent Projects - (983-89) ........................ 47Conclusions ...................... 52

2. Efficacy of Training Components ............... 533. Institution Building ................. 584. Policy Dialogue ...... 655. Sector Lending ...... 676. Poverty Alleviation and Equity Issues 687. Implementation Experience .......... 70

A Lesson for Project Design 70The Timeframe of Early Projects .................... 71Financing Benchmarks to .... 71Covenants ...... a.... ... * 71

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Tabla of Contents (Contd.)

Page No.

Part I7: Conclusions and R.com*ndations ................... 72

1. The World Bank's Role in the Development ofIndonesian Education *.........e............... 72

2. Lessons and Reco,mendations ...................... 763. Broader Implications ..... e...........e............... 79

ANNEXES

1. Manpowver Forecasting in Early Bank Projects .... ....... 812. Training Components in World Bank Education

Projects in Indonesia .. ............. c...... .... 913. Summary of World Bank-A3sisted Education Projects

(FY7.190) .. o ... o ..... o.......... ............ 1134. Statistical Tables ........ *.cce.ce..cc*e.cec.ecec.ee 117

BIBLIOGRAPHY ...... *0*0... 128

Boxes in the Text

1. Public and Private Edi'cation .......................... 172. Implementation Capacity in Delivery of Overseas

Training Programs: the Case of the Science andTechnology Training Project ....................... 56

3. Institution Buildlng - Case l The PolytechnicProjects (Credit 869 and Loan 2290) ................ 61

4. Institution Building - Case 2: The Inter-UniversityCenters (Loan 2547) ........cc.....c..e.c..e... 62

5. Sustainability of Indonesia First and Second EducationProjects ............................. 64

Tables in the Text

1. Trends in the Primary Education Subsector (1965-1985).. 142. Trends in the Secondary Education Subsector

(1965-1985) .............c.......c..................... 153. Estimated Social Rates of Return to Secondary

Schooling: 1978 .... ........ *00* ........ 204. Textbook Supply under Repelita I, II and III .... &...... 235. Enrollments and Staff in Higher Education

(Selected Years) ... eeee...e.* ...ceee..ecee*eee...e 296. Composition of Department of Education and Culture

Budgets by Level: 1969/70, 1973/74 and 1977/78 ..... 347. Projected Annual Average Education/Training

Requirements 1971-81 ... ... .... ..... . . .. . ...... ..... . ... . 398. Estimated Social Rates of Return to Education, 1986 ... 519. Institution Building in World Bank-Assisted Education

Projects ...... c.........c.................ee..... 60

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INDONESIAN EDUCATION AND THE WORLD BANK:AN ASSESSMENT OF TWO DECADES OF LENDING

Preface

This study has been undertaken by three consultants on behalf ofthe Operations Evaluation Department (OED), and under the general directionof an OED staff. All members of the team have contributed to the MainReport, whereas Annexes I and II, reporting on specific manpower andtraining aspects, are the work of two individual consultants.

The Main Report is divided into four Parts. The first deals withthe trends in economic conditions in Indonesia over the period since 1969,reviews the evolution of educational policy, and outlines in broad termsthe World Bank's strategy in assisting the education sector. Part II turnsto the education subsector/project areas, including primary, secondary andpost-secondary levels, nonformal education, agricultural training, andmanpower developaent, giving details of all the Bank supported projects andreviewing experience in each area. Part III concentrates on an analysis ofmajor issues arising from Bank involvement in Indonesian education,including manpower questions, the efficacy of training, institutionbuilding, the policy dialogue, sector lending, poverty alleviation andequity issues, and project experience, including the role of covenants.Finally, Part IV sets out some conclusions and recommendations.

The major sources for this review have been Bank documents, bothpublished and internal, supplemented by a considerable volume of materialfrom other published and unpublished sources, and from informationcollected by the authors during several field visits. The authors expresstheir thanks to the many government officials, researchers and Bank staffwho have given freely of their time and experience in discussing mattersrelated to this study and who are too numerous to be given individualrecognition.

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INDONESIAN EDUCATION AND THE WORLD BANK:AN ASSESSHKNT OF TWO DECADES O LENDING

EXECUTIVE SUHNARY

1. IntroductIon particularly of fellowships inprojects, institution building,the development of a policy dia-

World Bank assistance to the logue, sector lending, poverty andGovernment of Indonesia (GOI) for equity issues, and implementationeducation is its largest lending experience. Finally, Part IVportfolio for education projects presents some conclusions andanywhere in the world. Since recommendations.1069, a total of 25 projectsinvolving loans and credits total- Although pre6ress in theling over US$1 5 billion have been Indonesian education sector hasapproved. This study reviews the been continuous over the twotwo decades from 1969 to 1988, decades, one can discern fourcovering 21 projects. Although broad phases of Bank involvement.the study is concerned specifi- The initial phase, from the latecally with Indonesia, it also 1960. to the early 1970s coveringmakes some broader observations the country's first Five-Yearabout the evolution of the Bank's Development Plan (Repelita I),program of lending for education represented a modest start, duringin general. These wider implica- which the first two educationtions are discussed in the con- projects were undertaken. Then,cluding sections of this Executive in the mid to late 19708, duringSummary. Repelita II and part of Repelita

III, the Bank's strategy becameThe Report is organized in more focussed and more projects

four parts. Part I gives an over- were initiated. This period mightview of the development of the be characterized as a phase ofIndonesian economy in relation to cautious development in Bankthe education sector and of the involvement. The third and majorBank's lending program over the phase covers most of the 1980s, toreview period. Part II considers the end of Repelita IV, duringthe subsectors, i.e., primary, which the annual rate of projectsecondary and higher education, approval was almost double that oftextbooks and teacher training, the previous phase, with 13 newagricultural training, nonformal projects undertaken. The finaleducation, and skill development phase in this somewhat arbitraryprojects. In Part III some subdivision of the period coversspecific issues are discussed, the present and the immediatesuch as manpower planning, the future, a time of reappraisal forrole of training components and both the GOI and the Bank.

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2. 7he World Blnkes Role in the been the seemingly inexorable wayDevelonment of Indonesian in which one project has followedEUPMOfA another, reflecting, no doubt, a

common GOI/Bank interest in main-The task of building an taining a flow of investment funds

education system in Indonesia into the sector. However1 thesince the period of economic and need to maintain a relativelysocial chaoa of the mid-19609 has rapid sequence of project. may, onoccasion, have pre-empted a widerbeen a truly daunting one. The consideration of alternative eec-

factthatIndoesia eduatio istotal and subsectoral investmentnow characterized by universal opportunities.primary education, expandingsecondary participation, and a The Bank's involvement ingradually strengthening post- primary education has beensecondary subsector is testimony relatively minor, whereas in theto one of the most significant secondary suboector, the Bankeducational transformationswitnessed in the developing world puse oainlojcieearly on in the lending program.in recent times. In this process It was only later that it shiftedthe GOI has pursued consistentteoOmI han educaonapoiies its focus to the improvement of

econs aecondary education in general.which were responsive to changing Both primary and secondary school-conditions. ing have been assisted by projects

Two features of the Bank's aimed at enhancing the quality ofrole on ftuisproesso the Banikins . textbooks and teacher-training.rle fint tis proesheare striking. tThe latter area is still problem-The first is the sheer size of the atcadthBakoldavlending program, amounting toatcanthBnkoudavleounding proram amon to taken a stronger position over the

aroun US$15 bilion oer aye.'s, assisting the G0I to raisetwenty-year period. The second is telqalaisty n tehers throughthe ,roram' diersiy; t coers the quality of teachers throughthe p.rogram's diversity; it covers improved productivity, pay andvirtually every subsector of the ioved coditonssystem. Nevertheless, it should working conditions.be noted that the Bank has been The higher education subsectoronly one of a number of external was viewed by the Bank essentiallysources of aseiotance to as the main source of skilledIndonesian education, and that the manpower which would service theBank's financing has formed a growth needs of the Indonesianrelatively modest proportion of economy. This view tended tothe GOV' total education budget. confine the Bank's potential con-

tribution in the earlier years.Documenting and interpreting More recently, the Bank's lendingthe history of the Bank's assi~-prgahsaieatbldnatance to Indonesian education is self-sustainin cat b ing tcomplicted bythe inricateself-sustaining capacity in thecomplicated by the intricate post-secondary subsector. At thenature of the Indonesian adminis- same time, the focus of vocationaltration and by the delicate shifts education has shifted from school-perinod0 ank renelationshipsaer- the based to occupation-based train-period. One general character- ing, as reflected, in particular,istic of the lending program has in recent Bank-financed training

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projects in science and Secondly, attention needs totechnology, public works and be paid to improving the efficacyaccou.tancy. Finally, Bank of training components of projectssupport for the development of at all stages, from the selectionnonformal education continues, of candidates to re-entry of fol-despite problems in evaluating its lows to the workplace. A closerreach and effectiveness, evaluation is needed of the rela-

tive benefits and costs of provid-Thi Bank's education project ing overseas training via-&-vis

portfolio has also supported the developing local training capacityGovernment's policies of pursuing as part of growth in the domesticgreat-: equity in educational higher aducation subsector.opportunities and, hence, provid-ing a basis for enhancing incomes Thirdly, despite ar. awarenessand standards of living at the by both the GOX and the Bank ofprimary level, capacity expansion the importance of institutionto almost universal enrollment has building, the record of twentymeant that traditionally disad- years in this area contains con-vantaged groups--women, remote siderable shortcomings. In par-rural population3, low-income ticular, problems of internal andfamilies--have been included in external inefficiency have plaguedthe schooling process. Growth of the public education sector insecondary and higher education, Indonesia throughout this period.particularly in regions not well The task of institution buildingserved before, has had the same is basic to the long-run goal ofobjectives. Finally, Bank support increasing the self-sufficiency ofto Indonesia's large non-formal the Indonesian education syptem,education system has attempted to and, notwithstanding some suc-mitigate the effect of past cesses in particular areas, thereinequities in educational is still ample scope to create andopportunities. strengthen national capacities.

The goal of institutional3. Lessons and Recommendations development and flexibility should

continue to be a central theme ofA number of lessons can be the Bank's assistance to the

drawn from this study, which are education sector.summarized here.

Fourthlv, the development ofFirstly, there is a continuing the policy dialogue process in

need for flexibility with regard Indonesian education illustratesto the use of manpower planning the importance of sound sectormethodologies in the formulation work as a basis for discussionsof educational strategies. It is between the Government and thealso essential to make appropriate Bank. The value of this processuse of labor market information as a vehicle for regular reviewssystems in schemes for upgrading of project experience ard formanpower through on-the-job wide-ranging discussions on futuretraining, lending operations is apparent.

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Fifthlv, although the provision to education appears lowIndonesian experience is too brief by regional and world standards.for a definitive evaluation of the Some increased financial commit-effectiveness of sector-lending mont will be necessary in thestrategies, some caution still future, if the GOI is to takeappeoars warranted regarding the several needed initiatives,Bank's capacity to maintain suffi- including tackling the problem ofcient monitoring of loan expendi- teacher.' deployment and salaries,turats under such strategies. A the provision of adequate opera-successful sector-lending program tion and maintenance expenditure,will depend on at least four pre- and expansion of administrativerequisites: a solid empirical capacity at decentralized levelsbase, an effective policy dialogue of the education system.process, consistency betweengovernment and Bank objectives, Finally, it is apparent thatand satisfactory implementation private education in Indonesia hasprocedures. played an important role in the

development of that country'sSixthlv, although equity educational system over the last

remains a central goal of govern- twenty years. A broadening ofmental policy and Bank lending to Bank support to private educationIndonesian education (and justly is now warranted.so), it is not always easy toachieve, with some projects 4. Broader Implicationsattempting to spread benefits toowidely in questionable pursuit of This review also raises widerequity goals. There remain issues of the Bank's approach toseveral important avenues for education lending in general, overimproving the distribution of the last two decades and how theproject benefits, including the Bank has applied (or has failed touse of targeted quality apply) lessons learned about theimprovement programs and the economics of educational develop-provision of financial help to ment. In this regard, the Bankpoor families, to offset both has made progress in calculating,direct and indirect costs of the interpreting and using socialeducation of children. rates of return (or similar indi-

cators) as part of the informationSeventhly, a number of lessons base for educational investment

carL be drawn concerning implemen- planning. The Bank has alsotation of projects, including the become aware of the problemsdesirability of compact and uncom- involved in: traditional manpowerplicated projects, the need for rorecasting methods; improvingrealistic time-schedules, and the educational efficiency; assessingimportance of well-planned and the economic value of educationalwell-specified covenants. quality; and acquiring data and

designing methodology. At theEighthlk, it must be noted subsectoral level, the Bank's

that the GOI's level of financial projects have been successful to a

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large degree due to a process of been achieved by some other moreadaptation as experience has efficient means, or that otherunfolded. outputs from the same resources

might not have been more valuableAt a wider level, however, a to the economy. [iilnlJ, the

somewhat different picture monitoring and evaluationemerges. Except for the most provisions in projects h6ve rarelygeneral aim of developing trained been pursued with determixnation,manpower for the economys one can hence ex-post assessment ofnot discern in the Bank's project project outcomes has beenportfolio a common criterion by aeriously restricted.which to assess these operations.Rather, there has been a set of These conclusions suggest thatspecific criteria referring to the current moves within the Bank forparticular subsectors or project a rethinking of the Bank's ap-areas. It is thus not possible proach to education lending shouldeither to prove or to reject be encouraged. In particular,claims that these invertment there is a need for a betterdecisions have, individually or as defined strategy for the educationa whole, been optimal in an sector. This strategy should beeconomic sense. Several based on the economic and socialadditional considerations can be objectives of the borrower. Itadvanced to support this should be influenced by the demandstatement. and supply of manpower, but not

conditioned by it. The strategyFirstly, in the selection and should be flexible with respect to

sequencing of projects, the Bank prevailing conditions and changinghas paid little attention to the labor market signals and shouldeconomic justification of projects provide a clear basis forbased on relative rates of return. determining investment prioritiesInstead, project selection has based on an understanding of rela-been based on narrow criteria of tive social rates of return asimmediate subsectoral "needs." broad benchmarks. It should alsoThe lack of clearly articulated include appropriate monitoring andproject objectives means that ex- evaluation mechanisms, so thatpost evaluation of *projects is progress toward goals can beimpossible on any ocher terms than assessed. Such an approach wouldmostly input-centered targets for make best use of all relevantenrollments, building programs, data, including manpower statts-etc., which have or have not been tics and rate of return estimates,met. Furthermore, there has been without relying exclusively on ano consistent assessment of the single methodology. The key ele-cost-effectiveness of projects ments in such a strategy would bemeasured against alternative rationality (in an economicinvestment opportunities, so that sense), sector-wide consistency,there is no indication that the and flexibility./l (Please seesame output levels could not have page viii).

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Ll The Region takes exception to the proposition that the Bank's programlacked an overall integral strategy in the foilowing terms: "Ourevaluation of the Bank'6 involvement with Indonesia's education sectorover the last two decades does not substantiat. such a conclusion. Wsstrongly believe that the Bank has followed a clear strategy in thissector since we started working on analyzing sector issues in 1973which culmiuated in a major sector report Issued in 1975. This surveyhas constituted a coherent sector policy and strategy framework bothfor the Government and the Bani. Expending enrollment for primaryeducation, improving quality, equity, institutional/managementstrengthening and adequate investment planning were recognized aspriority goals. The projects financed from various sources fittedwell within this framework. As pointed out in the report, Bank-linanced projects represented only a small portion of the Government's,eogram. The bulk of the funds came from the Government's budget. Inpraccice there was a division of labor in choosing projects for Bankfinancing and others. Consequently, textbook development andproduction and teacher training parts of the Government's program forprimary education were financed by the Bank; school building, etc., bythe Government--as the Bank had no clear comparative advantage inprimary school construction. This should not imply, however, thatsupport from the Bank for primary education was inadequate or unclear;we had no problem with the Government's program for this subsector andits approach to project selection. Our project interventions shouldbe evaluated within the context of the -9hole program, not in isolationof it. We must add that similar dialogue and cooperation hascontinued subsequently in other subsectors (higher education,secondary and basic education) for which we had prepared separatesector reports. During reviews of both the 1975 Education SectorSurvey Report and the subsequent subsector reports we have notencountered any majar objections from the Government. Compared toother sectors, our diaiogue with the Government regarding theeducation sector and the formulation of a mutually acceptable sectorpolicy and strategy has been smoother and more satisfactory." Furthercomments/objections of the Region have been dealt with in footnotes inthe main text (see footnotes numbers 7, 8, 56, 64, 73, 74, 78, 79, 84,85, 86, and 88).

INDONESIAN EDUCATION AND THE WORLD B4NK:AN ASSESSMENT OF TWO DECADES OF LENDING

PART I: BACKGROUND AND OVERVIEW OF BANK INVOLVEMENT

1. Introduction

1.01 This study comprises a review of the World Bank's investmentprogram in Indonesian education, from 1969 to the present The firsteducation project to be undertaken by the World Bank in Indonesia wasappraised in 1969. In the succeeding twenty years (to the end of PY90), atotal of 25 projects in the education sector wyre approved by the Bank'sBoard of Directors, involving loans and credits totalling over US$1.5billion. Consequently, the Bank's Indonesian education program became thelargest and most diversified program in the sector it has undertakenanywhere in the world. These two decades spanned a period of considerableeconomic and social progress in Indonesia. The country's education systemplayed a major role in contributing to that progress, and was itselftransformed during this period. The Bank, as the most significant sourceof external investment funds for Indonesian education, was closely involvedwith these developments.

1.02 A review of the Bank's role in lending for education in Indonesiaraises immediately the wider issue of how the Bank has approachededucational investment over the last two deedes, and of how it has applied(or failed to apply) lessons in educational development. In the early1960., the Bank shifted from viewing education as a "soft" sector to acautious acceptance that investment in education did in fact yield economicreturns .l/ It was persuaded to change its stance by the fact that growthin many countries was clearly being constrainad by a shortage of trainedpersonnel, and that expanding the education system was the means toincreasing manpower supplies. Thus, lending for education in the earlyyears was focused on remedying skill deficits, which could be calculatedwith apparent accuracy to yield quantitative indications as to how mucheducation of various types Was needed. The desired outcomes were generallyexpressed in terms of enrollment targets, i.e., emphasis was onquantitative expansion of specific segments of education systems.

1.03 During the ensuing two decades, much has been learned about theeconomics of education in development2/ (though there is still a measure ofskepticism amongst some economists as to whether it adds up to a solid

1/ See Review of Bank Operations in the Education Sector (OED Report No. 2321, 1978)pp. 1-8.

2/ Some significant Bank publications that have advanced understanding about theeconomics of educational development include the following: Education Sector PolicyPaper (3rd edn.), 1985; G. Psacharopoulos and H. Woodhall, Education for DeveloDment:an Analysis of Investment Choices (N.Y.: Oxford UP, 1985); S. Heyneman and D. White(eds), Th ul of Education and Economic DevelovmentL 1986; C. Psacharopoulos(Cd), Econeoi os Of Education: Research and Studies (Oxford: Pergamon, 1987); andEducation in Sub-Saharan Africa. 1988.

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basis for investment decisions in the sector.)3/ But it can be reasonablysaid that progress has been made in at least five areas:

(a) The knowledge of relative rates of return to different levelsand types of education has improved considerably, end theempirical experience across a broad spectrum of counttiespoints to a fairly consistent picture. For example, a wid6range of studies undertaken since the 1970. has shown thatrates of return tend to be highest for primary education andlowest for tertiary education, although the size of thedifferential tends to diminish as a country's educationaldevelopment progresses. Further, there is general awarenessof the fact that private rates of return to education tend toexceed social rates, mainly because students do not pay thefull cost of the education they receive. The role of privaterates of return in explaining observed patterns ofeducational demand in various countries is now recognized,and the major implications of private/social rates of returnfor educational policy understood.4/

(b) Ample evidence has accrued to indicate that traditional man-power forecasting methods are widely at variance with the waylabor markets actually work. Tying educational strategiestoo closely to such forecasts can, at best, be wide off themark, and at worst, be actually counterproductive. This doesnot mean that manpower considerations have been or should bediscarded in evaluating educational development strategies,but rather that reliance on traditional forecasting methods,with their inflexible and unrealistic assumptions, should beminimized.

(c) Work on educational costs and the efficiency of educationalinstitutions has heightened understanding of how the educa-tional production process works. Some of these studies havegenerated controversy on grounds of statistical methods,questions about data, or skepticism concerning the validityof results pointing to widespread inefficiencies in educa-tional systems. There is general agreement, however, on theimportance of well-articulated management structures andprocesses in educational administration and delivery systems.

(d) Considerable progress has taken place in identifying therelationships between educational quality and educationalperformance. Variables studied in this context include thecontribution of teacher training, textbooks and materials,laboratories and equipment, examinations and so on in raisingthe standard of student achievement at all education levels.

_ See, for example, M. Blaug, review of Psacharopoulos (ed), on. cit., in Journal ofHuman Resources. vol. 24, no. 2 (1989): 331-335.

4/ It should be noted that calculated rates of return to education are appropriate tomarginal investments and generally do not account for effects on aggregate netbenefits, for example, through wage adjustments resulting from increased supply ofgraduates, when non-marginal investments are involved.

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In the context of developing countries, work in this area hasclearly identified the types of tradeoffs that exist betweenquantity and quality in education investment decisions, andhas suggested that expenditure on quality improvement mayyield rates of return that are just as high as, if not higherthan, rates on investment in quantitative expansion ofeducation.

(e) Finally, it is self-evident that the lack of data (oftenacute in developing countries) and shortcomings in availablemethodologies impose a serious constraint on effectiveanalysis in the economics of education. In the developmentcontext, these considerations point very directly, in thefirst instance to a need for improved monitoring, evaluationand analysis of investment projects in the sector.

1.04 None of the above lessons has been learned overnight. But in eachcase, enough has been known, for at least ten years, to enable the Bank andborrowing governments to apply these lessons in forming and implementingeducational strategies in borrowing countries. The question to be asked inthis Report is: Does the Indonesian case suggest that these lessons havebeen learned and applied?

1.05 There is no doubt that the Bank has made progress in applying someof the lessons listed above. For example, the Indonesian experience indi-cates a genuine and long-standing concern by the Bank to foster the growthof management skills in educational administration, although achievement inthis area still falls short of desired levels. Also, a recognition of theimportance of quality improvement has increasingly formed the Bank'slending program, even though there is a very long way .o go, at all levelsof education, in raising quality standards. Furthermore, the dangers ofover-reliance on "rigotous" manpower forecasts in educational planning arenow acknowledged, at least in principle, if not always in application.

1.06 However, this study suggests that at a more fundamental level,there are still major lessons of the past twenty years to be heeded withinthe Bank. Except for the most general aim of promoting a trained laborforce, one looks in vain for an overall criterion by which to assess thesectoral lending program. It is thus imposeible to ascertain whether theportfolio (or individual project decisions) have been optimal in the senseof yielding the greatest benefits relative to the sums invested. Thisconclusion is supported by the following observations:

1.07 Firstly, in the selection and sequencing of projects have paidlittle attention was paid to the economic justification as evidenced byrelative rates of return or similar indicators, but rather has beengenerally based on narrow criteria of immediate subsectoral "needs."5/

5/ A notable exception was the use made of Clark's work on rates of return in secondaryeducation In planning secondary expansion (e.g., Loan 2472) during the early 1980s;see D. Clark, How Secondary School Graduates Perform in the Labor Market: A StudY ofIndonesia (World Bank Staff Working Paper No. 615, 1983); and General SecondaryEducation in Indonesia: Issues and Programs for Action (Report No. 4954-IND, 1984)39-42.

Although it might be argued that links to a wider etrategy have in manycases been expressed in terms of manpower development, such goals have beenput forward either in vague and unquantified terms or, where quantificationhas been attempted, with questionable data and methods (especially in theearlier projects). The lack of clearly articulated project objectives thatrelate in a systematic way to an overall development strategy means that expost evaluation of projects is impossible in any other terms than ofnarrowly-based input-centered targets for enrollments, building programs,the establishment of facilities, and so on.

1.08 Secondly, there has been no ccnsistent assessment of the cost-effectiveness of projects measured against alternative investment opportu-nities even within the subsector, let alone more widely. Thus, in manyinstances, objectives of, say, increasing specific manpower supplies haveindeed been achieved, but there is no indication that the same outputlevels could not have been attained by some other more efficient means, orthat other outputs from the same resources might not have been morevaluable to the economy.

1.09 Thirdly, although it is recognized that good follow-up data arenecessary for monitoring the progress of projects and for providingfeedback to improve the design of future projects, the monitoring andevaluation provisions that have been included as components of Indonesianeducation projects have rarely been pursued with determination, and in themajority of cases, have failed to provide usable results. Hence, ex postassessment of project outcomes has been seriously restricted.

1.10 Fourthly, it appears that Bank lending for education in Indonesiahas moved forward inexorably, generating a momentum of its own. At somestages, particularly in the earlier years of Bank involvement, thismomentum has seemed to be at odds with the Indonesian Government's ownpriorities for educational development, as spelt out in the variousRepelita6/ and elsewhere. At other times, (especially more recently as aresult, in part, of the "poli-^y dialogue"), the momentum of Bank lendinghas been more congruent with Indonesian educational policy. Over the wholeperiod, however, this momentum served the interests of both the Bank (interms of maintaining a continual flow of lending) and the Government ofIndonesia (in terms of providing a ready source of funds to support itsdevelopment efforts). Nevertheless, there is no clear sense in that theBank has been pursuing an articulated overall educational strategy inIndonesia, which might guide an assessment of whether individual projectsor their components maximized economic and social benefits at the margin,at each stage in the process.7/

1.11 Hence, while it is undeniable that much has been achieved by theBank in providing assistance in specific subsectors or project areas, oneis left wondering whether the sum of the parts should add up to somethingmore than it does. The main reason for this doubt may well lie withinstitution-building. The lending effort over the last twenty years has

6/ Rencana Pembangunan Lima Tahun, the Government's Five-Year Development Plans whichstarted In 1969.

Z/ The objections of the Region are quoted in footnote 1, p. viii.

not yet resulted in the creation of a self-sustaining sector-wide capacityfor designing education of lasting quality. It is noteworthy that thecatalogue of problems besetting the education sector in Indonesia todaybears a striking resemblance to the list, as it stood, twenty years ago(although it should be mentioned in fairness that this may be explained inpart by the effect of rising expectations).!/

1.12 Two final points need to be made in this introductory overview.Firstly, in arguing for "an articulated overall educational strategy" inIndonesia or anywhere else, the authors are not advocating a detailet andrigid educational blueprint of the sort that once found favor in centrally-planned economies. Rather they are suggesting the desirability of a clearsense of direction in educational planning. This planning must include thebroad guidance provided by manpower considetations but should not be tiedto rigid subsectoral forecasts. Educational planning should be responsiveto changing labor market signals over time, so that the assessment ofparticular projects can be keyed to more immediate objectives that arenonetheless consistent with the longer-range view.

1.13 Secondly, in considering the experience in Indonesia, one mustnote the sheer magnitude of the task of educational reform that confrontedthe country in the late 1960s, and hence the huge achievements in bringingthe system to where it is today. Whilst it is possible to say with hind-sight that the Bank could have performed better, the fact remains that ithas been a force in helping to bring about one of the most significanteducational transformations seen in the developing world in the last 25years. These achievements and their attendant problems are detailed in theensuing pages.

1.14 In considering these developments, it is important to recognizethat, although the Bank has made a major contribution in absolute terms insupporting Indonesian educational development, its proportion of totaleducational finance has been relatively modest. The Bank has been but oneof a number of agencies providing bilateral and multilateral support forIndonesian education throughout the review period. For example, of allexternal technical and capital assistance to education provided frombilateral, multilateral and NGO sources in 1986, the Bank supplied justover 40 per cent (see further Annex 4, Tables 13 and 14). Further, Bankassistance, as a proportion of total government education expenditure, hasbeen relatively small. In FY89, disbursements in Bank-assisted educationprojects in Indonesia amounted to US$ 162.4 million equivalent, or approxi-mately Rp. 276 billion, representing 24 percent of the combined GOI deve-lopment budgets for primary, secondary and higher education (includingINPRES funds), and 8 percent of the total (development plus routine)budgets for these subsectors. The corresponding figures covering MEC proj-ects only were 19 and 6 percent respectively.9/

8/ The Region notes that education sector issues cannot be addressed easily and thatdeveloped countries also face questions of educational quality, etc. This is vhat thereference to "rising expectations" at the end of para. 1.11 implies.

9/ Budget figures from Indonesia: Basic Education Study (December 1989), Table 3.3, p.78; disbursements cdlculated from data In World Bank, Statement of Loans, June 30,1988 and 1989.

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1.1S In considering the development of Indonesian education and itsrelationship with economic planning, it is important to understand theinstitutional environment in which this planning occurs. Guidelines forthe Direction of the State (GBHN) are formulated every five yeats by thePeople's Consultative Assembly (MPR). These directives are binding,especially on the Government. A Five-Year Development Plan (Repelita) isworked out by BAPPENAS in conformity both with the GBHN and with a 25-yearmiddle-range development plan. The Repelita is binding on governmentagencies, particularly the Departments. These plans are the pegs on whichdevelopment plans for individual government agencies, and ultimatelyprojects themselves, must be hung. In addition, the legal framework is asignificant feature of the institutional background. Until recently therewas no comprehensive law on education. In 1989 a Law concerning theNational regulations for schooling from pre-school to secondary and highereducation was passed, which will have implications for future educationaldevelopment.

1.16 Although the progress in the Indonesian education sector has beencontinuous over the last two decades, one can, for purposes of exposition,discern four broad phases in Bank involvement up to and including thepresent. The initial phase, from the late 1960s to the early 1970s andcovering the period of the country's first Five-Year Development Plan(Repelita I), represents a modest start, during which the first two educa-tion projects were begun. Then, in the mid- to late 1970s, during Repelita1I and part of III, the emergence of a more directed Bank strategy can beseen, with a further six projects started. This period might be charac-terized as a phase of cautious advance in Bank involvement. The third andmajor phase covers most of the 1980., to the end of Repelita IV, duringwhich the annual rate of project approval was almost double that of theprevious phase, with 13 new projects undertaken. rhe final phase in thissomewhat arbitrary subdivision of the period covers the present and theimmediate future, a time of reappraisal for both the GOI and the Bank.

1.17 Tables showing the main features of the Indonesian economy and theeducation system during the period studied are in Annex 4.

2. The First Phase: 1960. to early 1970.

1.18 Pollowing the economic and political dislocations of the mid-1960s, the Indonesian Government set about a huge program of economicrehabilitation. The task was formidable. The agricultural sector, uponwhich the majority of the population depended for its livelihood, waa back-ward and stagnant. Transport, power, irrigation and other infrastructurehad been grossly neglected. Inflation was out of control. The publicsector was inefficient and badly managed, with underemployment of publicservants coexisting with a shortage of skilled personnel in key areas. TheGovernment had already begun tackling these problems by the time of thefirst of its five-year plans, Repelita I, covering the years 1969-1974.This Plan began in earnest the process of rectifying the economy, givinghighest priority to agriculture, especially rice output.

1.19 The educational background of the labor force in the late 1960swas extremely weak. More than 40 percent of the population was illiterate;16 percent of the work force had completed only primary school and about

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4 percent secondary education; a mere 0.2 percent had undergone post-secondary training.1 / The education and training system was inadequate,and shortage of finance was a serious constraint on reform. Only about 13percent of total government outlays were in the education sector, andeducational expenditures comprised less than 3 percent of GDP; these werelow figures by international standards at the time. Primary education wasof poor quality, secondary schooling used outdated curricula orientatedmainly towards "academic" streams, vocational and technical educationproduced few graduates of any real worth, and internal efficiency through-out the education system was very low.

1.20 Furthermore, throughout the bulk of the decade of the 1960s, therewas no concerted efforts to undertake any long-run planning for educationaldevelopment. In 1969, the GOI, with assistance from UNESCO and the FordFoundation, embarked on a major study and review of the state of education(the National Arsessment of Education),!1/ with a view to using the resultsas input into the formulation of a longer-term development plan for theeducation sector, to begin in the early 1970s.

1.21 The Bank Group had started lending to Indonesia in 1968, beginningwith a series of IDA credits mainly to agriculture, but also for transpor-tation, electricity and telecommunications. The Bank had not been involvedin lending for education in any country for very long, and in fact, hadonly entered the field of educational financing in 1962. There was still asense, among some in the Bank, that education was a "soft" sector and lessappropriate for Bank investment than agriculture, infrastructure orindustrial development.12/

1.22 In the case of Indonesia, a cautiGus approach was adopted with theBank initially unwilling to undertake a major commitment to education u.atilthe findings of the National Assessment were available. At the same time,the Bank acknowledged the cructal role that education would have to play inproviding a foundation for economic recovery and growth, and recommended amodest start that would not preempt future options. In line with the then-prevailing Bank view on lending for education, attention was focused onovercoming specific manpower shortages. Two projects were proposed, thefirst supporting secondary vocational and technical education, and thesecond upgrading and strengthening middle-level agricultural training.Wi'ti these two projects, financed through IDA (Credits 219 and 288 approvedin 1970 and 1972, respectively), the Bank took its first tentative steps inassistance to Indonesian education.

3. The Second Phase: mid- to late 1970s

1.23 During the period of Repelita I (1969-74), the Indonesian economymade significant progress. The Government was successful in achieving its

10/ Appraisal of a Third Education Pro1ect: Indonesia (Report No. 112-IND, May 4, 1973)para. 2.02.

i1/ See C. E. Beeby, Assessment of Indonesian Education: A Guide in Plannin&.(Wellington: Oxford University Press, 1979).

12/ See further Review of Bank Operations in the Education Sector. 1978, op.cit.

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major targetet a high rate of growth (around 8 percent p.a.), stableprices, and increases in foodgrain production (agricultural output rose byabout 4.5 percent p.a.). Levels of savings and investment grew rapidly,and the foundations of a modern industrial sector were laid with thedevelopment of productive capacity in cement, fertilizers, etc. Therehabilitation of basic infrastructure in transport and communications madeconsiderable progress. In short, the economic framework upon whichRepelita II was built in 1973 was a good deal stronger than had been thecase a mere five years earlier. As this wat also the baginning of theperiod of escalating oil prices, there was an optimistic outlook forincreases in foreign exchange reserves and for domestic budget surplusesduring the planning period.

1.24 In fact, a relatively high growth rate (about 7 percent) wasmaintained during the mid-1970s. Although the benefits flowing from highoil prices were tarnished somewhat by the financial difficulties ofPertamina, the national oil company, net oil exports increased from $640million in 1973 to about $4 billion in 1978, which allowed governmentexpenditure to increase, in real terms, at an annual rate of 20 percent.All social sectors enjoyed increased budgets, includ4ing health, familyplanning, education, housing and water supply. However, the educationsector had the greatest financial boost, vith an annual increase of 45percent in real terms between 1971/72 and 1976/77.

1.25 The GOI's education policy in the early 1970s, formed on the basisof the National Assessment's findings, gave priority to increasing primaryschool access as a means toward achieving universal primary education. Asubstantial schedule of priniary school construction was put into effectunder the INPRES public works program. As the Government also continued tobe concerned with the fact that planned economic expansion was beingconstrained by a shortage of skilled manpower, additional priorities werestrengthening and expanding secondary and post-secondary education capa-cities in several key areas, including engineering and agriculture.

1.26 The Bank Group provided an increased number of credits toIndonesia during the early 19709, and lending on Bank terms began in 1974.It was acknowledged that cumbersome arrangements with BAPPENAS had hinderedproject administration in earlier years, and the Bank provided a credit fortechnical assistance to improve the process of project implementation. Bythe mid 1970s, Bank loans and credits for agriculture still had highpriority (about one-third of the projects to date had been in the agricul-tural sector), but the range of other projects now extended across theentire spectrum of economic activity.

1.27 Ir. education, the Bank's strategy was guided first by the NationalAssessment and soon after by the results of a sector survey published inearly 1975.13/ This initial strategy focussed in three main areas:improving educational quality, providing trained manpower, and reachingdeprived groups through nonformal education and training programs. TheNational Assessment study had drawn attention, amongst other things, toproblems of school quality in Indonesia: underqjalified and under-motivatedteachers, shortages of materials, especially textbooks, inadequate

13/ Indoneata Education Sector Survey Renort. (Report No. 433a-IND, 1975). The relatedfield work had been carried out towards the end of 1973.

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equipment and facilities, and shortcomings in management and administrationat both government and institutional levels. Thus, the first Bank projectin this phase (the third education project overall), was aimed atsupporting the Government's textbook production and distribution program(Credit 387). This was followed in due course by a teacher trainingproject (Loan 1433). These two projects represented the first concertedattempt to overcome the two biggest problems of school quality inIndonesia, with ramifications at both primary and secondary levels.

1.28 Another central feature of Bank strategy during this period wasthe attention devoted to several aspects of the manpower problem. Threeprojects in this area during the second half of the 1970e were: (i) aproject approved in 1976 (Loan 1237) which supported, inter alia, addi-tionai centralized workshops (following First Education Project), theestablishment of 17 vocational training centers for the Department ofManpower, and a strengthening of the National Institute of PublicAdministration (LAN); (ii) the First Polytechnic Project (Credit 869),approved in 1979; and (iii) the Second Agricultural Training Project,approved in the same year, just as the first project in that sequence(Credit 288) was closing.

1.29 Finally, in addition to these projects in general and vocationaleducation respectively, there was one remaining which not only spanned both

of these areas, but also strove to meet the concern with equity issues thatwas surfacing both in the Bank and the Government at that time. This proj-ect, the first Nonformal Education Project (Loan 1486), was approved in1977. It supported the development of PENMAS, the Gcvernment nonformaleducation agency, assisting it to extend both education in basic literacyand numeracy and training in simple vocational skills to educationallydeprived groups, especially women and out-of-school rural youth.

1.30 Overall, the second phase of Bank support for education, with arate of project approval averaging about one per year between 1973 and1979, could be characterized as a period of slowly accelerating involve-ment. Even so, of a total of more than 60 loans and credits extended toIndonesia over these years, only six were in the education sector. By theend of the 1970s, the conditions were deemed appropriate for an increase inthe rate of project generation in the education sector, and this indeedoccurred in the third and major phase of Bank involvement.

4. The Third Phase: the 1980.

1.31 The buoyant economic conditions of the late 1970s gave way to amarked deterioration in the economic situation in Indonesia in the early1980s. By this time the oil sector was contributing about 25 percent ofGDP, more than two-thirds of government revenue and about 80 percent ofmerchandise exports. The economy was therefore very vulnerable to the fallin oil prices at this time, and the weakness of other commodity prices andrising external debt made matters worse. The Government took strong actionto maintain growth and to restructure the economy towards reduced depend-ence on the oil sector through fiscal and monetary measures, exchange ratepolicy and reforms to trade and industrial policy.

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1.32 These measures werw successful, but further falls in oil prices in1986 led to the re-emergence of domestic and external imbalances, requiringrenewed government efforts in fiscal, monetary and exchange rate policies,together with further financial and structural reform. By the end of thedecade, growth had recovered, the non-oil sector had been strengthened andthe internal and external deficits reduced. In other words, in the broadscope of economic policy, the 1980s can be seen as a period of considerableachievement for the Indonesian Government in coping with a difficultexternal environment and in giving effect to measures designed in thelonger term to bring about necessary structural changes in the economy.

1.33 At the same time, problems of inequitable income distributionpersisted, with the physical, human and economic resources distributed veryunevenly between the main regions of the country. For example, Javaaccounts for about 50 percent of GDP and 62 percent of population, yet itcontains only 7 percent of the land area and its unknown numbers of land-less laborers represent the core of Indonesia's rural poverty problem.Despite some success during the 1970s in reducing the overall proportion ofthe population in poverty (the share of income of the poorest 40 percenthad risen from 11.9 percent in 1976 to 20.5 percent in 1981), regionalincome differences continued to widen during the 19809, mainly as a resultof unevenness in the distribution of oil industry benefits. These effectswere mitigated to some extent by migration and redistributive budgetaryimpacts. Repelita III, covering the period to 1983/84, responded to theseconcerns by focussing on poverty alleviation, especially through job crea-tion in the non-oil industrial sectors, and these measures were carried oninto Repelita IV.

1.34 The Bank's lending program in Indonesia in the 1980s reinforcedthe shifts embodied in Repelita III towards a more equitable distributionof the benefits of growth. It was recognized that there was little scopefor further labor absorption in agriculture or the services sector,14/ andthat the poor would be helped most by the development of labor-intensiveindustry. The Bank's lending program reflected this priority, while at thesame time continuing support for other areas, especially irrigation forrice production and provision of basic services.

1.35 Meanwhile, the educational sector presented a mixed picture. Atthe beginning of the 1980s, universal access to primary education had beenvirtually achieved, although repeater and dropout rates remained high.Enrollment ratios at secondary and higher levels were still below SoutheastAsian regional averages. However, these ratios grew during the 1980s asthe flow-on from increased primary enrollments reached the secondary cycle.Between the beginning and the end of the 1980s, enrollment rates at lowersecondary increased from just over 40 percent to over 50 percent, and atupper secondary from 24 to 35 percent. The GOI responded to pressures forincreased secondary places by giving priority to expenditure in that sub-sector, a strategy that was clearly reinforced by the accumulating evidenceon high social rates of return to investment in secondary education inIndonesia. Toward the end of the 1980s, the Government was increasingly

14/ R. M. Sundrum and A. Booth, Employment Trends and Policy Issues for ReDelita V.(Jakarta, ILO/UNDP, 1988) (Confidential).

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concerned with quality issues in higher education. Nevertheless, increas-ing the supply of skilled manpower continued to dominate the policy agenda.

1.36 It is in this broad context that the evolution of the Bank'sstrategy for educational lending in the 19809 should be viewed. At thebeginning of the period, two additional factors come together to influencethis strategy. Firstly, the convictior grew that Bank's global lending foreducation should increase, despite the acknowledged difficulties of lendingin this area. An OED study in 197815/ recommended that particularattention be given to development of educational infrastructure, and that asector-wide approach be encouraged as a means of addressing broaderconcerns in educational policy. The second factor was a desire expressedhy the Bank for a substantially increased commitment to education projectsin Indonesia. For its part, the GOI, encouraged by the prospect ofcontinued buoyancy in oil revenues, and mindful of the need for improvedhuman resources in its development program, was eager to see an expandedBank involvement in the education sector. As existing projects werewinding down, project implementation capacities were set free, and the GOIagreed that the number of projects initiated might double from the level ofabout one per year realized in the 1970s despite misgivings in somequarters about the country's ongoing capacity to provide counterpart funds.The stage was thus set for a major increase in Bank involvement ineducation in Indonesia during the 19809.

1.37 In the event, between 1980 and 1988 a total of 13 new educationprojects in Indonesia were approved by the Bank, at an average rate ofalmost two per year. The decade was, by far, the most active period foreducation projects in progress, notwithstanding the difficult economiccircumstan^es and public spending reductions experienced during this time.The number if active education projects (i.e., projects at some point bet-ween appraisal and closing) rose from 7 in 1980 to 15 in 1984/85, though ithad fallen back to about 10 toward the end of the decade.

1.38 The projects undertaken fall readily into four groups. Firstly,there were three projects affecting primary and secondary schooling: thesecond projects in both the teacher training and textbook sequences (Loans2101 and 2102 respectively) and the first direct intervention in generalsecondary education, the Secondary Education and Management TrainingProject (Loan 2472). Secondly, there were four projects at the post-secondary level: two University Development Projects (Loans 1904 and 2547)and the Second Polytechnic Project (Loan 2290) were undertaken, followed indue course by a subsector-wide loan under the title of a Higher EducationDevelopment Project (Loan 2944). Thirdly, the largest single group of fiveprojects was in the manpower area, with three in specific disciplinaryfields: Science and Technology (Loan 2599), Accountancy (Loan 2940) andthe third in the sequence of agricultural training projects (Loan 2341).The two remaining manpower projects were in Public Works (Loan 2258) and inManpower Development and Training (Loan 2705). Finally, the second projectin the nonformal education sequence (Loan 2355) was approved in 1984, justas its predecessor was closing.

15/ Review of Bank Operations... 1978, on.cft.

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1.39 A number of features of the Bank's lending approach during thisperiod can also be distinguished. These are dealt with in detail in PartsII and III of this Report, and are simply mentioned here to complete theoverview. Firstly, the decade of the 1980. witnessed the increasingemphasis placed both by the GOI and the Bank on the process of policydialogue. Secondly, the Bank's emphasis on institution-building became animportant determinant of the content and direction of most educationalloans during this period. Thirdly, concerns about educational quality andequity continued to figure prominently in the Bank's sectoral strategy,although achievement in these areas still falls well short of desirablelevels. Finally, important lessons were learned about the process of theeducation project cycle itself, with issues ranging from the problems facedby project implementation units to the seemingly inexorable process bywhich new projects were launched hard on the heels of old ones.

5. Present and Future

1.40 Currently, Indonesian growth performance has regained a respect-able level of around 4 percent p.a., with most of the growth now comingfrom the non-oil sector. The restructuring of the economy, although by nomeans complete, has certainly reduced dependence on oil and increased theimportance of manufacturing (especially textiles, clothing, electronics,plywood); nevertheless, the agricultural sector remains important in termsof output and employment. The immediate prospects, despite an uncertainworld outlook, are for continued satisfactory growth, with reduced fiscaland current account deficits and a declining debt service ratio. There islikely to be a continuation of the downward trend, noted earlier, inpossibilities for labor absorption in agriculture and small-scale industry;this means a growing role for the modern private sector, especially inmanufacturing.

1.41 The major implications for educational policy are clear. Thecurrent agenda, both for the GOI and the Bank, is likely to contain: acontinuing priority for secondary and tertiary education, especially inareas where lack of skilled manpower is thought to be placing a constrainton development; a still greater recognition of the importance of improvingeducational quality at all levels in the system; an ongoing effort toimprove efficiency and flexibility in educational management; and a ration-alization of the financing, both public and private, in the entire sectcr.Overlaying all of this, in a country of the size and economic and socialdiversity of Indonesia, is the need for increased equity in educationalopportunities.

1.42 Projects approved by the Board after the cut off point adopted forthis study (end of FY88) comprise the Tree Crops Human Resource DevelopmentProject, involving a new implementing agency (Loan 2992), the Public WorksInstitutional Development and Training Project (Loan 3112), theProfessional Human Resource Development Project (Loan 3134), with severalnew beneficiary agencies, and the Second Secondary Education and ManagementProject (Loan 3158), a follow-on operation of Loan 2472.

1.43 The next section contains a more detailed review of developmentsin each subsector/project area that will throw some further light on theexperience of the two decades.

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PART I1: REVIEW O EXPERIENCE IN SUBSECTOR/PROJECT AREAS

1. Primarw Education

2.01 The fundamental importance of primary education in educationaldevelopment is well recognized, and the role of basic literary and numeracyin providing the foundations of economic and social progress is universallyaccepted. The evidence for high social rates of return to primary educa-tion, especially at early stages of economic development, is substantialand indisputable, and lends empirical support to the notion of primaryeducation as an appropriate target for both private and public investment.

2.02 In Indonesia these considerations have been reflected in educa-tional policy, over the entire post-Independence period. Compulsoryprimary education was introduced in 1954, and universal primary schoolinghas always remained an important goal. It has been recognized by theGovernment that primary schools have a dual task to perform: they have toprovide a basic preparatory education for those students proceeding tosecondary schools, but more significantly they also have to give a usefuland effective terminating education for the majority of pupils who willreceive no other formal schooling in their lifetime. As for the latter, itmight be noted that, until recently, the terminal point for moet Indonesianchildren's education was effectively grade 3 or 4, official goalsnotwithstanding.

2.03 In the 1950. and 1960s, the growth in primary schooling camemainly from private efforts. In the late 1960s and early 1970s, a stock-taking of the state of primary education, flowing firom the NationalAssessment of Education, revealed that the system was inadequate to achievathe two tasks mentioned in the previous paragraph. According to officialfigures, about 20 percent of primary schools were in a state of disrepairand suffering from serious overcrowding, though the actual number was pro-bably much higher; the majority of schools lacked teaching equipment; therewas a serious shortage of textbooks, with an average figure of only 8 booksper class compared to the calculated required number of 160; the level otteacher training was low, with less than half the primary teachers inservice having completed a post-secondary teacher training course; andteaching and learning methods, despite a new curriculun introduced in 1968,remained entrenched in traditional modes, stressing rote learning andmemorization rather than development of analytical skills. In other words,this assessment revealed a classic case of declining educational qualityduring a period of assiduously pursued quantitative targets.

2.04 The Government's response to this situation during the 19709 wasto introduce new primary curricula, upgrade the supply of textbooks (withCanadian Government and World Bank assistance, see para. 2.23 below),upgrade and expand facilities, and try to improve teachers' skills. Theseefforts met with uneven success. Attempts to u-grade teachers' standardsthrough in-service training programs ran into problems of the professionalisolation of teachers. Indeed, the whole teacher training system wasdescribed in 1977 as "uneconomic" and in need of rationalization.L6/

16/ Staff Appraisal Report, Loan 1433, 1977, para 2.02.

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Progress on other aspects of qualitv improvement, including textbooks, fellsomewhat short of expectations.

2.05 Despite these setbacks, the primary sector benefitted from theincreaseu in public resources devoted to education during the years of highoil revenues, and the fruits of this expenditure could be seen in advancesmade during the early 1980s. This period witnessed considerable progresstoward a full achievement of quantitative goals: by the end of the 1980s,95-98 percent of the relevant age cohort were enrolled in primary school.Over this period, too, dropout and repetition rates fell; the annual drop-out rate by 1986 was only about 3 percent, with repeater rates of 11 per-cent in public schools and 8 percent in private schools.17 / The cost effi-ciency of Indonesian primary schooling came to compare very favorably withother developing countries, with student:teacher ratios of less than 30:1on average. Equity of access by gender, although not a major problem,also improved. By 1986 nearly half of all primary enrollments were girls.Nevertheless, the disadvantage of remote areas persisted.

2.06 Table 1 summarizes the main developments in the primary subsectorin Indonesia over the period 1965-1985.

Table 1:Indonesia: Trends in the Primary Education Subsector (1965-1985)

1965 1970 1975 1980 1985

Schools ('000) 51.4 64.0 72.8 128.9 168.6Teaching staff ('000) 282.0 514.0 603.3 787.4 1181.8

En- lments ('000) 11,687 14,870 17,777 25,537 29,897Female (X) 45 46 45 46 48

Pupit/teacher ratio 41 29 29 32 25

Source: UNESCO Statistical Yearbook, various years.

2.07 A number of current problem areas in primary education can beidentified which are likely to dominate the policy agenda 4nto the nextplanning period. Indonesia is experiencing a problem familiar to manydeveloped countries, that of cyclical disequilibria in the market forprimary teachers. By the mid-1980s, an oversupply had emerged, althoughdifficulties in placing primary teachers in remote areas persisted. Thishas been compounded by the continuing problem of educational quality,including teacher quality. Furthermore, providing primary education placesfor children In remote rural areas still denied access is a continuingchallenge and part of an on-going effort to rectify regional andrural/urban differences in educational opportunities.

2.08 Summarizing the experience in policy and practice in primaryeducation over the last twenty years in Indonesia, one can see a clear

17/ USAID, Indonesian Education and Human Resources Sector Review. Vol. 1, 1986: Ch.1, p.30.

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example of the quantity/quality dilemma in educational development. TheGovernment recognized at an early stage the importance of improving educa-tion while pressing ahead with the system's expansion. Commendably, muchprogress has been made on both fronts over the period. There is nowvirtually universal primary education, though some quality problemspersist, particularly in teacher training (see paras. 2.29-2.37). TheBank's direct role in these developments was generally a minor one, sinceit did not support any direct investment in the primary education subsectorin Indonesia for the period under review. (At the time this study wasundertaken a primary project was being prepared). Nevertheless, it issignificant that the Bank reinforced the Government's strategy of tacklingquality problems early, through the textbook and teacher training projectsdiscussed below.

2. SecondarX Education. includint Vocational/Technical Schooling

2.09 During the review period, secondary schooling in Indonesia hascomprised two cycles: lower secondary (grades 7 to 9), and upper secondary(grades 10 to 12). Considering the development of the secondary subsectorfrom the broadest perspective, one could see that a primary task would beto provide skilled manpower for industrial development. In practice, how-ever, secondary education has expanded in respon3e to individual demand forplaces. This has been witnessed particularly through a growth in privateschooling that lacks a strong or purposeful direction. Certainly, it hasmet the needs of some st.Ldents seeking basic skills to facilitate theirentry into modern sector employment, for example, through a proliferationof separate schools and systems for technical, vocational, commercial,agricultural, or domestic science education. The secondary subsector hasalso served the small but vital stream going on to higher education. Butmost secondary pupils L,ave enrolled, not so much because they wanted aparticular type of educat..on, but simply because they wanted schooling assuch.

Table 2:Indonesla: Trends in the Secondary Education Subsector (1965-1985)

1965 1970 1975 1980 1985

Teaching staff ('0002

GeneraL 39.6 130.8 n.a 261.9 480.5Teacher training 5.6 8.1 8.3 16.6 20.2Other 22.9 48.8 n.a 106.7 120.2

Total 68.1 187.8 234.6 385.2 620.9

Enrolltents ('000)

General 999 1,816 2,710 4,879 8,312Teacher trairing 61 99 103 232 298Other 394 545 757 610 870

Total 1,454 2,460 3,570 5,722 9,479

Pupil:teacher ratio 21 13 15 15 15

Source: UNESCO Statistical Yearbook, various years

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2.10 Yet over the vlhole of this period, the secondary subsector hasfaced a perennial set of problems which have remaineoi virtually unchanged,occasional shifts in emphasis notwithstanding. These problems haveincluded: inadequate training of both lower and upper secondary teacher.tthe use of inappropriate teaching methods and curriculat shortages ofmaterials and equipment, especially textbooks and acientific equipment;problems with examinations; regional and rural/urban dieparities in re-source allocation leading to inequities of access; and inefficient manage-ment and administration. Most of these problems have been exacerbated, ifnot caused, by inadequate levels of public expenditure. This raisedcontinually the question of the appropriate balance in revenue sources inthe financing of secondary education and of the relative roles of publicand private schools in meeting the demand for secondary places (see Box 1:Private and Public Education).

2.11 Despite the difficulties faced by general secondary education, itis notable that the first World Bank project in secondary education (indeedthe first Bank project in any subsector of education in Indonesia) dealtwith secondary technical education, thus reflecting the prevailing view ofthe time that skilled manpower for industrial expansion could best beproduced by specific vocational curricula implemented within the educationsystem.18/ This First Education Project (Credit 219), approved in 1970, hadas its objective the improvement of practical training for skill develop-ment in selected senior secondary technical schools (STM) to help meetmanpower needs. The prrject introduced an innovative approach to technicaleducation in Indonesia, by establishing centralized workshops (TTCs) toserve a number of feeder schools. Altogether, 5 TTCs, serving 15 feederSTM, were constructed and equipped under this project. Other projectcomponents included inservice training for over 300 STM teachers, plustechnical assistance. The project did not, however, provide for trainingof any TTC teachers; when planning follow-up investments later on, this wasidentified as a shortcoming.

18/ It also reflected the fact that initial experience with earlier Bank projects inIndonesia had exposed how critical was the shortage of skilled manpower.

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BOX 1:

Public and Private Education

Private schools play a man or role in Indonesia, their importance increasingwith the level of education (see Ta6le below). In primary education, private schoolsare mainly an urban phenomenon, which explains their slightly larger average sizerelative to the public sector. This contrasts with the subsequent education levelswhere public institutions tend to be much larger.

INDONES[A. MAIN PARAMErERS OF PUBUC AND PRIVATE EDUCATIONBY LEVEL, 198647

No. of Average No. of Student/Levet No. of Students Size of Teachers TeacheriYDe Schools (in 1.000) Schoot (In 1.000) Ratio

Primary

Public 133,012 24,508.5 184 1,003.0 24.4Private 9,954 1,936.2 195 75.6 25.6Total 142,966 26,444.8 185 1,078.6 24.5% Private (7.0) (7.3) (7.0)

Lower Secondary

Public 6,830 3,459.1 506 174.4 19.8Private 11,745 2,672.9 228 202.2 13.2Total 18,575 6,132.1 330 376.6 16.3| Private (63.2) (43.6) (53.7)

Unper SecondarY

Public 2,217 1,456.2 657 82.8 17.6Private 7,049 2,042.8 290 168.1 12.1Total 9,266 3,499.0 378 250.9 14.0X Private (76.1) (58.4) (67.0)

Higher /a

Public L& 44 415.1 9,434 30.2 13.7Private 665 747.5 1,124 16.2 46.1Total 709 1,162.6 1,640 46.4 25.0X Private (94.0) (64.3) (34.9)

/a Enrollments refer to non-degree and undergraduate programs; teacher numbers refer to full-time academicstaff.

&b Universitas Terbuka (open University), with 113,802 students and 165 teachexs. acluded.

Sources:

Dc men Pendidikan dan Kebudayaan, Rangkunan Statbtik Persekolahan 1986/1987, Jaiarta, November1987 (for primary and secondary education).World Ba SAR Higher Education Development Project (Report No.7085-IND) (for higher education).

Student/teacher ratios are about the same for both public and private primaryschools. They are somewhat higher in public than private schools at the secondarylevel but much lower for public than for private post-seconday institutions. Thelower student/teacher ratios in pnrvate secondary are mostly a reflection of the scantemployment of full-time staff: 77.7 percent of teachers in private lower secondaryand 82.0 percent in private upper secondary education are classified as working part-time; the corresponding figures in the public school system are 6.4 and 9.8 percent,respectively.

Contd...

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Box I (contd.)

Because of the highly aggregate nature of these statistics, little can be saidabout the effect of these input differences on the quality of education in the publicand private segments. In general, however, the strained financial circumstances ofmost private institutions at secondary and higher levels suggest that they cannot offerthe same quality of instruction as their public counterparts. Nevertheless, theexistence of a number of private institutions in both secondary and higher educationthat are comparable to good public schools suggests that an easing of the resourceconstraint could improve the performance of private education significantly.

So far, the Bank has not supported private education in Indonesia directly.There have probably been spillover effects from, for example, the textbook andteacher training projects which have benefitted private schools.

2.12 The First Education Project was subsequently shown to be bothsuccessful in its own terms and sustainable.19/ It demonstrated thatshared workshop facilities for in-school technical training could beefficiently used, although the overall impact was limited because of thesmall number of project institutions involved. This was inevitable, giventhat few urban areas had sufficient feeder schools within a catchment areaof a size that would not impose an excessive amount of commuting on thestudents. In the mid-1970s, at the time when this project was closing,attention was drawn (in the appraisal of a multipurpose project--Loan 1237)tc, the fact that the secondary system was still not producing enoughskilled or semi-skilled graduates, because of low quality teachers,inadequate curricula and lack of facilities, and that recurrent expenditureper student in Indonesian technical/vocational schools were amongst thelowest in the developing world. The Government, which had embraced theconcept of centralized workshops, new secondary technical curricula, andother measures in Repelita I, carried on the re-equipping of workshops andthe introduction of still further curriculum changes in Repelita II, in aneffort to make secondary vocational and technical education more responsiveto the requirements of the industrial workplace.

2.13 Meanwhile, enrollment rates in secondary education as a whole wereincreasing rapidly. For example, lower secondary enrollments, which hadstood at around 2 million in the early 1970s had risen to 3 million by1980. By the mid-1980s, they had reached 5 million, as the flow-on fromthe increased primary enrollments of a few years earlier were fed throughto the next cycle. But despite the impressive growth figures, the peren-nial problems noted above were still affecting learning outcomes and systemefficiency. In 1977, for example, the poor training of lower secondaryteachers was noted. Of the 80,000 lower secondary teachers, one-third had

19/ Project Performance Audit Memorandum. Credit 219, 1980; Indonesia: impact EvaluationReWort and Sustainabllitv of the First and Second Education Projects, (OED Report No.7767, 1989).

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received schooling only to grade 12 and had no teacher-trainingqualifications.20/ The same issue was raised again in the appraisal of theSecond Teacher Training Project in 1982, where it was noted that 25 percentof lower secondary teachers were unqualified.21 /

2.14 Government policy toward the subsector during the period ofRepelita II and III (mid 1970s to mid 1980s) was marked by attention toquantitative targets, in response to increasing social demand. As thefigures quoted earlier for lower secondary enrollment growth show, theresults were impressive. The expansion of upper secondary education,though necessarily more modest, was sizeable increase by any standard:enrollments, which stood at around one million in the mid 1970s had doubledten years later, and the enrollment ratio had increased from around 12 tonear 20 percent.

2.15 Despite its preoccupation with expansion, the Government was notunaware of the persistent quality problems noted earlier. Many studentscompleting their lower secondary training were finding themselves ill-equipped for skilled or semi-skilled employment, and those graduating fromthe upper cycle were lacking a solid basis for post-secondary studies, allreflecting on the low quality of education throughout the secondary level.Efforts were made to meet the most urgent problems. In regard to teachers,the rapid expansion of general secondary education had led to shortages ofqualified staff especially in mathematics, science and English. Inresponse, the Government provided crash courses in teacher training throughthe Secondary Teacher Training Institutes (IKIP), together with inservicecourses to upgrade teachers' skills, with assistance from UNDP and UNESCO.Even so, the problem of low status and salaries in the teaching professionremained, with the concomitant difficulties stemming from the widespreadmultiple-jobbing of teachers. The shortage of adequate scientific equip-ment seriously hindered the teaching of science. Imported equipment wasoften inappropriate to local conditions and difficult for teachers to useeffectively. This prompted government efforts to develop a local manu-facturing capability. The examination system was re-thought. The nationalexam at the end of Grade 12 for university entrance, which had beenabolished in the early 1970s, was reintroduced in somewhat changed form in1984. University and IKIP entrance was then based on both in-schoolassessment and a single centrally administered exam.

2.15 During the 1970s and early 1980s, the Bank Group assisted thedevelopment of general secondary education only indirectly. Recognizingthe importance of the quality problems, the projects focussed attention onteacher training (two projects) and textbook provision (two projects), witha component relating to examinations for university entrance included inthe First University Development Project. No direct assistance to generalsecondary education was provided during this period, because the existenceof many unemployed school leavers seemed to indicate that investment inthis type of education was unprofitable. In fact, this was a misreading of

20/ Staff Appraisal Report, Loan 1433, 1977, para. 2.10.

21/ Staff Appraisal Report, Loan 2101, 1982, para. 1.11.

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the evidence, as studies in the early 1980a amply demonstrated.22/Estimated social rates of return for secondary schooling at that time, werereasonably high, as shown in Table 3, and confirmed particularly the worthof public investment in general secondary education, as a preparation forthe workplace.23 / Furthermore, not only were the rates of return higherthan had apparently been believed during the 1970s, but tracer studiesshowed that the unemployment amongst secondary school leavers had beenexaggerated in importance. The sporadic bunching of job-searching bycohorts of graduates had driven apparent unemployment rates upwards.However, the process of job-searching itself contributed positively toeventual earning capacity, and unemployment rates fell sharply with age.

Table 3: Indonesia: Estimated Social Rates of Returnto Secondary Schooling: 1978

Level and Tvye of Education Social Rates of Return(%)

Rate Female

Lower secondary

General 12 14

Vocational 11 13

Upper secondary

General 23 11

VocationaL 19 4

Source: G. PsacharopouLos, Indonesia: Manpower Considerations in the Enerav

Sector (Wortd Bank, Education Department 19W2).

2.17 It was not until the middle of the 1980s that the Bank made itsfirst direct investment in general secondary education. The SecondaryEducation and Management Training Project (Loan 2472) grew out of a majorstocktaking of general secondary education carried out by the Bank in theearly 1980., which reviewed the evidence just mentioned. The resultingreport24/ identified four major areas for action in regard to generalsecondary education: quality, equity, capacity expansion and financing.The subsequent project had as its main objective to help the Governmentimprove the quality of general secondary education. This was to beachieved by: providing inservice teacher training in science, mathematicsand English; expanding training for provincial school supervisors andheadmasters; producing equipment prototypes for local manufacture;providing warehouse facilities to strengthen the distribution, storage andmaintenance of school science equipment; providing new science equipment;and improving the Examinations Center in the Ministry of Education (MEC).The project's other objective was to strengthen management and planningskills in the MEC through a needs assessment and fellowship scheme.

22/ See D. Clark, 1983, and 1984, op. cit.

23/ However, the somewhat lower returns to vocational streams reflect not just theirgenerally higher cost but also the fact that vocational education attracted weakerstudents, who choose this less preferred alternative to the academic stream.

24/ See D. Clark, 1984, General Secondary Education..., op. cit..

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2.18 A summary of the progress of Indonesia's secondary educationsystem over the review period suggests a somewhat checkered pattern. Onthe one hand, the Government's vigorous pursuit of enrollment expansionfollowing its success in moving toward universal primary education has seensignificant achievement: it is now possible to discuss the prospect ofuniversal lower secondary education. In fact, compulsory ez.rollment tograde 9 is a target in Repelita V. On the other hand, the intractabilityof the perennial problems of secondary education--shortage and inadequatequalifications of teachers, lack of materials and equipment, deficienciesin the examinations system, inefficient management and administration, andso on--has been and continues to be a serious constraint on performance ofthe subsector.

2.19 The Bank's involvement with secondary education can be seen fromtwo perspectives. Firstly, the importance given to vocational andtechnical schools (reflected in the orientation of the First and FourthEducation Projects and in the fact that direct Bank assistance to generalsecondary education did not begin until the mid-1980s) can, in retrospect,be seen as misguided. It is now widely accepted that many forms ofvocational training can best be provided in the workplace, building on asound basis of secondary general education. Accordingly, it might now besaid that Bank should have supported general secondary education sooner,and given somewhat less prominence to in-school vocational training. Butthese are lessons learned with hindsight. The Bank was acting on the bestinformation then available, and in line with prevailing perceptions. Inany case, no doubt this shift in emphasis will be seen in the shaping offuture government policy towards vocational schooling. For example,alternative forms of vocational/technical training such as apprenticeships,on-the-job practical work, etc., can be expected to play a greater role andthere will be a rationalization of within-school vocational/technicalcurricula. These issues will be resumed in more detail in Part III.

2.20 Secondly, although the Bank was foremost preoccupied with manpowerissues in the 1970s, it did appreciate the importance of the problems oflow educational quality at an early stage, and was clearly influential inturning attention towards these issues via the teacher education and text-book projects, which are discussed below. Finally, as an outside agencyable to take a possibly more objective and comprehensive view, the Bank hasalso been instrumental in pushing for improved management, coordination andadministration in secondary education, a need that continues to be stronglyfelt.

3. School Oualitv

2.21 During the 19609 and 1970s, a period which witnessed substantialinvestments in education throughout the Third World, the focus was chieflyon quantitative targets for enrollment expansion, from the primary levelupwards. However, over this period, a shift in emphasis towards qualityconsiderations began to emerge. The Bank's lending policy was sensitive tothis shift, and indeed encouraged it in a number of coungries.

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2.22 Against this background, one can see that the Bank's support forquality improvement in Indonesian education in the early 1970s was in factin the vanguard of this reorientation. The first textbook project,approved in 1973, was only the third education project to have been under-taken in Indonesia, and the First Teacher Training Project, signed in 1977,was only the fifth. By the time of the Second Teacher Training and SecondTextbook projects, commenced in the early 1980s, the concern with educa-tional quality was well established within the Bank, and it became moreprominent in education lending to many countries throughout the 1980s.

2.23 Textbooks. The evidence on the role of sufficient and appropriatetextbooks and other instructional materials for the learning of students isoverwhelming.25/ However, in Indonesian schools during the 1960s, studentsrelied mainly on copied notes, with little access to books of their own orin-school libraries. The National Assessment of Education Report foundthat in 1969 a class of 35-40 pupils had an average only 8 textbooks bet-ween them. Beginning in 1969, under Repelita I, the Government undertook aprogram of textbook preparation and production with assistance from UNICEFand the Canadian Government. The program aimed to distribute over theensuing decade more than 200 million books on mathematics, social studies,science and Indonesian language, sufficient eventually for one book forevery primary school child. By the end of Repelita I in 1974, about 63million books at primary level and about 3 million at secondary level hadbeen produced (see Table 4).

2.24 It was in this environment that the Third Education Project(Credit 387) was developed. This project aimed to assist the Government tocarry its existing school textbook program through to completion, involvingthe production and distribution of 138 million books between 1974 and 1979.The project also recognized the need for complementary training ofteachers, and provided for the training of 350,000 primary teachers in theuse of the textbooks. This was in fact the Bank's first large scale text-book project.

2.25 The project focussed on the physical proauction and distributionof books, but neglected to establish institutional structures to ensure thecontinuing supply of professional publishing skills. It was the Bank'sview at the time of appraisal that institution-building was too difficult,and it was not realized until well towards project completion that short-comings in the project--poor physical quality of the books, and books notproperly keyed to curricula in use--might have been lessened had a strongerinstitutional base been provided from the outset.26/

25/ See, for instance, S. Heyneman "Overview," in S. Heyneman and D. White (eds) TheQuality of Education and Economic Develonment. 1986, p.3.; S. Fuller, Raising SchoolOuality in Developing Countries: What investments Boost Learning? (World Bank, 1986);and S. Heyneman et.al. "Textbooks and Achievement in Developing Countries: What WeKnow" Journal of Curriculum Studies, Vol. 13, 1981, p. 227.

26/ Project Completion Report, Loan 387, 1983, par&. 2.23. It should be realized, though,that even then a msmatch between textbook provision and institutional strengtheningmay have resulted given the greater difficulties of the latter task. But at least astart would have been made. The actual course pursued suggests that the Bank followedits early preference for "hardware" over software* aspects.

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Table 4: Indonemsi: Textbook Supply under Repelits I, II and III

Textbook SWolY (million) durina Soecific Periods

Levet 1969/70- 1974/75- 1979/50 1980/811973/74 1978/79(Repetita I) (Repelits II) (Repelita III)

Primary

INPRES 4.5 60.3 -Third Education Project 202.0 38.0 69.8Other 58.1 2.7 -

Sub-total 62.6 262.3 40.7 69.8

Secondar

General 3.0 46.5 12.0 16.3Tech. & Vocational 0.1 10.8 4.5 1.0

Sub-total 3.1 57.3 16.5 17.3

Total 65.7 319.6 57.2 87.1

Source: Staff Appraisal Report, Indonesia Second Textbook Project (Report No.3560-IND), 1982, p. 4.

2.26 Nevertheless, the Government made remarkable progress in textbookproduction and distribution. Over the period of Repelita II (1974 to 1979)a total of 262 million primary and 57 million secondary textbooks wereproduced by the Government with assistance from several sources, includingthe Bank project already mentioned, and the INPRES Library Project. By1978, when a second Bank textbook project was being mooted, the Governmentrecognized that merely supplying books was not enough, and that more atten-tion should be devoted to content, physical standards, availability andtesting in use.

2.27 As a result, the Second Textbook Project (Loan 2102) aimed atassisting in institution building in textbook publishing and distributionand in curriculum development.27/ The project was planned to meet 22percent of total textbook needs in all subjects at primary and secondarylevels and would prepare the base for further textbook development underRepelita IV. It was hoped, not unreasonably, that this project would alsopromote equity, since the books would be available free of charge to pupilsand regional distribution and monitoring systems would be strengthened.28/

27/ Although textbook production and distribution was to absorb 80 percent of total basecost, institution building was *the central objective of the project and the essentialjustification for Bank financing" (BAR, para. 5.02).

28/ However, claims at appraisal that the project would raise attendance and reducedropouts (SAR, para. 5.05), appear to have lacked any factual basis.

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2.28 On balance, the Bank's involvement in textbook provision inIndonesia has clearly been positive. The shortcomings of earlier effortshave been recognized and addressed, and the encouragement to the Governmentto build up a lasting institutional base in this area has borne fruit.

2.29 Teacher Education. Low levels of teacher quality are directlylinked to low levels of student achievement in schools. A review ofteacher training and student attainment in thirty-two developing countries,lead to the conclusion that teacher characteristics have a positive influ-ence on student learning,29/ and one author has stated that "numerous otherstudies of students in developing countries confirm these generalfindings."30 / It was thus appropriate that, in the development ofIndonesian education, early attention was turned to the matter of teachertraining.

2.30 The first significant impetus in this direction came from theNational Assessment Study, which pointed to the problems of low teacherqualifications at all levels of the education system. One of thedifficulties was that 'qualified" teachers (mostly those who had beenthrough teacher training schools), were often less capable than the"unqualified" teachers with a university background. The former group hadperhaps only half the amount of substantive work that university graduateshad, and moreover lacked actual teaching experience as part of theircourses. Thus, IKIP graduates did not require any class practicals, norhad their teachers had that experience.

2.31 Overall, at the time of appraisal of the Bank's First TeacherTraining Project (Loan 1433) in 1977, it was possible to identify a list ofproblems besetting teacher training which was strikingly similar to theproblems facing the whole education sector: curricula in need ofmodernization, lack of coordination between curriculum design and teacherupgrading, materials in short supply, poorly trained staff, inadequatefacilities, and difficulties of student selection. In addition, primaryteacher training schools (SPG) were unevenly distributed leading to markedregional imbalances in teacher supply, a difficulty which was compounded bythe limited attractiveness of the career for bright students.

2.32 The components of the project included: the training of 40 educa-tors to supervise curriculum changes under later stages of the project; thedevelopment of curricula and materials; the establishment of 69 LearningResources Centers and provision of associated equipment- inservice stafftraining for about 7,000 teachers in the use of new materials andcurricula; evaluation and policy studies, with emphasis on improvingteacher quality; and technical assistance. With the agreement of the Bank,the Government proposed that local financing should be mainly used forconstruction, with external finance concentrated on quality improvements.

2.33 By the early 1980s, despite the largely successful implementationof this project, government reviews revealed that there were still problems

29/ T. Husen, L. Saha, and R. Noonan, Teacher Training and Student Achievement in Less-Developed countries (World bank Staff Working Paper No. 310, 1978).

30/ L. C. Solmon, *The quality of education and economic growth: a review of theliterature" in Heyneman and White (eds) og.cit., 1986, p. 10.

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of unqualified primary teachers and shortages of secondary teachers. Withthe dramatic increases in primary enrollments of the late 1970. otarting tospill over into secondary education, the deficit of secondary teachers wasbecoming particularly worrying. The problem of teacher supply was exacer-bated by the fact that less than 10 percent of the primary teacher traininggraduates would take up employment as teachers (and lese than 20 percent inthe education sector as a whole). Hany students were simply using teachertraining as a route to further (higher) education. Furthermore, teachertraining courses were poorly designed and were not preparing studentsspecifically for a career in education. Finally, as in many other coun-tries, teaching was not seen as a very desirable career.

2.34 The Government's response to the continuing problems of teachertraining was a program covering most of the 1980. which broadly addressedquality issues, quantitative output at the secondary level, and managementand administration. The Bank assisted in this through a continuation ofthe First Teacher Training Project, in what was then envisaged as a seriesof further projects. The Bank noted in 1982 that "in teacher training eachproject can only cover a portion of need because of constraints on fundsand absorptive and implementation capacity."31/

2.35 The objectives of the Second Teacher Training Project (Loan 2101),appraised in 1982, were to support the Government's long-range plans toimprove quality and increase capacity of the teacher education system atboth primary and secondary levels. The project provided for 1,560 newpreservice primary teacher training places (of which 1,200 were in sportseducation), and for 16,000 additional preservice secondary teacher trainingplaces. In addition, a substantial increase (1,400 places) in teachertraining capacity in special education was provided. Finally, assistanceincluded inservice teacher training (300 additional places), and anEducational Administration Center was established.

2.36 To summarize, the Indonesian experience in teacher training duringthe review period has been one of both achievement and frustration. On theone hand, as the IEES Report of 1986 put it, "teacher training programshave experienced remarkable euccess since Indonesia became...independent.This success has been in the ability of the system to respond to emergencyneeds and to adapt programs to new priorities as they emerge."32/ On theother hand, shortcomings in the quality of teacher training, the continuingshortfall in output of practicing secondary teachers, and fragmentedmanagement and coordination, are still present. While the numbers ofteachers trained through crash programs and "emergency training" lookimpressive, the standards attained must be questioned, and the pressure forquality improvements seems weakened because of the importance attached toquantitative targets. Although the Government has shown commendablewillingness to review and recommit its policy in this field, decisions havenot always been followed through. For example, the proposal to rationalizethe "uneconomic" number of primary teacher training institutions has onlyvery recently been acted upon. In the same vein, the Bank's intentionshave not always been converted into action as witnessed by the fact that

31/ Staff Appraisal Report, Loan 2101, 1982, para. 2.15.

32/ USAID, Op. cit., Ch. 1, para. 1.7.4.

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the proposal to implement a series of three teacher training project.during the 1980, never became a reality.

2.37 Nonetheless, Bank support for an attack on the major areas ofneed, as outlined above in the two teacher training projects, was timely,and gave valuable encouragement to the Government. It might also be notedthat the Bank's own research has begun to raise questions about the worthof lengthy preservice teacher training, and has auggested that oftenteacher quality may be more efficiently raised via inservice trainingprograms.33/

4. HIbaher Education

2.38 Development of the Subsector. The Bank's overriding policy con-cern in Indonesian higher education over the last twenty years has been theproblem of the supply of skilled manpower to service the growth needs ofthe economy. Although enrollments at universities and other post-secondaryinstitutions expanded during the 1960s and early 1970s, the attention oflocal educational administrators was mainly focuased elsewhere, partic-ularly on lower levels of the system and securing the educational founda-tions in primary and later in secondary schooling. By the late 1970s,however, it could no longer be ignored that the achievement of the ambi-tious growth targets expected of the Indonesian economy was being seriouslycompromised by the inadequate output of technical manpower from the educa-tion system, especially middle level technicians. Under Repelita I and II,high growth rates for the economy of around 7.5 percent p.a. had been setbut not achieved. The absorptive capacity of the economy was poor, withsome unemployment and underemployment of skilled labor, and contrastingwith perceived shortages of skilled manpower. In planning for Repelita IIIin the late 1970s, it was recognized that a substantially increased inputof skilled manpower was going to be required over the next planning periodto develop the agricultural infrastructure, to expand the output of tradi-tional manufactures of foods, tobacco, textiles, wood and wood products,and to obtain greater efficiency in the newer heavy industrial sectors ofchemicals, basic metals and non-metallic mineral products.

2.39 At this time Indonesian higher education comprised five main typesof Institutions: the universities, giving 5-year degrees (Sarjana), 3-yeardegrees (Sarjana Muda) and diplomas; institutes in a single professionalfield, with 5- and 3-year degrees; teacher training institutes, alsoleading to 5- and 3-year degrees; academies offering 3- and 2-year diplomasfor technician-level courses; and other post-secondary schools, mostly atdiploma level. Administration of this system was complex and cumbersome,spread amongst eight Government agencies with little coordination betweenthem. In 1977 there were some 360,000 students enrolled in highereducation, of which about 40 percent were in public institutions.Transition rates from general senior secondary school were around 45percent, and the total post-secondary enrollment amounted to about 2percent of the relevant age cohort.

33/ Against this background it ia worthwhile noting that the two further projects whichdid not materialize were to have emphasized, inter alla, support to inservice trainingprograms (SAR for Loan 2102, para. 2.15).

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2.40 Less than one percent of the labor force in the late 1970. heldpost-secondary qualifications, and, as noted above, there was seen to be anacute shortage of high level manpower. Labor force targets, difficult toformulate in any circumstances, were especially problematical in theIndonesian context given the lack of data and limited scope for analyticalexpertise. Even though it was projected in 1975 that in the period to1990, demand for professional, technical and skilled manpower would grow ataround 5 percent per annum (with particular requirements for engineers,scientists, agriculturalists and accountants), the concentration of enroll-ments was in degree programs in the social sciences. It was clear that, atcurrent levels of output, the system would be far from satisfying theseprojected labor demands in the ensuing decade.

2.41 The basic reason for the poor performance, in both quantitativeand qualitative terms, of the Indonesian higher education system during the1960s and 19709 was simple: persistent underfinancing. The higher educa-tion sector in Indonesia absorbed only about 5 percent of total publiceducational expenditure in 1976, compared with an average of 15-20 percentin most Asian countries. There was a relatively low level of cost recoveryin public higher education, with about 90 percent of recurrent expendituresin these institutions being provided by Government. Despite the vigorousgrowth of private higher education, where full cost recovery was the norm,the overall levels of financing, both capital and recurrent, throughout theIndonesian higher education subsector were inadequate.

2.42 These financial deficiencies were manifested in a set of majorproblem areas that accounted for the poor output performance of the system.Firstly, the system was characterized by low levels of internal efficiency,defined as the ratio of graduate output to total enrollment. In a per-fectly functioning system with a 5-year degree program, internal producti-vity with constant intake should approach 20 percent; in the late 1970. inIndonesia this figure was estimated at only about 5 percent.34/ The lowefficiency was attributable to high failure, repetition and dropout rates,themselves in turn deriving from low levels of contact time between staffand students, inadequate physical facilities (including libraries andlaboratories), poor teaching methods, inflexible course credit systems, andinsufficient financial aid to help students meet the high costs of tertiaryeducation, especially in private institutions. The second problem area,and an important further cause of low internal efficiency, was the factthat academic staff throughout the higher education system were inade-quately qualified. Only a relatively small proportion of tertiary teachersheld postgraduate degrees (about 5-15 percent, depending on field); onlysmall numbers of staff pursued active research interests. In fact researchwas almost entirely confined to commissioned research, mainly for govern-ment bodies, and was accessible only to the body commissioning it. Therewas no procedure for peer evaluation, publication or dissemination ofresults. Research was also almost entirely carried out by group ratherthan individual effort.

34/ See Report and Recommendation..., Loan 1904, 1980, para. 26; and D. Clark, "EfficiencyIn Indonesian Higher Education," 1983. It should be noted, of course, that crude*efficlency" measures eay nothing about the quality of graduates, and that a low"efficiency score might simply reflect a high expected standard of academicachigvement.

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2.43 Thirdly, the higher education system was poorly managed, withcumbersome and inefficient administrative arrangements at all levels. Thecentral planning process was fragmented, with the setting of unrealistictargets and consequent resource misallocation. At the institutional level,management lacked flexibility and adaptability and, in any case, did nothave access to the sorts of management information systems necessary forgood decision-making.

2.44 Finally in this list of major problem areas facing Indonesianhigher education in the late 1970s, one notes the issue of equity ofaccess, particularly with regard to socio-economic criteria and gender:children from white-collar urban families and males were over-representedin the student population. While inequity is characteristic of themajority of countries, including many developed countries, the overallproblem of inequality in educational opportunity at the tertiary level wasa worrying one, especially given the emphasis on equity issues in a widercontext in Repelita II and III.

2.45 It was with a growing awareness of the issues of inequality thatthe Government in the late 19709 formulated its policy to carry highereducation into the period of expansion expected in the next decade. TheGovernment aimed to rectify what it saw as an imbalance between diplomalevel (to grade 15) and degree level (grade 17+) training. Expenditureshad been disproportionately allocated to degree-level training, so policywas redirected toward expanding opportunities for diploma-level training.In the case of engineering, for example, 80 percent of total expenditurehad been on degree-level training, although manpower considerations sug-gested the need for more engineering technicians. Accordingly theGovernment planned to strengthen and expand diploma level training empha-sizing practical skills required in civil, mechanical and electrical engi-neering. Apart from engineering and technology, the Government planned togive priority at all appropriate levels in higher education to education/teaching, basic sciences, management, agriculture and health. The achieve-ment of se growth objectives was to be assisted by improving internalefficiency and upgrading standards of management and administration at theinstitutional level. Priorities in the 1979/80 budget of the DirectorateGeneral of Higher Education (DGHE) were given to these two strategies, with41 per cent of budget allocated to productivity improvement and 29 percentto management35 / Furthermore, following the introduction of the creditsystem in universities and the revised structure for diplomas and degrees,the Government planned to provide universities of appropriate standard withopportunities to expand and improve their programs in planned stages over a10-year period.

2.46 The Bank moved to support the Government in its plans for highereducation during the latter years of the 1970s. External assistance forhigher education was being, or had already been provided to the GOI from avariety of sources, including USAID (mainly for staff training), ADB (forfacilities and equipment), the Rockefeller and Ford Foundations (for tech-nical assistance and training), and bilateral programs (mainly for staffdevelopment). The Bank's strategy in higher education at that time was toidentify specific programs which were either nonexistent or deficient and

3/ Resort and Recosneudations.... Loan 1904, 1980, para. 29.

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to provide "concentrated assistance either to create new programs or toraise standards and/or increase the output of graduates."36/

2.47 The first Lank projects in higher education arose from a survey onhigher technical education in 1977, which identified the need for a nowsystem to train middle-level technicians, and for a strengthening ofuniversity level education in engineering, science, mathematics and busi-ness management. The first of these needs led to the Polytechnic Project,effective in 1979, and the second gave rise to the First Phase of aUniversity Development Program in the following year. Both of these proj-ects were supportive of the Government's emphasis on meeting needs fortechnical manpower as the major priority in higher education development inthe following decade. A summary table showing overall trends in enroll-ments and staffing in the entire subsector is shown in Table 5.

Table 5: Indonesia: Enrollments and Staff in Higher !ducation(Selected Years)

19s65 19l I97 1981 1984i

No. of studentsl100,000 inhabitants 133 208 212 375 !/ 600

Total enrollments ('000) 140.0 248.2 296.3 565.5 980.2

Total teaching staff ('000) n.a 20.0 46.7 60.6 75.6

P/ 1980

Source: UNESCO, Statistical Yearbook, selected years.

2.48 Polytechnics. She First Polytechnic Project (Credit 869), theseventh Bank project, was appraised and negotiated in 1978 and becameeffective in 1979. Its objectives were, firstly, to establish a newsystem for training engineering technicians; secondly, tc improve thequality of accounting training and practices; and, thirdly, to assist instrengthening educational planning and management. The first of theseobjectives was to be pursued through a major initiative, the establishmentof six new polytechnics and a Technician Education Development Center, withmanagement, program and staff development support; the second, throughaccounting instructor training, materials development and research; and thethird through support for studies in manpower analysis and planning forhigher technical training and through project monitoring.

2.49 This project was implemented during the early 1980s. The sixpolytechnics and four accountancy development centers were established asplanned, albeit with some early staffing problems for the polytechnics andsome delays in setting up the accountancy components. Overall, however,the project achieved its original aims, and also laid the basis for afollow-on project, appraised in 1982. The need for a second project hadbeen foreseen at the outset, in that the initial project had been envisagedas the first phase in a government strategy to provide eventually a

2J/ Staff Appraisal Report, Loan 2944, 1988, para. 1.31.

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nationwide system of polytechnics. In any case, at the time of appraisalof the second project, the same problems were still seen to be facingtechnical education as had been identified five years earlier.

2.50 The Second Polytechnic Project (Loan 2290), the thirteenth in theseries and the largest educational loan to that date, became effective in1983. It aimed to expand, strengthen and diversify the polytechnic systemby providing extensions to existing polytechnics and adding 11 new ones,and by strengthening the Polytechnic Education Development Center (as theTechnician Education Development Center was now called), plus technicalassistance and fellowships. This project was able to draw some of itsrequirements for new instructors from graduates of the polytechnicsestablished under the first project. The second phase of polytechnicdevelopment expanded from a focus mainly on engineering to embrace otherfields including telecommunications, banking, energy and aeronautics.

2.51 Universities. Meanwhile, the second area of Bank assistance forhigher education was being pursued in the First Phase of a UniversityDevelopment Program (Loan 1904), which was signed in 1980. It was seen asthe initial stage of the Government's long-run university developmentprogram, aimed at strengthening university management and improving boththe supply and the quality of high-level manpower. The project focussed onfour priority areas: engineering, agriculture, science, and economicsincluding business administration and accountancy. It was based in threeparticipating institutions: University of Indonesia, Gadjah MadaUniversity and Andalas University. The project provided for overseastraining for selected academic staff from the three universities and forvisits of varying duration to the project institutions by expatriatescholars as the main means of improving quality. Steps towards increasingthe quantity of output included the introduction of new policy measures toimprove internal efficiency, and assistance with the preparation of plansfor increased enrollment capacity. Finally, investments aimed at streng-thening university management involved assisting DGHE in improving itsplanning and management functions and rationalizlng university organizationand staffing. Although activities were to take place in the three projectuniversities, it was expected that the policy measures developed wouldspread in due course through the whole university system.

2.52 Despite some implementation delays, this project was well on theway to achieving its targets by the time of the appraisal report on theSecond University Development Project in 1985. The follow-on project (Loan2547) continued in the same general direction as its predecessor, althoughits objective was stated somewhat more sharply, as being "to developIndonesia's capacity to train its own university teachers andresearchers."37/ It involved support for new graduate-level programsthrough the creation and development of academic infrastructure at 16Inter-University Centers located at five universities; the initiation offive specialized fields of undergraduate study not currently available; andthe strengthening of university planning and management. Projectcomponents included, as for the preceding project, overseas graduate degreetraining, inservice nondegree training, visiting scholars, materials,equipment and support facilities. The project was expected to lead to more

37/ Staff Appraisal Report, Loan 2547, 1985, para. 2.01.

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advanced degrees for university staff, higher quality of graduate output,better servicing of manpower requirements, and improved universitymanagement.

2.53 The appraisal of this project reaffirmed that higher education wasa priority subsector for Bank involvement, "based on a review of develop-ment priorities in Indonesia and of the Bank's comparative advantage andresources."38/ The Bank's strategy, as reflected in the orientation of thetwo projects, indicates a sequential and long-term view of the appropriatemeans to address this problem. In other words, instead of seeking a"quick-fix" solution to the high-level manpower problem (if indeed oneexisted), the projects concentrated on building Indonesia's capacity toeducate ite own undergraduate and eventually postgraduate students. It issignificant that the concept of sustainability was explicitly introduced atthe appraisal of the Second University Development Project, when it wasstated that it would "pave the way for the sustained development of theuniversity system in Indonesia, resulting in an easing of the skilled man-power shortage and the more efficient implementation of development proj-ects and programs in all sectors.n39/ It will be some years before it maybe possible to discern the wider impacts of these projects, in all sectors,but the principle of establishing in Indonesia a basis for developmenttowards self-sufficiency in high quality tertiary education is sound.

2.54 During the mid-1980s, when the first two uni7ersity projects wererespectively closing and opening, the Bank was involved, together with GOIand UNESCO, in co-operative sector work in higher education in Indonesiawhich fed into the formulation of the Government's ten-year higher educa-tion development plan (covering 1986-1995). This sector work had alsocontributed to a sustained policy dialogue, which in turn had brought abouta shift in approach in the next project. These recent developments inhigher education policy are the subject of the following section.

2.55 Current Developments in Higher Education: a Sectoral Approach. By1985, the number of higher education enrollments in Indonesia was fastapproaching 1 million, the result of very rapid growth in student numbers(around 15 percent p.a.) over the previous ten years. There were by nowabout 480 tertiary institutions in the country, of which more than 400 wereprivate. Yet despite a slowdown in the growth rate in the economy, therewas still a shortage of properly trained manpower, and the basic problemsconfronting higher education, such as low internal efficiency, under-qualified staff, and inadequate planning and management were still inevidence. The needs in the 1986-1995 period, as identified by the jointsector work mentioned in the preceding paragraph, were ft.- budgetarymeasures including increased recurrent funding and greater cost recovery;assistance to private institutions; improved planning and management; andstaff development, scholarship programs etc., to improve the quality,relevance and efficiency of higher education.

2.56 At that time the Government considered it important to continuegiving high priority to post-secondary education and to renew its attack on

38/ Staff Appraisal Report, Loan 2547, 1985, para. 1.34.

39/ ibid.

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the fundamental deficiencies of tha system. The social rate of return tohighar education had been assessed at around 15-20 percent overall, a rela-tively high level, confirming the desirability of paying increased atten-tion now to investment at the tertiary level, after the substantial pro-gress made in developing primary and secondary schooling over the previous20 years.

2.57 In this context, the Bank affirmed its long-term commitment toassisting higher education, perceiving its involvement as an importantmeans of both implementing government and participating in the process ofpolicy formulation itself. It is here that one sees the origin of therecent policy dialogue in the area of higher education. But dialoguecannot occur in a vacuum; it requires a solid factual and analyticalfoundation upon which it can be built. Hence the crucial role of thesector work of the mid-1970s and of the early and mid-1980s can beappreciated. Sector work provided the basis for a continuing jointGOI/Bank review of issues and policies. The resulting policy dialogueopened up new channels of communication between the DGHE and the Bank, andwas carried forward in a parallel program of discussions of sectoral policyand of project implementation reviews.

2.58 The outcome of this process was that, instead of being preoccupiedwith specific target areas of the higher education subsector such as poly-technics, IKIP, etc., the Bank adopted a wider outlook in considering thenext higher education loan. It was therefore favorably- inclined toward theproposal that the next project should be in the form of a sub-sector loanto strengthen summarily the development program of the DGHE.

2.59 The Higher Education Development Project (Loan 2944), was firstdiscussed in 1985, identified in 1986, and appraised in 1987. The Bankagreed to define a three-year time-slice of the DGHE's expenditure programfor inclusion in the proposed project. The objectives of the project wereto improve planning; enhance both sectoral and institutional management;increase resource mobilization by encouraging private institutions andpromoting greater cost recovery in public institutions; improve educationalquality and efficiency; strengthen fields of study important to manpowerneeds, including engineering and science teacher training; and increase thecontribution of universities to regional development, especially in theEastern Islands. The project therefore dealt with virtually the wholearray of problem areas atfecting higher education.

2.60 Components of the project included measures to improve planning,management and implementation capacities, including training programs andinformation systems; measures to improve quality and efficiency, includingpostgraduate training for university staff, materials, equipment, etc.;measures to develop private higher education including coordination, super-vision, staff training etc.; development of campuses and construction offacilities; and provision for operation and maintenance expenditures,including incremental staffing and operating budgets. The overall benefitof this project was seen to lie in the way it would allow DGHE to pursueits priority programs without encountering unexpected budgetary problemsthat might otherwise constrain Its activities.

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2.61 To summarize, over the last twenty years the higher educationsubsector in Indonesia has mple substantial progress in quantitative terms,although the growth in output of the skilled manpower needed for develop-ment has remained consistently short of target requirements. Furthermore,the quality standards and management capacity of the system have not keptpace with the quantitative expansion. The Bank has endorsed the emphasisgiven by the Government to manpower goals as the rationale for highereducation expansion. The development of basic capacities in Indonesianuniversities to produce high quality teaching and research from their ownresources is a key institutional objective.

2.62 In more recent times, the Bank'a approach has shifted towards awider sectoral strategy, arising from a continuous dialogue between theGovernment and the Bank. Although the current higher education developmentproject does contain components that might otherwise have appeared in aThird Polytechnic or a Third University project, its focus is considerablywider. A sectoral approach in educational lending has obvious attractionsto the GOI in a difficult budgetary climate, but, as noted above, itremains to be seen whether the somewhat more diffuse allocation of fundswill yield the same benefits as a more targeted approach, and whether themanagement of a sector loan can be adequately monitored.

2.63 The higher education subsector raises a number of issues crucialto an overall judgment on the Bank's involvement with Indonesian education.Four of these issues will be discussed from a broader perspective in PartIII of this Report; they are: the importance of manpower considerations;the effectiveness of training programs; the role of institution building;and the significance of the policy dialogue between the GOI and the Bank.

5. Out-of-School (Nonformal) Education

2.64 In the educational effort of developing countries, the nonformaleducation (NFE) subsector occupies a somewhat ambiguous position. Someeducators and officials in the formal areas of education look uponnonformal activities as a sort of irrelevant side show to the mainendeavors of the educational system, even accusing nonformal educators ofsuperficiality and a lack of rigor in their educational methods. On theother hand, those working in the nonformal subsector itself are frequentlyfervent believers in the capacity of their work to reach vast numbers ofpeople untouched by formal schooling and to impart to them useful skillsthat they have no other way of acquiring. Generally this ambiguity isresolved in Government educational policies by an attempt to recognize thecomplementarities between formal and nonformal avenues of education, suchthat valid and distinct roles for both subsectors can be pursued.

2.65 In Indonesia, the latter approach has certainly been character-istic of educational development since Independence. The nonformal educa-tion sector (or out-of-school education, to use the official term) hasabsorbed only a small fraction of the educational budget, and its sharedeclined during the 1970s (see Table 6). Yet it has always been seen as avital component of the country's educational effort. The main Governmentagency for NFE, originally called PENMAS, was established in 1946 and hasgrown today into one of the largest nonformal education organizations inthe world.

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Table 6: Indonesia: Composition of Department of Educationand Culture Budgets by Level: 1969/70, 1973/74 and 1977/78

kLyhi 1969 70 1973/74 1977/78Devetoment Devetoament Routin 1evlotoment RoMutine

Budget Budget Budget Bujeut Budget /a(X) (X) CX) (X) (X)

Primary Lg 10.4 4.7 0.1 8.1 0.3Secondary 20.8 40.7 33.7 47.0 46.3Higher 55.9 35.6 15.7 23.5 20.0Nonformat 4.6 3.0 0.5 1.5 0.5Other 8.3 15.9 50.1 19.9 32.9

Total 100.0 100.0 100.0 100.0 100.0

La 1976/77Lb does not inctude primary teacher salaries

Source: Calculated from data in: Indonesia--Aworaisat of a NonformalEducation Project (Report No. 1606b-IND, 1977), para. 55.

2.66 The Bank's interest in assisting NFE originated in the mid 19708.At this time, the illiteracy rate stood at about 40 percent, and wasespecially high in rural areas, contributing to rural/urban income dispari-ties. Of the country's labor force of over 40 million, about one quarterwas either unemployed or underemployed, and these problems were most pro-minent amongst females and rural out-of-school youth. Nonformal educationservices were being provided by a variety of agencies, including someprivate ones, but the major organization was PENMAS, which was seen ashaving a specific mandate to provide vocational and general education toabout 17 million out-of-school youth and over 20 million illiterate adults.In 1977, it had 3,500 local offices and a staff of 6,500, of whom 2,500were professionals. It provided four types of courses: vocational trainingin small-scale industry and agriculture and in basic technical skills;family life education; community education including leadership training atlocal level; and general education in basic literacy and numeracy. It haddeveloped teaching methods centered on village-based learning groups as aneffective medium especially for the vocational training aspect of its work.

2.67 But despite these impressive statistics, there were problemsPENMAS suffered from an overcentralized administrative structure that wasinflexible and unable to respond effectively to local needs. AlthoughPENMAS staff had developed good working relationships with local governmentofficials in most areas, its teaching activities were constrained by lackof qualifications and experience amongst staff, and by inadequate suppliesof materials and equipment. Furthermore, although the Government had

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conducted useful studies of NFE's effectiveness in 1976, there was littlecapacity for on-going monitoring and evaluation of programs. As a resultof these problems, PENMAS' success in reaching the poorest and mosteducationally disadvantaged members of Indonesia's far-flung population hadbeen, at best, mixed.

2.68 The key to these shortcomings was, not surprisingly, lack offinancial support. In 1975/76, the NFE subsector accounted for only abouthalf of one percent of the DEC budget (Table 6), or about 5 US cents perperson in the target population. Whilst average costs figures can be mis-leading, underfunding was without doubt a serious problem. The Governmentproposed, therefore, to revitalize PENHAS, through measures includingexpansion in professional staff numbers, the strengthening of provincialoffices, and the reorganization of programs. To provide for this ration-alization and expansion of PENMAS, the Government proposed to continuesubstantial budget increases (around 40 percent p.a.) into the early 1980s.

2.69 The Bank's involvement in NFE in Indonesia began in 1976 with amission to appraise a project whose origins could be traced back to theEducation Sector Survey. Amongst the objectives articulated in the surveyto guide the Bank's investments in Indonesian education was one of creatingnew educational opportunities. The proposed project was consistent withthis aim, and was in effect the first Bank project in Indonesiaspecifically to pursue it.

2.70 The first Nonformal Education Project (Loan 1486) provided themeans for the Government's proposed revitalization of PENHAS. It aimed tostrengthen its management and supervision capabilities; to establish aprogr&m for regular in-service training of staff; to improve educationalquality through provision of teaching materials; to introduce continuousevaluation of programs; and to address the problem of financing village-level learning activities by establishing local learning funds. Projectcomponents included civil works, equipment and materials including booksand pamphlets, in-service training, monitoring and evaluation, and tech-nical assistance.

2.71 The supporting loan was approved in 1978, and in the ensuing fiveyears the project did indeed succeed in giving PENHAS a new lease on life.By the end of 1982, the organization, now renamed DIKMAS, was reaching anestimated 5 million people, compared with fewer than half a million in1977/78. Spending on NFE had grown to around 4 percent of the educationbudget by 1980/81. Nevertheless, despite these successes, and despite therapidly widening participation in formal education during this period asnoted earlier, there were still serious problems of illiteracy and lack ofemployable skills amongst the work force.40/

2.72 A mid-term review of the First Nonformal Education Project hadfound that although programs and support materials were effective, andalthough the management of DIKHAS had indeed been strengthened, there re-mained some problems, such as limited geographical coverage, unsatisfactory

40/ In 1983 it was estimated that about 20 percent (18 million) of the population betweenthe ages of 7 and 44 were illiterate and that there were around 20 million unemployedand underemployed persons, many of whom were school dropouts. Many labor forceentrants in the 15-24 age group had less than full primary education and no skills.

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quality of content and teaching method., and insufficient communication andfeedback. The Government reiterated its view of the complementaritybetween nonformal and formal education, and propooed further expansion ofNFE under Repelita IV. Th.'s Government'o objectives were put more sharplyas the twofold aim of increasing literacy in the national language andincreasing access to ttaining in income-earning skills amongst the educa-tionally deprived. It was appropriate, then, for the Bank to carry forwardthe initiatives of the first NFE project into a second.

2.73 The Second Nonformal Education Project (Loan 2355), which becameeffective in 1984, built on its predecessor by expanding coverage andimproving quality. Its objectives were to provide direct support forprograms in basic education and training, to establish new regional stafftraining and development centers and to strengthen existing ones, toprovide training for selected staff and to improve management and evalua-tion. Project components included the provision of resources to extendvillage learning programs, provision of materials and equipment, construc-tion, and support for management, monitoring and evaluation. The immediatetarget was to provide basic education and skill training for about 800,000illiterates and dropouts, but in the longer term it was envisaged that theproject's benefits would spread, and the effectiveness of other Governmentprograms would be improved. Overall, the second project continued tofoster NFE growth in Indonesia that was so significantly accelerated underthe first.

2.74 In looking back over the Bank's assistance to this subsector, onecan see that the two projects led to a refocussing of NFE efforts in the1970s, and to extremely rapid growth during the 1980s. At the same time,an impact evaluation iR seriously hampered by lack of reliable data. As aresult, it is difficult to judge how effective NFE expenditures have beenin economic or social terms.

2.75 At present, a change in emphasis appears to be underway, towards agreater reliance on local and community initiatives, including financing,in NFE. In this process, a stronger role for private institutions may beemerging. There are also still continuing problems with reaching thepoorest and most remote areas. In addition, some rethinking of NFE target-ing has been occurring, with increased interest being shown in the 20-34age group where unemployment difficulties are most acute.

2.76 It is against this background that the Bank's thinking on furthersupport for NFE is now evolving. If there is a further project in thesubsector, it is likely to incorporate these new tendencies.

6. Agricultural Trainina

2.77 One of the highest priorities of Repelita I was the attainment ofself-sufficiency in food production through rehabilitation of the agricul-tural sector. The lack of skilled manpower in agriculture, however, wasimposing a severe constraint on expansion of output. During Repelita I(1969-1973), agricultural education and training programs to produce theskilled manpower required were given by the Departments of Education and

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Culture and of Agriculture, the former being responsible for all post-secondary agricultural education as well as a number of specialized second-ary schools, the latter for programs at the secondary level and for somenonformal activities.

2.78 The training system under the Department of Agriculture was at thetime affected by several problems, especially by shortcomings in thequality of education provided by the agricultural schools (SPHA, subse-quently renamed SPP). These schools had been set up in the 1960., andwere short of equipment and specialized facilities such as laboratories,workshops, administrative offices and staff housing. They also usedinappropriate curricula and had insufficient qualified staff. Most of theteachers worked effectively only part-time, about three-quarters of themholding multiple jobs.

2.79 During the p2riod of Repelita I, the Government undertook toexpand and strengthen the agricultural extension service in line with itsobjectives of increasing agricultural output. However, the majority ofextension staff had only general secondary schooling with no agriculturalbackground or extension training. The Government therefore assigned prio-rity to improving agricultural technician training, and of streamlining andstrengthening its organization and management.

2.80 The Bank had originally envisaged a component of the FirstEducation Project (Credit 219) to cover agricultural technician training,but in the event FAO and the Bank developed jointly a separate project foragricultural training. The Second Education Project (Credit 288), alsoreferred to as the First Agricultural Training Project, was appraised in1971 and became effective in the following year. It was seen as supportingthe first phase of the Government's program for development of agriculturaltraining during Repelita II, with another project to support a second phaseto follow in due course. The eventual outcome were three Bank projects inthe agricultural training field.

2.81 The objectives of the First Agricultural Training Project wereimplied in the Government's first-phase strategy, viz., to upgrade admini-strative and technical personnel, and to develop certain training institu-tions under the Department of Agriculture. The project components were tobuild and equip two new SPP and one new forestry technician training center(FTC); to rehabilitate or expand 12 existing SPP, 13 existing agriculturalinservice training centers (ISTC) and the National Agricultural TrainingInstitute (NATI); to provide additional equipment for an existing FTC; toequip a PIU and the Agency for Agricultural Education, Training andExtension (METE); and technical assistance.

2.82 The first project was regarded as a success, with its targetsbeing satisfactorily achieved during the life of the project. Its comple-tion set the scene for the follow-on project, supported through Loan 1692,which was approved in 1979. This project provided the means of implement-ing the second phase of the Government's strategy for development ofagricultural training, which broadened the range of institutions estab-lished or upgraded, especially to provinces without adequate agriculturaltraining facilities, and extended quality improvements to provincial

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preservice institutions. It also sought a further strengthening of AAETE,whose worth had been clearly established under the first project. Thisphase was to be implemented during Repelita III.

2.83 Like its predecessor, the Second Agricultural Training Projectsucceeded in increasing outputs of both pre- and inservice training and inbuilding up AAETE. However, reduced government funding from 1983/84 cutprograms and suggested that the expansion of the inservice training networkmight have been somewhat too rapid. Yet, despite the successes of the twoprojects in helping to meet the Government's requirements for middle levelmanpower in agriculture, there was still in the early 19809 a continuingshortage, and the same quality problems that had been identified more thana decade earlier persisted. Accordingly, the Third Agricultural TrainingProject (Loan 2341) was approved in 1983.

2.84 Planning of this project was influenced by a Bank Report,41/ whichnoted that middle level technical manpower would be in short supply duringthe 1980s, and that quality needed to be raised. DOA projections indicateda 16 percent annual growth in demand for technicians during Repelita IIIand a 9 percent growth in Repelita IV, though there would be differencesbetween subsectors within agriculture. The Government had a three-pointstrategy: the establishment of accelerated training programs for secondaryschool recruits; the strengthening of agricultural secondary schools (SPPand SMTP) during Repelita IV; and the provision of post-secondary diplomaprograms for middle-level staff.

2.85 The Third Project was designed to give effect to this strategy.It was thus in broad terms a continuation of the previous two projects, inthat it continued to assist the provision of preservice training throughthe agricultural secondary schools, and inservice training through the ISTCsystem. It also established 15 new Agricultural Information Centers tohelp in extension, and a Center 'or Agricultural Manpower Development atNATI. This Center, with a projected staff of 30 full-time professionals,was charged with five areas of activity: evaluation and tracer studies;manpower survey; identification of training needs; development of curriculafor agricultural training programs; and development of learning materials.It was expected to "increase the overall analytical capacity of AAETE."42 /

2.86 During the implementation of the Third Agricultural TrainingProject, which spans the 1980s, the scene in agricultural training changedsomewhat. Budget limitations restricted the number of extension workersthat could be absorbed by DOA. Accordingly in 1984 the curriculum in theagricultural high schools was changed to prepare students also for selfemployment as farmers or in small businesses associated with agriculture.The training system now turns out more diversified manpower, suited to awider range of employment than simply technical workers in Governmentservice.

2.87 Overall, the development of agricultural training in Indonesiathrough the sequence of three projects to date has been very successful,when judged in terms of objectives and outcomes. The process has been

41/ Indonesia: Technical and Professional Manpower in Agriculture. August 1981.

42/ Staff Appraisal Report, Loan 2341, 1983, para. 42.

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characterized by a clear statement of a simple goal, the increase in supplyof skilled manpower in agriculture, and by a well-planned phased approachto pursiing this goal. The Bank's role has been direct and well-judged; itis significant that the First Agricult-tral Training Project has scoredhighly on sustainability performance indicators measured almost twentyyears after the project's initiation.43 /

2.88 This aspect of the Bank's support of human resources developmentin Indonesia also illustrates the importance of institution building as ameans of providing a sound and continuing infrastructure for education andtraining efforts. The AAETE, despite some ups and downs, must be judged ashaving played a useful supporting, coordinating and providing role in theagricultural training area. However, the proliferation of other institu-tional structures creat d under or assisted by these projects may bequestionable.

7. Manpower and Professional Skill D.velopment

2.89 The first two Bank education projects (Credits 219 and 288,discussed earlier) tackled manpower development in what were judged to beareas of obvious priority. However, in the mid-1970. the Bank undertook amanpower forecasting exercise as a basis for a more systematic investmentprogram. This forecast influenced the pattern of Bank lending for manpowerdevelopment throughout the latter half of the 1970.. It pointed tosubstantial deficits during the 1970s in the output of technicians frompost-secondary training and of skilled workers from vocational training atthe secondary level, as shown in Table 7.

Table 7: INDONESIA: Projected Annual Average Education/Training Requirements: 1971-81 - ('000)

Annualt Annuel Anual AnrualManroower Tralnins SUDDy SuralUs(+)/Needs Reouirement La Deficit(-)

Engineers, Technologists(university education) 10 5 6 +1

Technicians(post secondary training) 49 20 0 -20

Skilled workers(vocational training) 165 41 19 -22

La Assumed, on the basis of international and intersectoral comparisons, as 50,40X and 25X of anmual manpower needs at each level respectively.

Source: doneia ti Sor Curvey Rgort (Report No. 443a-IND,1975): 7; modife as in The ieuDcof nonesija Anraisat of aFourth Education Prolect (Report No. 875a-IND, 1976): 4.

43/ Indonesia: Impact Evaluation Report - Suatainabilitv of the First and SecondEducation Proiecta (Report No. 7767, 1989).

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2.90 While the Bank was well aware of the limitations of long-termforecasts, evidence of unemployment statistics and contacts with employersat that time seemed to support the view that the Bank's role in manpowerdevelopment should be to focus upon the production of vocational skills,especially of middle level manpower. This emphasis can be seen in theFourth Education Project (Loan 1237), and in the First Polytechnic Project(Credit 869) discussed earlier. Both of these projects were based on thefindings of the manpower forecast, and both were aimed explicitly atincreasing the supply of middle level technical manpower.

2.91 The Fourth Education Project (Loan 1237) had as its objectives theproduction of skilled and semi-skilled manpower, the improvement of skillsamongst disadvantaged groups, and che strengthening of civil servicetraining. Its components included the construction and equipping of twotechnical teacher training faculties and 4 centralized workshops (TTCs) forthe Department of Education, the provision of 17 vocational trainingcenters (PLK) and mobile training units for the Department of Manpower, andprovision of facilities for the National Institute of Administration (LAN).The project was dubbed a "Multipurpose Project" which is a euphemism todescribe three separate projects supported by a single loan. As was notedat the audit stage, the project's disparate elements led to severeimplementation problems, with the project taking twice as long until finaldisbursement as was originally intended.

2.92 The early 1980s saw a major change of direction in the Bank'sstrategy. During the 1970s the Bank's concern with the development oftechnical skills had had an important influence on its overall strategy: apreoccupation with vocational education, an emphasis upon specific occupa-tional categories among which substitution was neither widely possible nordesirable, the perceived need to curtail the growth of general education atboth secondary and higher levels, and the absence of any major directinvolvement in primary education. Evidence noted earlier that rates ofreturn to general secondary education were significantly higher than re-turns to secondary vocational, and greater understanding that much school-leaver unemployment was little more than a prolonged period of job search,led to a reappraisal of thinking on lending for manpower development. Themost immediate outcome of this reappraisal was Bank acceptance of the ideathat general education could be seen as providing a worthwhile investmentin overall manpower development. The Secondary Education and ManagementTraining Project of 1984 (Loan 2472), discussed above (paras. 2.19 ff) wasdesigned to improve the quality of general secondary education.

2.93 The longer-term outcome of the reassessment was that the emphasison specific occupational skills shifted from provision in the formal schoolsystem to provision in the work force. The Public Works ManpowerDevelopment Project (Loan 2258), signed in 1983, aimed to extend andstrengthen the inservice job-related courses already run by the Departmentof Public Works. Its components included a strengthening of the TrainingDepartment and the Manpower Planning Division in the Department of PublicWorks, the establishment of a curriculum and materials development unit,and expansion of the Regional Training Centers. The Science and TechnologyTraining Project of 1985 (Loan 2599), while making available fellowshipsfor formal education overseas, was nevertheless explicitly limited to those

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who already had job experience in one of the Government's researchinititutes (LPND), and who would be contracted to return to their homeinstitution after completion of study abroad. Similarly, the AccountancyDevelopment Project of 1988 (Loan 2940) included some elements for improv-ing accountancy education in several subsectors including secondary, post-secondary and nonformal education, but the essence of the project was animprovement in public and private sector accountancy practices through theprovision of specifically job-related training programs in accounting,auditing, capital markets, and so on. Tha most recent project in the man-power area, the Public Works Institutional Development and Training Projectof 1989, has as its centerpiece the development and training of staff for adepartment with wide responsibilities for infrastructural development inIndoresia.

2.94 A final manpower-related project falling within the review periodremains to be considered. This is the Manpower Development and TrainingProject (Loan 2705), signed in 1986. It was seen as comprising the firstphase of a long-term development program to focus on institutional develop-ment, the formulation and implementation of new policies for manpowerdevelopment and training within the Department of Manpower, and upgradingof its management and training systems.

2.95 Three observations may be made about this project. Firstly, it iscommendable for its emphasis on institution-building, i.e., on developingand strengthening structures within the Department of Manpower that wouldbe of lasting effectiveness. This point will be discussed further in PartIII Section 3 below. Secondly, and in passing, it should be noted that thejustification for this project contained statements typical of a number ofprojects where "oversell" scems to have been thought necescary in order toincrease the appeal of the project. So, for example, it was argued thatthe Manpower Development and Training Project would "contribute to expan-sion of employment by improving the competitiveness and productivity ofindustry through improved skills of industrial manpower and by providingtraining and other support for self employment and the informal sector "4Such a claim is not only exaggerated, but also, because of its vagueness,incapable of being subsequently tested against actual outcomes.

2.96 Finally, this project is notable in that it was designed amongstother things to strengthen labor market and manpower planning informationsystems at both national and regional levels. The fact that this projectprovides the basis for more reliable data on manpower development stands insharp contrast to the conditions under which the first tentative Bank proj-ect was appraised in the late 1960s. That first project wiao noteworthy forthe almost complete absence of reliable manpower data, and for the indis-criminate use of what data were available. Now one can look forward notonly to better information systems, but also to a more judicious use of thedata they yield.

2.97 This brief description of the major projects for manpower develop-ment makes clear the changing nature of the Bank's involvement since 1970.The first section of Part III will now take up the major issues that havearisen during the evolution of Bank policies towards manpower developmentand their implications for education investment decisions.

44/ Staff Appraisal Report, Loan 2705, 1986, para. 2.01.

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Part III: ISSUES IN BANK INVOLVEMENT

1. H-noower Develompnt

3.01 The Early Projects - (1969-83). The first major issue that arisesfrom Bank involvement in manpower development is the reliance throughoutthe first ten years of lending on the use of manpower forecasts. Theseforecasts were used to calculate estimates of surpluses or (usually)shortages of particular categories of manpower, with Bank projects beingexplicitly designed to remedy the shortage. As was mentioned above (PartII, Section 7, paras. 2.89 ff), the Bank undertook a fore:-asting exercisefor the 1975 Education Sector Survey, and extensions or developments ofthis forecast provided the basis for the Bank's approach to manpower-oriented projects throughout the late 1970s.

3.02 There is no need to analyze in detail the deficiencies of theseforecasts (see also Annex 1). Nonetheless, some broad issues are worthy ofcomment. Firstly, even by the standards of the time the forecasts used bythe Bank were fragile in the extreme. This is readily understandable inview of the extreme paucity of data in Jndonesia, but the Bank's forecastscompounded rather than minimized these weaknesses. For example, the fore-cast used in the Seventh Project (Credit 869) ostensibly covered the period1975-90. In itself this was a bold undertaking, given the rapid rates ofeconomic growth and transformation under Repelita I and II. But the start-ing point for the forecast was precisely the same set of assumptions andbase-line observations from the 1971 Census that had been used for theEducation Sector Survey. Th.,se observations were extrapolated to 1975, andthen used to project to 1990. In effect, the demand for polytechnicmanpower (a category that did not even exist at that time) was inferredfrom a 20 year projection based on a set of Census observations that werealready seven years old and not reliable to start with.45/

3.03 Secondly, the Bank maintained its reliance on long-term fore-casting beyond the point where it had already lost credibility as the mainweapon in the educational planner's armory. That the Bank should havestarted its educational involvement in Indonesia in the late 1960a with aheavy reliance on manpower forecasting is entirely understandable; it wasfz-llowing no more than standard practice in educational planning at thetime. But the continued reliance on such techniques throughout the 19709is remarkable as there was already ample academic literature discreditingthe fixed coefficients assumptions underlying the manpower requirementsapproach.46/ More important, there was increasing evidence from ex postevaluationa that most manpower forecasts were simply wrong, often by a

45/ Indonesia. Education Sector Survey Report (Report No. 443a-IND, 1975) Appendix B.

46M H. Blaug, "Approaches to education planning," Economic Journal, June 19671 C. A.Anderson and M. J. Bowman, "Theoretical Considerations In Educational Planning" in J.A. Lauvreys, et al. (eds), World Yearbook of Education (Londons Evans Bros., 1967);R. Hollister, A Technical Evaluation of the First Stage of the Mediterranean RegionalProject (Paris: OECD, 1967).

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margin oufficient to give quite mistaken policy signals.47/

3.04 Despite this increasing evidence against such estimates, the Bankcontinued to use manpower forecasts as the centerpiece of project identifi-cation and appraisal right up to the First University Development Projectin 1980. Even if one discounts academic findings as irrelevant to thelown-to-earth business of project identification in a developing country(and indeed manpower forecasting remains a widely used tool of educationalplanning despite continued criticism of its methodology and trackrecord),18I the fact remains that developments within Indonesia itself haddiscredi.ted the methodological basis of the Pank's forecasts. All theforecasts constructed by tha Bank during the 1970s were based on theassumption that x percent growth of GDP would require y percent growth oftechnical manpower. In the Education Sector Survey, 7 percent had beenused as the base line target for GDP growth, and the estimates of manpowerhad been derived through the explicit assumption that certain numbers ofprofessionals, technicians and skilled workers would be required if thista.get were to be achieved. Growth rates during the 1970s turned out to bevery close to the Survey's base figure of 7 percent; the economy grew by7.5 percent during the early 1970. (Repelita I) and a little less than thisduring the latter half of the decade (Repelita II). Since this excellentgrowth rate was achieved without the supplies of technicel manpower whichthe forecast had argued were a necessary condition for that growth, itmight have been thought desirable to reconsider some of the basicassumptions of the forecast, such as the GDP/employment elasticity, or theconstant ratios between different categories of manpower, or the argumentthat the limits of substitutability had already been reached in the early1970e. No such reassessment took place, and forecasts continued to be madeusing essentially the same set of assumptions.

3.05 It could be argued that these criticisms of the Bank's early fore-casts have little pr..ctical relevance; that during the 1970s Indonesia wasso desperately short of skills that, while the details of projected demandmight have been wide of the mark, the basic case for an expansion ofeducated manpower wa& so overwhelming that deficiencies in the forecastingmethodology have little more than academic interest. At this broad levelof generality such an argument can be readily accepted. However, one ofthe major issues arising from the Bank's reliance on the manpower require-ments approach is that it shaped not only the tvve of manpower which wouldbe supported but also the general stratesv of the Bank's involvement inIndonesian manpower development.

3.06 Looking first at the tvve of manpower supported in Bank projects,one can see that without exception all the manpower-oriented projects ofthe 1970s concentrated on the promotion of technical/vocational middle-level skills. Right from the first project in 1970, the focus of Bankconcern was the perceived shortage of vocational skills (including agricul-tural vocational skills) at the secondary and postsecondary technician

47 D. Ahamad and H. Blaug, The Practice of Mannower Forecastint: a Collection of CaseStudies (Amsterdams Elsevier, 1973).

48/ H. Godfrey, Plannint for Education. Trainint and Unemnloyment in Indonesia (UNDPIILOmimo, 1987); M. Blaug, Review of Psacharopoulos (ed), op. cit., In Journal of HumanResourcea. vol. 24, No. 2 (1989): 331-335.

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levels. The ostensible reason for this is that the manpower forecastsrepeatedly came up with severe shortages of such skills; as was shown(Table 7) the central forecast constructed for the Education Sector Surveyshowed a small surplus of university graduates but continuing deficits oftechnicians and skilled workers. The more fundamental reason, however, isthat in attempting to estimate surpluses and deficits of these particularskills the forecasters themselves reflected the underlying conventionalwisdom in favor of middle level technical manpower. The forecasts (andensuing Bank projects) were very much a product of their times inpostulating the direct contribution that secondary technical manpower couldmake to economic growth.

3.07 The crucial issue is that the Bank concentrated on remedyingapparent shortages of secondary technical manpower, without convincingevidence that there were such shortages, relative to other types ofmanpower. One study showed that "evidence from two independent datasources in 1978 indicates that the economic return to investment inIndonesia is well above any plausible alternative discount rate...thisstatement applies to all levels and kinds of education, except lowersecondary as a terminal qualification."49/ Another author found that thesocial rate of return to upper secondary general schooling was much higherthan the return to upper secondary technical (32 percent versus 18 percentif the graduates found a job immediately, and 19 percent versus 10 percentif graduates had to wait three years before finding a job).50/ Theseresults make it clear that the Bank was not mistaken in declaring ashortage of secondary technical manpower, but other types and levels ofmanpower may have been in even shorter supply, and concentrating ontechnical manpower was not the optimal investment strategy to follow, giventhe much higher cost of technical vis-&-vis general education.

3.08 Turning now to the way in which the 1970. emphasis on manpowerrequirements shaped the Bank's overall strateav towards manpower develop-ment, one notes that the main objectives of Bank involvement were laid downin the Education Sector Survey. The Bank drew explicitly upon the survey'sforecast to "suggest the need for a deliberate policy of a) selectiveexpansion in technical and vocational education, b) restraint in expansionof secondary and higher education, and c) major reallocation of resourcestowards out-of-school education."51/ This latter emphasis was toaccommodate the very large numbers of unskilled and semiskilled workers whohad not received much if any formal education.

3.09 The issue here is that this strategy says literally nothing aboutsupport for increased formal education beyond the concern with specificmanpower requirements. As far as formal education is concerned, the entirethrust of the Sector Survey deals with the promotion of specific technical/vocational skills for a small proportion of the Indonesian labor force.

49/ G. Peacharopoulos, Indonesia: Manpower Considerations In the Enertv Sector andElsewhere (World Bank, mlmeo, 1981): p, 19.

50| D. S. Clark, Haw Secondary School Graduates Perform in the Labor Market: A Study ofIndonesia, World Bank Staff Working Paper No. 615, 1983.

511 Indonesia, Education Sector Survey Report, op. cot., 1975: 5.

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While the Bank's strategy of concentrating on the amelioration of manpowershortages might be interpreted as a very sensible focus of limited effortand resources on areas where it could make a genuine contribution, leavingthe Government to concern itself with the central thrust of satisfyingwider social objectives of education, the problem is that a careful readingof the Sector Survey makes it hard to escape the view that the Bank'.preoccupation with skills for a tiny minority and lack of interest in wideraspects of general education stemmed from its uneasiness with the priori-ties in education policy being pursued by the 001 at that time.

3.10 Evidence for such a view can be gleaned from the Sector SurveyReport itself. In its review of the proposals for educatiota and trainingin Repelita II, many of the Bank's criticisms were well directed; criti-cisms of administrative capability in education, the lack of hard informa-tion about the education system and its workings, and the lack of detailabout specific plans for policy implementation were fully justified. Butin addition to these specific criticisms it is impossible to read theBank's appraisal of Indonesian education policies in this document withoutperceiving a more general underlying tone of doubt. Two examples standout. The first of these concerns the issue of quality. The Bank notedthat "it appears tnat educational quality ranks foremost at practicallyevery level of education [and ...the plan includes numerous measures toimprove educational quality throughout the system."52/ In view of the sub-sequent (and continuing) quality problems in Indonesian education, thisapparent determination of the Government to tackle the problem as long agoas 1975 appears extraordinarily prescient. While the Bank was certainlyconscious of quality problems in Indonesian education (as witnessed by thefirst textbook project in 1973) and later supported further plans forquality improvement, there appears to be a sense of surprise that qualityobjectives should rank so importantly with the Government, with the Bankcommenting that "an evaluation of the individual policy measures... seems toindicate a concern for educational quality over-riding every otherobjective." 5 3 / As a result, the Bank adopted towards both this objectiveand the Plan's specific quality proposals a somewhat reserved attitude.

3.11 In fact, in its focussing on technical manpower the Bank appearsto have paid less attention to the central thrust of Indonesian policies.Second only to quality in Repolita It was the objective of equality ofeducational opportunity, reflecting what had been since Independence (andstill is) a strong commitment by the Government of Indonesia to extendingeducation to increasing proportions of children. The state ideology ofPancasila may sound like a system of lofty principles to Western ears, butthe participation of all population groups in the process of economic andsocial development has substantive practical contents it is precisely thispolicy which has shaped the particular educational strategy followed by theIndonesian Government. In short, the satisfaction of social demand hasbeen a key element in Indonesian educational planning. A central featureof the Government's commitment to increased educational access is that it

S2/ ibid.: 6 and Appendix c: 21.

5I/ Ibid.t 21 and Appendix C: 5.

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has pursued a strategy of "stratified expansion," first universalizingprimary education with limited access54/ to the junior secondary level,then proceeding to universalize junior secondary education with relativelymodest access to senior secondary schooling, and so on.

3.12 After Independence in 1945 there was an explosive growth inenrollments until about 1960, when economic stagnation and politicalturmoil took their toll in slowing down the rate of expansion. Under theNew Order Government, the education sector resumed its rapid growth. Bythe time of the Sector Survey, the gross primary enrollment ratio hadreached 80 percent, 18 percent for secondary, and 3 percent for highereducation. During Repelita I, financial constraints meant that primaryenrollments increased only slowly, from 12.8 million students in 1969 to13.6 million in 1973, an annual growth rate of only 1.2 percent. Giventhis poor performance, together with the Government's long term strategyfor education, it is not surprising that under Repelita II (1974-78), thegreatest absolute and relative increase in enrollments was planned forprimary education. The targeted 9.0 percent annual rate of increase wouldbring the gross primary enrollment ratio to 91 percent in 1978 compared to66 percent in 1973, and, consistent with government strategy, lowersecondary schooling would have a more modest rate of enrollment increase,and upper secondary and higher education still less.

3.13 It is apparent that this policy was viewed with scepticism by theBank. As the Sector Survey noted, "unemployment, particularly of schoolleavers, has become a growing concern in recent years.... Significantly,almost two-thirds of the unemployed were under 25 years of age and two-thirds have pursued their education beyond primary school. As the recentexpansion at the post-primary education levels has not yet reached thelabor market, the problem of educated unemployment could become larger andmore pressing in the next few years."55 / When one adds to the apparentevidence of unemployment for school leavers what has already been learnedof the Bank's view that the scope for substitutability had already beenexhausted in Indonesia, it is not difficult to appreciate that the Bankmust have felt some apprehension about the resolve of the Government tocontinue expansion of the very groups which, it was thought, would not haveany specific skill preparation and which could be expected merely to add tounemployment after graduation from primary or lower secondary school.

3.14 The policies unveiled in Repelita II were certainly open tocriticism on specific points, but those policies and priorities wereentirely consistent with the overall strategy and objectives of theGovernment. By focussing on specific categories of technical manpower, theBank forewent an opportunity to participate more comprehensively in theinitiatives for quality improvement proposed by the Government. It seemsreasonable to conclude that the Bank chose to channel its efforts in thisdirection because it felt that the sectoral development policies were notsufficiently geared towards the manpower requirements of the economy. As

54/ It should be mentioned, though, that the vigorous growth of private secondary endhigher education systems made controlled enrollment an illusory goal.

551 ibid.: 4.

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was noted above, the Bank's strategy could be interpreted as a sensiblecomplement to the Government's own measures, but the price paid for thisfocus upon emall categories of middle-level manpower was a lost opportunityto influence the mainstream development of Indonesian education during aperiod of rapid and profound changes.56 /

3.15 Recent Proiects - (1983-89). The issues arising and the lessonsto be learned from the early manpower projects deserve such detailedtreatment because of the way in which the Bank's views on technicalmanpower were not limited in their effect to the specific issues ofmanpower development, but spilled over to influent.e the overall objectivesfor Bank lending to education in Indonesia. By the end of the 19708 thisperiod of lending was drawing to a close, and some changes of emphasis werealready becoming apparent. For example, the First Polytechnic Project(Credit 869) included proposals to increase the output of accountants,representing a substantial shift from the previous emphasis on skilledworkers and technicians. Similarly, the First University DevelopmentProject (Loan 1904), signalled a clear change of direction when it notedthat the Bank should follow a three-pronged strategy of support to: "a)basic education spanning the first nine years of schooling; b) highereducation to provide an adequate supply of manpower in areas crucial toIndonesia's development; and c) development of administration to improvethe effectiveness of government personnel charged with implementation ofdevelopment programs. S /

3.16 However, the real change of emphasis in manpower development canbe dated to the early 1980s, when Clark first produced his estimates ofrates of return to secondary education.58/ In 1980/81 the final outputfrom general senior secondary schools was only 7 percent of the age cohort,low in relation to output from the overall secondary cycle and low by Asianstandards. In spite of this low output, high rates of unemployment amongsecondary school leavers had been interpreted as showing a surplus of suchmanpower. "It is not a large step," commented the Bank, "to draw the nextconclusion which is that the expansion of secondary education should beregarded with singular caution...a position found in practically allprevious Bank documents taking up t:is matter."59/

3.17 From a tracer study which had been prepared under Bank auspices,Clark made a two-fold contribution. The rirst was to show that socialrates of return were actually higher for general secondary graduates thanfor vocational secondary leavers. These rates of return were listedearlier in this section, and need not be repeated here except to emphasize

56/ The Region points out, correctly, that tae Bank also undertook non-manpower projectsduring the period of Repelita II (specifically, the first Teacher Training and Non-Formal Education Projects). However, manpower development projects appraised andpresented to the Board during this period surpassed non-manpower projects (in terms ofBank funds allocated to them) by a margin of almost 4:1 (US$128 m. vs. US$34 m.).

57/ Staff Appraisal Report, Loan 1904, 1980, para. 2.43.

58/ D. Clark, op. cit., 1983.

59/ peort and Recommendation..., Loan 2472, 1984: 15.

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the substantial margin of returns in favor of general secondary education.The second contribution was to show that high unemployment rates of schoolleavers were caused not by a static pool of surplus graduates but by asurprisingly gradual process of job search which was actually in theinterests of the leavero concerneds the refusal to accept low-salary entry-level jobs yielded higher returns in the longer run.

3.18 The key issue that arose from this research was not simply that itencouraged a siitch from one type of manpower to another, but that itenabled the Bank to modify its earlier stand that manpower development wassynonymous with technical/vocational education and training. As the Bankcommented, with some understatement, "a fresh approach to the vocationalfunctions of general or academic socondary education may be in order."60/Considerable work by the Bank in the early 1980a culminated in a strategyfor general secondary education6l/ and a project to improve the quality andmanagement of general secondary education (Loan 2472). Symptomatic of therevisod attitude towards manpower development was the wording of thisproject's objectives, "to assist the Government to improve the quality ofgeneral secondary education and thereby raise the quality of Indonesia'shuman resources for economic development."62/

3.19 Furthermore, the full acceptance of the economic role of generalsecondary education played an important role in putting Bank lending on atrack parallel to the Government's own educational policies. A subsectorreport 63/ acknowledged the Bank's earlier reluctance to invest in thissector, an absence which had become increasingly conspicuous. It alsoacknowledged that the Government had in the past ten years been carryingout a large-scale program of primary school expansion as part of a phasedexpansion of the education sector as a whole. With universal access tograde one of primary school virtually achieved, the Government was seekingto expand the development of secondary education, and the Bank now embarkedon a lending policy that dovetailed with, and directly supported, theGovernment's own objectives, with the Secondary Education and ManagementTraining Project (Loan 2472) the most immediate result of the newpolicy.64/

60/ Ibid.

61/ General Secondary Education .... op. cit., 1984.

62/ Renort and Recomendation .... Loan 2472, 1984: 15.

631 The World Bank, Report No. 4954-IND, General Secondary Education in Indonesia: Issuesand Progrms for Action, July 1987.

64/ The Region points again to its position that GOI and the Bank pursued a division oflabor (see also footnote 1, p. viii). However, this argument is not convincing: inits sub-sector report "General Secondary Education in Indonesla: Issues and Programfor Action* (Washington 1984) one finds the statement that " ... the Bank and othermajor donors have been reluctant to make major and more direct investments insecondary schools themselves. The reluctance ... is probably due to the popularjudgment that general secondary schools produce an oversupply of school leavers whoare unemployed, unproductive, and potentially a social and political liability.However, fresh data have become available recently to challenge this judgment* (para.1.07). The authors of the report then present in a later chapter (pp. 39-42) detailedrate-of-return firures to support their statement that general secon -ry education isan economically worthwhile proposition (as a matter of fact, supez: to vocationalsecondary education).

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3.20 A second major issue that arise, from Bank experience in themanpower area in Indonesia since the early 1980. is the perceptible shiftof focus from school-based manpower development to occupation-basedtraining. During the 1970., the prevailing aesumption was that specificjob-related skills could (and should) be taught in school, particularly atthe upper secondary level. By the early 1980. the economic value ofgeneral secondary schooling had been recognized. The final link in thischain of thinking about manpower development was to focus upon the provi-sion of specific occupational skills for those already in the work force.This particular focus has been the central feature of four recent projects:

Public Works Manpower Development (Loan 2258);Science and Technology Training (Loan 2599);

* Accountancy Development (Loan 2940); and* Public Works Institutional Development and Training

(Loan 3112).

3.21 The main features of these projects were described above insection 7 of Part II. Some of these projects are complex, with multi-faceted components, but cutting across them all is a view of manpowerdevelopment in which specific occupational skills are provided not in theformal education system but as part of job-related training in the workforce. This approach is entirely consistent with the increasing evidencefrom around the world that schools are places for learning general, widelyapplicable skills, and that specific vocational skills are best provided on(or in close contact with) the job. As the Bank itself has reported insummarizing its experience in Africa, the formal school system provides "aninhospitable venue for specific vocational training."65/

3.22 The third issue that emerges from recent experience, and indeedstems directly from the shift towards job-related manpower development, isthat of appropriate information systems. It is reasonable to suppose that10-20 years ago the requirements for specific occupational training of thetype provided in recent projects would have been estimated by a long-termmanpower forecast. Manpower forecasts have continued to play a role in theBank's manpower projects, as in the Accountancy and the Science a-LdTechnology projects. But such forecasts are no longer the foundation ofproject identification and appraisal.

3.23 In the early 1980s Clark's work on unemployment, on stocks andflows of manpower, and on earnings differentials provided clear evidence ofthe value of labor market analysis and of attempts to improve labor marketinformation. His findings on rates of return and unemployment could hardlyhave been more at variance with the conclusions and attitudes derived fromthe manpower forecasts of the 1970s. Additionally, it has been realizedthat manpower forecasting, with its inevitably high level of occupationalaggregation and concern with meeting projected skill deficits throughexpanded training within the formal education system, can not provide theappropriate basis of information for the shift to specific skill trainingon the job.

65/ Education iX Sub-Saharan Africa. op. cit., 1984.

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3.24 The consequence is that it has been widely accepted that anexpanded system of labor market information is a concomitant part of anyscheme to upgrade manpower through the provision of on-the-job training.As was noted in Section 7 of Part II this is precisely the purpose of theManpower Development and Training Project (Loan 2705). The key feature ofthis project is that it was not only intended to have a direct influence onskills training through the establishment of national and regional voca-tional training systems, but was designed to strengthen labor market andmanpower planning information systems. These would provide ongoing labormarket and training studies, and hence would help to ensure that manpowerdevelopment and skills training was properly geared to costs and outcomesas measured by labor market signals.

3.25 It was noted earlier that the Bank's response to newly availablelabor market signals, as expressed in the very healthy social rate ofreturn to general secondary education, helped to realign Bank lendingpolicies which resulted in greater congruience of GOI and Bank priorities.In retrospect Bank support for general secondary schooling can be seen tohave been fully justified, since the social rate of return to that levelremains close to 20 percent.66/

3.26 It would be ironic if in spite of the lessons learned about theimportance of labor market signals (lessons now incorporated in currentmanpower-oriented lending) a divergence of GOI and Bank views abouteducational priorities were to arise again. Under the current plan(Repelita V, 1989/90-1993/94) there will be a shift in the allocation ofthe Government development budget for education away from the lower levelsof schooling towards upper secondary and tertiary education. In part thisreallocation between levels reflects no more than the simple arithmeticthat the primary age group will grow only slowly over the next few yearsand that most children in the age group now attend primary school.However, the major explanation for the budgetary shift is the Government'slong-term objective of continued and phased expansion of educationalaccess; the budgetary shifts and the ambitious targets for tertiaryenrollment under Repelita V "make it clear that the Indonesian Governmentis determined to maintain the momentum of educational expansion which wasinitiated during Repelita II with the rapid expansion of primary education[but) now the focus will be on expanding access to the upper levels of theeducation system."67/

3.27 Whatever the strong underlying social commitment, the problem isthat there is no convincing evidence that further expansion of higher

66/ W. M. McMahon and Boedino, mUniversal Basic Education: An Overall Strategy ofInvestment Priorities for Economlc Growth," mimeo, cited in World Bank, BasicEducation Study (Report No. 7841-IND, 1989), Annex. Table 6.

The Region emphasizes that it also considered labor market signals in its first twoeducation projects (Technical Training Centers and Agricultural Training). However,the argument In this paragraph is concerned with general secondary education.

67/ A. Booth, fRepelita V and Indonesia's medium-term economic strategy," Bulletin ofIndonesian Economic Studies. August 1989: 26-27.

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education is economically justified. There is growing evidence68 / thatgraduates from upper levels of the system already face considerabledifficulty in finding the kinds of jobs which they and their parents mighthave expected. Emphasizing education to the public as a means ofindividual upward mobility ultimately risks disillusionment "when alreadyin Indonesia today one hears young people say that their work is 'tidaksesuai dengan pendidikan' (not in accord with my education)."69/Disparities in earnings by level of education are diminishing: whereas in1976 a tertiary graduate earned over four times the national average, thishad fallen by 1986 to 2.4 times the national average.70 / Data for 1986,shown in Table 8, confirm that social returns to tertiary education are nowdecidedly modest.

3.28 While differences in data and method mean that direct comparisonswith other studies need to be made cautiously, it is worth pointing outthat the returns to university education listed in Table 8 are identical tothose calculated for the IEES Education and Human Resources SectorReview.71 1 These returns of 9-10 percent on university education representa significant reduction from the return of 14.8 percent calculated byPsacharopoulos for 1978.72/

Table 8: Indonesia - Estimated Social Ratos of Return to Education, 1986

LeveL and type of education Social Rate of ReturnMales Females

Some primary 7 24Completed primary 10 14Lower secondary general 19 25Lower secondary vocational 6 24Upper secondary general 19 22Upper secondary vocational 16 14University 9 10

................................ ... .... ..... ......... ..... ......... ...

Source: walter M. McNahon and Boedino, "Universal Basic Education: An OverallStrategy of Investment Priorities for Economic Growth," unpublishedmanuscript 1988, cited in World Bank Basic Education Study (ReportNo. 7841-IND, 1989) p. 111.

68/ N. Keyfitz, *putting trained labour power to *ork: the dilemma of education andemployment." Bulletin of Indonesian Economic Studies (December 1989).

69/ ibid.

701 Booth, op. cit., 1989: 27.

71/ iEES, Education and Human Resources Sector Review. 1986: 2-224.

72i CG. Peacharopoulos, Indonesia: Manpower Considerations in the Enerty Sector andElsewhere (World Bank, mimeo, 1981).

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3.29 A clear feature of recent Bank projects for university educationis that thoy focus upon the improvement of very poor facilities, onassistance for staff development ao as to raise the quality of output, andon improvements in planning and management, internal efficiescy, and inproject implementation. These are highly desirable objectives, and do notin themselves imply the sort of strong quantitative expansion which wouldbe quite inconsistent with the lesson learned about labour market signals,as expressed in the most recent rate of return to university education.

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3.30 The possibility has to be faced, however, that the shift to asectoral approach as exemplified by Loan 2944, as distinct from the earlierapproach of funding smaller more targeted programs, may conceivably under-mine the Bank's desire to emphasize qualitative rather than quantitativeexpansion at the tertiary level. The advantage of the sectoral approach isthat it places greater responsibility for policy development on theGovernment, while at the same time allowing a constructive Bank input intothe policy process. Given the tremendous social pressure to expand highereducation, a pressure which conforms well to Government objectives forcontinued educational expansion, it is a legitimate question whether theBank will be able to maintain an adequate degree of monitoring ofexpenditures and of achievement of project objectives so that the lessonsfrom past projects do not go to waste.

3.31 Conclusions. The Bank's role in manpower development in Indonesiafalls so naturally into two distinct periods that this breakdown has beenmaintained in the organization of the review in this section. In tryingnow to pull together the threads of the analysis, one can summarize themajor issues as a set of contrasts between the Bank's position in the twoperiods:

(i) From manpower forecasting in the 1970s to the provision oflabour market signals and information systems in the 1980s;

(ii) From schools-based vocational education to specific occupa-tional training on the job;

(iii) From a preoccupation with vocational schooling to an under-standing of the economic value of general education; and

(iv) From some reservation about the direction of In4onesia's owneducational policies to projects which directly support thosepolicies 74/

73/ The Region notes that rates of return "cannot be the only criterion." The authors ofthe Report fully agree (see para. 3.27 for additional considerations besides rates ofreturn and the end of para. 4.30 for a more general statement).

741 The Region draws again attention to its position quoted in Footnote 1, page viii.However, a comparison of relevant appraisal and sector/subsector reports during thesetwo decades clearly reveals the shifts in emphasis outlined in this paragraph.

Another objection by the Region is that "All our [i.e., the Bank's) projects wereacoepted by GOl," which would not have been the case if they had not been consistentwith its priorities. The argument in para. 3.31 (iv), however, makes the oppositepoint, i.e., the Bank's doubts about the direction of the country's educationalpolicies (see also footnote 64).

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2. Efficacy of Training Components

3.32 Analyzing the role of the Bank in determining the scope and extentof training and foreign specialist components of education projects inIndonesia ls made difficult by the incompleteness of data and documentationon this aspect of project history. The practice of frequent changes of topproject staff, and the changing roles of the Resident Staff and the sectoror country officers within the Bank, have meant that neither files norindividuals have been able to give a clear picture of negotiation. over theproportion of loans to be used for fellowships and other technical assis-tance. There is a clear perception, however, that the Government ha.favored a greater role for fellowships rather than foreign experts ingeneral. The Bank's views on this balance are le clear. Whereas theproportions of a loan to be used for physical inputs such as buildings andequipment have seemed to be precisely determined, the amount to be devotedto technical assistance has often appeared to be a residual, althoughexceptions such as the Science and Technology Project and the HigherEducation Sector Loan should be noted. The issue of the appropriateness ofre-training those already in the system as against pre-training newentrants to the system is not addressed in the Bank loan documents.

3.33 Training targets are expressed in the staff appraisal reports innumbers of man-months of Masters and PhD degrees, and numbers of man-monthsfor short-term training, by field of study and institution. Once thegeneral proportions to be devoted to fellowships and training and toforeign experts have been decided, the identification of target insti-tutions and individuals for training, and of foreign experts and overseasagencies to assist in the administration of both experts and fellows, havebeen the responsibility of the Government, although this role has fre-quently been delegated to an executing agency. It appears that the Bankhas exerted no influence whatsoever on the selection of individualparticipants.

3.34 Selection criteria for fellows have been generally set byGovernment in agreement with the Bank. The formal criteria used, however,have been so broad that they have served merely to delimit the extent ofthe pool, rather than to identify individual participants. Actual selec-tion of participants has then been either through self-selection, where acandidate has sought admission to a university overseas on his or her owninitiative and then applied to a relevant project for funding, or throughthe appointment of a member of staff by his or her head of department,professor, dean, or head of unit (a common method of selection, partic-ularly within the civil service, but also found within colleges anduniversities). In such cases, the criteria used by the professor or headof unit are unclear. Where groups were selected for training, from withinthe administration, selection was usually carried out by the head of theunit. The fairly common practice of funding a single participant under twoor more projects shovs a desirable flexibility but obscures selection andnumbers trained under any single project. For instance, the frequentpractice of upgrading from Masters to PhD not only affects the budget, italso calls into question the initLal assessment by the faculty or unit ofits needs.

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3.35 Preparation for overseas study such as language testing andtraining has only occasionally been provided for under project expenditure.The Government has become increasingly aware of the importance of earlyidentification of participants so that adequate language training can beprovided. The lack of language training has been the most importantobstacle to meeting numerical targets, as well as to eventual success instudy abroad.

3.36 Placement in overseas institutions, like selection, may be throughself-placement, as was common in the First University Development Projectwhere a potential candidate sought out and applied to a university of hisor her choice. Alternatively, placement may be effected by an overseasagency acting on behalf of the project, or through the project administra-tion itself. Project experience to date has shown that self-placement isleast likely to be effective since the relevant information and hence therange of choice of suitable recipient institutions is generally poor at thefaculty, department or unit level, and choice tends to be determined bynon-academic considerations. Placement through a contracted overseasagency with access to more than the home institution is more likely to takeinto account the competence and background of the applicant, the particularfacilities and strengths of the overseas university, their requirements,and an up to date estimate of costs involved.

3.37 Since the end of 1984, the Government has insisted on a greateremphasis on self-management in the administration of fellowships, short-term training and employment of consultants. Limited delegated functionsmay still be contracted out to overseas agencies for placement, monitoring,and for identification of potential consultants. The Bank has played animportant participatory role in the selection of overseas agencies, but hasmaintained little contact with them after selection.

3.38 Where programs involved groups of participants, planning appearsto have been well considered. Staff of the overseas institution frequentlyhave been involved in joint planning for the program with the projectofficials. However, there have been and are still major problems of match-ing programs where the eventual function of the returnees is not veryclear. The data suggest, and officials confirm, that such programs are toooften used as a reward for service rather than preparation for a task. TheGovernment has imposed a lower limit of three months for such short-termtraining in an attempt to ensure greater relevance and impact. Thisregulation was clearly directed towards administrative training, but hashad deleterious effects on other projects. For example, it has had anegative impact on programs for conference and workshop attendance, andefforts are now being made to deal with this problem by allowing forexceptions to the limit.

3.39 It appears that foreign experts have had only limited contact withparticipants in training programs. Their TORs have tended to be verygeneral and are frequently revised and made more relevant only after theirarrival in Indonesia. There appears to have been a lack of consultation atthe planning stage between the central PIU and local PIUs or userinstitutions over the role of such specialists, with TORs being set by the

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CPIU in general terms, such as subject and number of months only. WhileTORs have often specified that consultants should assist in identifyingstaff for overseas study, the timing of their services and of fellowshipshas frequently made this impossible.

3.40 Consultant targets were usually met in terms of man-months, butfrequently exceeded in terms of numbers of persons. Consultants with therequired qualifications were generally unavailable for long terms and weresubstituted by larger numbers for shorter terms. In early projects, con-sultants were used as substitute teachers for staff on overseas study; inlater projects this seldom occurred. Difficulties still exist in the useof foreign consultants; in selection criteria and procedures for appoint-ment; in timing their arrival with other activities of the project, partic-ularly equipment installation; in the lack of incentives for counterparts;in language problems where the consultant must interact with non-Englishspeaking staff; in changes in project activities and redundancy; in esca-lating costs of overseas consultants not anticipated in the project budget;and in coordination of work of similar consultants employed by other donorsin the same field.

3.41 Re-entry problems faced by participants after training have notbeen considered in the project plans or supervision documents. Re-entry isnot a simple process. Problems arise for a variety of reasons: specificgoals for fellows on return are not made clear in project documents or infellows' study contracts; fellows' study contracts specify that they mustreturn to their previous job, but in fact teaching posts may not be leftvacant for more than six months, so that the fellow may then return to findhis or her previous post filled; where a university/unit is attempting todevelop a new faculty/function, fellows training for this may have diffi-culty in placement because of inadequate backgrounds, axid in finding a poston return if the new unit has not yet been formalized; it normally takesseveral months for salary and other allowances to become payable afterreturn; returnees, especially in the sciences, return to faculties wherelibraries, laboratories and recurrent budgets are insufficient to continuetheir work; and because of lack of clarity of their goals, they rarely keepup any contact with the overseas university.

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BOX 2:

Implementation Capacity In Delivery of Overseas TrainingPrmgrams: the Case of the Science and Technoloe, Training Prolect

The Science and Technology Training Project (Loan 2599), which becameeffective in 1985 and is scheduled7for completion in 1992, provides for overseastraining for approximately 1,300 employees of six non-departmental research andtechnology organizations (LPND). About 200 staff will be trained to Doctoral level,about 600 to Masters level, and the remainder to first-degree or training certificate orother non-degree levels.

Implementation is handled by the Overseas Fellowship ProgramImplementation Unit (OFPIU) established under the project. The OFPIU isresponsible to a Steering Committee comprising representatives of the six LPND. Itemploys about 50-60 full-time staff, and a similar number of employees i distnbutedamongst the LPND to take core of overseas fellowship activities within each LPND.

The OFPIU is comprised of six main sections, dealing with

. Recruitment, Selection and Training;* Student Relations;. Monitoring and Evaluation;. Finance;. Public Relations; and. Re-entry;

A rigorous selection procedure for fellows is in place, with provision ofextensive pre-departure programs in language training and basic science training.The Student Relations Section maintains close contact with fellows from pre-departure till a year after re-entry. Monitoring and evaluation covers not just studentperformance but the enecution of the entire program. The re-entry program aims toensure that benefits to both the individual and the LPND are maximized on thefellow's return to Indonesia.

This project provides an exemplary case study of the institutional requirementsto support an extensive overseas training program. The OFPIU is a successfulenterprise for several reasons. Firstly, adequate resources have been devoted to thetask of building a sustainable institutional infrastructure. Secondly, good local staffhave been su plemented by skilled consultants to design and operate managementsystems. Third[fy, attention has been paid to the wider application of instruments andprocedures developed under this project, such that selection tests, monitoring andevaluation instruments, counseling methods and so on can be used in other projectsand other fields within Indonesia.

Further reading:

- Wardiman Djojonegoro, "Overseas Training: Human Resource Development forScience and Technology" (Paper given at NAFSA Conference, Washington D.C,1988); and

- Overseas Fellowship Program in Science and Technology, Building a NationThrough Human Resource Development, (Jakarta, 1988).

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3.42 The expected impact of the followship component of projects inonly implicit in the loan documents. The return of a number of parti-cipants with higher degrees, and the provision of equipment in certainfaculties has been expected to lead automatically to improvements in teach-ing as wvll as to increased output. While some projects have producedwithin-project evaluation reports, neither the GOI nor the Bank has untilnow conducted any poet-completion evaluation of changes in teachingpractices, improvements in internal efficiency or in quality of output ofgraduatos. While improvements in buildings and in equipment can easily beverified at end-of-project, changes in teaching practice may take farlonger and be more dependent upon institutional conditions rather than uponindividual competence. Changes in administrative procedures arising out ofproject training activities may be even more difficult to identify thanteaching practices. So far, it appears t}at these issues have been left tothe borrower/client/user and have not received attention from the Bank.With increasing concern within the Bank over the value of continued fellow-ships provisions, such studies should take high priority.

3.43 There is little doubt that overseas training benefits theindividual irvolved. Whether it benefits the faculty or administrativeunit depends to a large extent on whether a critical mass is formed. Datafrom project experience indicate that this criterion has been fulfilled inthe Second University Development Project, and to some extent in thecombined efforts of this project and its forerunner. It is much lessdemonstrable in the Secondary Education and Management Project, or in theSecond Teacher Training Project, except in one or two teacher trainingcolleges. In the First University Development Project, fellowships werediverted from target faculties to other faculties because of the need tospread the benefits of the project to faculties that were bereft ofdomestic funding. In the Second Teacher Training Project, a major changefrom secondary-level to tertiary-level training has resulted in thediversion of returnees to unknown destinations in certain elements of theproject. In the Secondary Education and Management Project, a criticalmass could not be achieved because considerations of regional developmentand equity provided a final effect of very small numbers over a very largebase.

3.44 In future, even where critical mass is not achieved, training ofkey persons may have a very considerable effect if those persons have beensoundly chosen and have a reasonable period of working life ahead of them,particularly when they are working together with those trained under otherprojects and financed by other donors. A careful assessment of the impactof fellows trained under Bank project finance should be a high Bankpriority in the near future. No amount of building and equipment canimprove the educational system unless there are also changes in teachingpractices and administrative support.

3.45 A more detailed analysis of the efficacy of the trainingcomponents of four Bank pro1ects chosen as case studies is contained inAnnex IC. These projects are the First and Second University DevelopmentProjecte. ioans 1904 and 2547, respectively), the Second Teacher Training

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Project (Loan 2101) and the Secondary Education and Management Project(Loan 2472).

3. Institution Building

3.46 In the broadest sense of the word, every education projectattempts institution building insofar as it aims to bring about changes inthe number, size or modus ogerandi of education and training institutions.It is not this broad, almost tautological meaning that will be used in thissection, but a more difforentiated and narrower one distinguished by fourdirections:

(i) Innovation: adding now sagments to the education system orintroducing new elements into the education process in anexisting part of the system;

(ii) Growth: making substantial additions to the capacity of theeducation system or parts thereof, without any of the changesmentioned in (i);

(iii) Improvement: changing the education process with the aim ofimproving the size or quality of the output or lowering thecost of the education process; and

(iv) Support: modifying the administrative, educational, finan-cial or legal framework for the education system or any ofits parts to strengthen the operation of the system.

3.47 It will be apparent that every education project in the portfolioof Bank operations in Indonesia has been pursuing at least one of the abovecourses, and sometlme-s all four. The following presentation attempts togauge the relative emphasis given to each component, focussing on completedprojects.

3.48 For ease of p entation, achievements of the first twelve educa-tion projects (with the exception of the tenth--Second Teacher TrainingProject, Loan 2101) are summarized in matrix form in Table 9. Theindividual projects and the four directions of institution building occupythe two axes and +++, ++ and + symbolize a dominant, major or minor role ofa given characteristic in the project design. Brackets indicates caseswhere,

* the relevant project component was deleted or severelycurtailed;

* the institution building effort was judged only partiallvsuccessful; or

* the available information did not yet permit a firmconclusion.

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3.49 While it would not be difficult to dispute the choice of weightsgiven to each of the four aspects for a given project, a certain patternseems to emerge from the portfolio. The earliest projects focussed onimprovements of existing segments of the education system, with expansionsometimes being a by-product (i.e., through an improvement of the internalefficiency), sometimes the result of direct capacity expansion. Until theFirst Polytechnic Project (Credit 869 of FY79), innovation and supportplayed comparatively minor roles, with two important exceptions. TheTechnical Training Centers (centralized workshops to be shared by a clusterof secondary technical schools financed under Credit 219 and Loan 1237)were a notable innovation, albeit of limited replicability (given thescarcity of urban areas with the requisite cluster of technical schools).Credit 288 assisted in the establishment of AAETE, the apex agency for allagricultural education, training and extension, a major contribution to thesupporting framework (see also Box 5).

3.50 In the other early projects the support function was usuallylimited to the creation or strengthening of project implementation units(PIUs)--by no means an unimportant element of institution building as itexpedited subsequent development through follow-up projects.

3.51 Later projects tend to incorporate side by side significantinnovation, improvement and support elements, while growth is again ofteninduced (i.e., the result of higher process efficiency) rather thanimmediate. The greater role given to the support function is perhaps areflection of heightened awareness by the Government and the Bank of theneed to achieve greater economies in resource use. The simultaneous shiftaway from investments in physical assets towards software components, inparticular staff develcpment (which is not reflected in the Table below),points in the same direction.

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Table 9: Indonesia - Inatitution Buildina In World Bank-AslsitodEducation Pgolects

Projecti°- LILC NoE ow f Project Invtion Growth lorovement Sunort

1 219 First Education (Sec. Tech.) ++ - 0+)

if 288 Second Education CAgric. Tng.) - .. ++ .

III 387 Third Educatfon (First Textbk) - - 44+ 4

IV 1237 Fourth Education (Nultipurpose)

(a) Nin. of Education + + 4

(b) Min. of Manpower C-) .+

(c)LAN -LW+ -

V 1433 Teacher Training - 4-

VIl 869 (First) Polytechnic

Ca) Min. of Education .. ++ .+

cb) Min. of Finance - (0) (++) +

Vill 1692 Second Agriculture Training -++ . 4 4

IX 1904 University Development - (+)

xi 2102 Second Textbook ++ 4

XII 2258 Pui.lc Uorks Manpower

Development . ++

3.52 By and large the J.nstitution building achievements for this groupof early projects is impressive in its extent and diversity. The few caseswhere outcomes have been below expectations have been those projects wherestructures have depended on the cooperation of the non-governmental sector(Projects I and VII), a case where cancellation of the relevant componentwas unrelated to its intrinsic merit (Project IVb), an overburdened PIUhaving to imp'ement an unrelated component with which it was not familiar(Project VIIb) and one project where there has been insufficient time forthe effects of improvement to become apparent (Project IX).

3.53 Boxes 3 and 4 present two major examples of innovative institutionbuilding, the creation of the polytechnic system (Credit 869, followed byLoan 2290) and the establishment of the Inter-University Centers (Loan2547). It is interesting to note the change in the approach to sub-sectoral development implicit in these two projects (which are separated byover six years): from a direct investment in a new type of education tothe ostablishment of institutions with a multiplier function aiming ac animprovement of existing segments of the system.

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BOXI3

Institution Buildina

Case 1: The Polvtechnk Prolects (Credit 869 and Loan Z292)

These two projects arose out of an awareness that the country lackedappropriate post-secondary institutions to turn out urgently needed industrialtechnicians. Credit 869 helped establish a network of six polytechnics (four on Java,two on Sumatra, with a total capacity of about 4,300 places) which were to train, inthree-year courses, senior technicians in civil, mechanical, and electrical/electronicsengineering. These institutions were to be supported by a Technician EducationDevelopment Center (later renamed Polytechnic Education Development Center) tocarry out related curriculum, materials and staff development work.

This project was an undeniable success: by the time of audit (end of 1988),data on the first three cohorts of graduates were available which suggested that theywere highly regarded by industry and easily employable.

In the meanwhile, however, the polytechnic system was undergoing rapidexpansion and substantial modification: Loan 2290, approved in June 1983,supported the development of additional facilities (in the fields of chemicalengineering, foundry, aeronautical engineering and commercial options:accounting/secretarial/banking) at the six existing polytechnics and the SwissPolytechnic (a specialized institution which had been established prior to Credit 869).This represented a capacity expansion of about 8,200 places.

In addition, four new polytechnics similar to the first six were to be created (allbut one outside Java), providing a total of 3,450 places in the three 'core" disciplines(civil, mechanical, electrical/electronics engineering), plus chemical engineering andshipbuilding in one polytechnic each.

Finally, seven polytechnics outside Java offering a reduced two-year course inthe core disciplines plus commercial options in three locations had a combinedcapacity of about 3,350.

Thus overall capacity was to increase by almost 15,000 or by a factor of 4.5.This was a radical shortening of the system's development period, the original intenthaving been to undertake a review of the first project in 1994 to obtain a feedback foran eventual follow-up operation.

Loan 2290 closed at the end of 1990. While a PCR is not yet available, thereare indications that the rapid expansion, diversification and differentiation (in two-and three-year programs) of the polytechnics may have had its drawbacks both interms of intemal system developr..ent and of the absorption into the labor market ofits graduates. On balance. i period of consolidation seems now to be needed.

Sources: SARs for First and Second Polytechnic I and II Projects (ReporL. 2125-IND and 4308-IND); PPARs for First Polytechnic Project (OED ReportNo. 7847).

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BOX 4:

Institution Bullding

Case 2 - The Inter-University Centers (Loan 2547)

Like its predecessor, the Second University Development Project, approved inJune 1985, aimed at strengthening university education m selected institutions andfields. However, it went beyond the former's scope in explicitly seeking to develop anational capacity to train university teachers and researchers.

An important instrument in achieving this objective were to be 16 Inter-University Centers (IUCs) aocated at five universities and covering a total of tenfields. An IUC consisted of a complex of equipment, materials and facilities, staffedby expertsin the relevant disciplines. Its aims were to assist in research and materialsdevefopinent, to offer degree and non-degree training programs, and to facilitateprofessional interaction among universities.

Project support was to include overseas training of IUC staff (who would intum train m-country the next generation of university teachers and researchers), anda variety of in-service training activities in five key areas (curriculum development,instructional methods, research methodology and data processing, Planning andmanagement, and professional subject matter development). The ICs would alsoparticipate in the development and production of instructional materials andgraduate-level research for students from all universities pursuing the specific field ofstudy represented by the JUC. Finally, the IUCs were to perform specializedtechnical services in support of teaching and research elsewhere.

Loan 2547 was expected to close at the end of 1991. Because of its potentialmultiplier effect and its role as an agent of change, the IUC experience would merit acareful and detailed analysis at the time of project completion.

Source: SAR for Second University Development Project (Report 5354-IND).

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3.54 In a more general sense the question of institution buildingrevolves around the issue of the sustainability of investment projects indeveloping countries. A number of studies in a variety of countries overthe last few years has affirmed the view that *ustainability of developmentprojects depends importantly on the relevance, flexibility and strength ofthe institutional structures established under projects .L5/ In all of thesectors studied, a continuing policy commitment by the borrower, and awillingness to support project institutions with adequate recurrent fundingin the project's post-completion phase, have been shown to be crucialdeterminants of project sustainability. In the specific context ofeducation projects, a recent studyL61 has demonstrated and elaborated thesefindings ln regard to the education sector. This study points out that "asa process of improving the capacity of institutions to use effectivelyscarce human and financial resources, institutional development dependsprimarily on human resource development. This is particularly relevant inthe context of education, given that the accumulation of human capital isindeed a long-term process, and that continued educational developmenttypically requires strategies extending beyond the time-spar of anyindividual investment project." (See par&. 8.11, p. 45). As part of thesame study, the sustainability performance of the first two Indonesianeducation projects was evaluated. These results are outlined in Box 5.

75/ For example, World Bank, Sustainabilitv of Pro1ects: Review of Experience in theFertilizer Subsector, (OED Report No. 6071, 1986); T. J. Davis and I.A. Schirmer(eds), Sustainabilitv Issues in Aaricultural Development. (Washington D.C. World Bank,1987); Sustainabilitv of Development Finance Institutions in an EvolutionaryEnvironment (OED Report No. 7658, 1989).

71/ World Bank, The Suatainabilivt of Investment Proiects in Education. (Report No. 9225,199nl

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BOXS:

Sustalnabllltv of indonesia First and Second Education Plrojects

In a recent World Bank study, sustainability performance of several completededucation investment projects was evaluated using a model that measured five sets ofsustainability indicators (input indicators, output indicators, efficiency indicators,qualitative indicators and spin-off indicators) and hypothesized a variety of factorsaffecting sustainability, arising both internally and extemally to the project. Amongstthe case study projects analyzed, two were in Indonesia, First Education Project(Credit 219) and Second Education Project (Credit 288). The results are summanzedas follows:

Indonesia

Evaluation of sustainability indicators for this project showed that the majorinputs established by this project have been unevenly maintained, although outputshave been satisfactory, with TTC enrollments exceeding capacity and the number ofgraduates matching targets. Both internal efficiency and qualitative characteristicshave been reasonably maintained, and spin-off effects have been substantial. Whilstpolicy suppot has been consistent, recurrent expenditures declined in the mid-1980s,resulting in neglect of facilities and equipment. Overall, Indonesia I was found in thisstudy to have achieved a moderate level of sustainability.

Indonesia II

Sustainability indicators for this project showed that project inputs, outputs,efriciency and quality have been satisfactorily maintained, with substantial spin-offeffects in follow-up projects. The most important achievement was seen to be theinstitutionalization of the AAETE under the MOA. Strong policy support has beenmatched by a rising trend in recurrent expenditures. Indonesia II was judged to haveachieved a high level of sustainability, due in no small part to the strength of the insti-tution building aspects of the project.

Source World Bank, Impact Evaluation Report Indonesia Sustainabilitv of the First and Second EducationProit (OED Report No. 7767,1989).

3.55 In summary, despite the Bank's stress on the importance ofdeveloping the institutional base for management and administration ofeducational programs over the period under review, lasting achievements(measured in terms of the establishment of institutions of lastingstrength) has been mixed. Successful efforts in a number of areas, asdiscussead above, have been partially offset by such problems as difficul-ties in maintaining community support (seg., the committees intended tosupport the vocational effort in the First Education Project), problemsestablishing administrative units that duplicate or parallel existingstructurea, and the failure of some institutions to do as what they wereoriginally intendod to do (as happened in building up some areas of the

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administration). It has to be conceded that the scale of the problemsfaced in trying to manage Indonesian educational institutions and theadministrative structures that support them is huge. The conclusion isinescapable, however, that efforts toward institution building in existingprojects, though commendable in intent, have not yet gone far enough and itremains an ongoing task.

4. Policy DLal oue

3.56 In the past ten years or so, the Bank has increasingly used thevehicle of the policy dialogue to exchange views with a member Governmenton the present situation of a sector or the entire economy. Such diecus-sions have frequently covered key policy issues and the broad outlines offuture Government-Bank cooperation, including the scope and thrust offuture lending operations. The term enjoy. wide popularity and is oftenused in a rather undisecriminating way, including work of a more specificnature such as the resolution of single issues affecting a givenproject.77/ In a narrower and more appropriate interpretation, the conceptof policy dialogue would have the following characteristics: it wouldrequire Government and Bank representation at a fairly high level ofresponsibility; it would take place at reasonably regular intervals, thusintroducing an element of continuity; and it would make use of certainbenchmark events such as the preparation of a new five-year plan, or, morefrequently, the annual budget exercise, Consultative Group meetings, etc.,as anchoring points for the dialogue.

3.57 A systematic review of macro-economic and sectoral issues is ofcourse not a new element in Bank-Borrower relations. In the specific caseof Indonesia's education sector, comprehensive policy discussions haveformed an important part of the Bank's field work since the early years ofBank lending to the country. The timing of the Education Sector Surveymission in late 1973, for instance, made it possible to engage in verydetailed discussions with several key officials in the sector on the educa-tion and manpower aspects of Repelita II (then under preparation), a factwhich is still remembered ard appreciated by some of those officials.These discussions encompassed the entire range of education activities,priorities and options, and even included a tentative assessment of theimplications of the radically changing resource outlook (as a consequenceof the oil price increases) which was unfolding at that moment. Thedialogue developed and became more specific (i.e., focussing on sub-sectorsrather than on the entire field of education and training) over the years,being usually linked to specific pieces of sector work, but on occasionalso to the preparation phase of individual projects or to the review ofupstream studies undertaken as part of an ongoing project.

3.58 Despite this favorable picture, there were shortcomings in thecommunication process between the GOI and the Bank in the early years of

77/ it vas interesting to note that Borrower officials interviewed in the course of thi6study frequently equated supervision missions with the policy dialogue. This isunderstandable since, in its narrower sense, the *dialogue" cannot involve allrelevant administrative structures within a ministry or other agency, and supervisionmissions are often the only occasion for individual PlUs to exchange views on topicstranscending specific implementation issues.

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Bank involvement with Indonesian education, as has been noted in earliersections.78/ The beginnings of a move toward improving the dialoguebetween the GOI and the Bank can be traced to the early 1980s, when theBank sought to open new channels of communication for the purposes ofdeveioping sectoral policy and improving the overview of projectimplementation. These discussions were based on, and made good use of, thesector survey work of the mid 1970s. This has led in due course to a newphase in the policy dialogue process where better communications can beexpected to, lead to a better dovetailing of GOI and Bank activities in thesector.

3.59 Four elements distinguish the present policy dialogue from itsforerunners: its more regular format, the involvement of senior officerson both sides, a shared conviction that education (or more broadly speak-ing, human resources development) is a key sector in Indonesia's economicand social development, and a heightened concern over the longer-termviability of the education system in general and the assets created underBank-assisted projects in particular. This reorientation has been facili-tated by the new organizational structure of the Bank which unites theformer program and project functions for a given country in one department,and the availability of a much larger--and ever increasing--body ofpertinent data (although it shlould be noted that this growth in the volumeof data has not always been accompanied by commensurate improvements intheir quality). The scope, direction and content of the dialogue isreflected in the projects which have passed from the preparation to theimplementation stage over the last few years and whose unifying character-istic is an unusual diversity. These projects have involved many newagencies beside the traditional recipient, the Department of Education andCulture. In the case of the latter, a number of new services and functionswhich are becoming increasingly important in the development and operationof an extremely large and diverse system are receiving continuous support.

3.60 It should follow from the foregoing that the relationship betweenthe policy dialogue and the regular project, sector and generrAl economicwork is one of complementarity and mutual reinforcement, not of substitu-tion, the former providing general guidance and the latter, feedback anddata for subsequent review and decision-making. Essential elements of bothprocesses are a measure of personnel continuity at the various levels ofparticipation on both sides, and adequate documentation of the process tocontribute to a better understanding on all sides as well as to institu-tional, as distinct from individual, memory.

3.61 An overall assessment of the policy dialogue process as exempli-fied in the education sector in Indonesia suggests success at thesubsectoral level in improving the exchange of ideas and informationbetween the GOI and the Bank and in leading to more coherent subsectoraldevelopment, especially in higher education. Sectorwide, however, the

78/ The Region disagrees with this assessment and goes on to note that the period of theearly 1980. ... was the lowest phase of our ti.e.., the Bank'al dialogue." This standsin odd contrast to the fact that almost half of the projects reviewed in this report(nine, to be precise) were appraised/approved between M8 and FY85 (i.e., betweenJuly 1, 1980 and June 30, 1985).

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improved dialogue has had to cope with the enormous size and diversity ofthe system, as well as with administrative compartmentalization so thatmodest achievements in this area should not come as a surprise. Thesefeatures of the education system also tend to impede a proper judgement ofoverall priorities in educational development. The Bank has a built-intechnical advantage in the discussion process because of the range ofskills, breadth of approach and diverse international experience of Bankstaff and consultants. However, this does put the onus on the Bank to "getit right." The chances for this happening are certainly better with aregular policy dialogue, accompanied by careful and explicit documentationto facilitate evaluation and preserve institutional memory.79 /

5. Sector Lendina

3.62 In the discussion of the higher education subsector in Part IIabove, it was noted that the Bank's lending strategy in the post-secondaryarea has moved recently towards sector lending (more precisely, subsectorlending), rather than provision of specifically targeted project loans.This development is symptomatic of a wider shift in Bank lending in anumber of areas, and warrants further consideration.

3.63 The Indonesian education case illustrates the way in which asubsector-based approach to lending must be built on a foundation of openand productive dialogue between Borrower and Bank. Indeed, in theIndonesian situation it can be said that the establishment of an effectivepolicy dialogue process was a necessary prerequisite to the emergence of aviable sector lending strategy. This dialogue, in turn, had to be based onsound sectoral work, as was undertaken for Indonesian education throughoutthe period since the mid-1970s.

3.64 The appearance of project implementation difficulties in the early1980s can be seen to have inhibited the development of subsector-widelending strategies. In the higher education subsector, these problems wereaddressed through moves such as the appointment of full-time projectsupervisors/managers, and the establishment of subsector-wide monitoringand procurement facilities. Such measures helped to improve overallimplementation performance and supported the expanded Bank role in educa-tion during this period. A stronger implementation performance was thusimportant in strengthening the view that sector lending could go ahead andcould be successful.

3.65 The sectoral approach to Bank lending in Indonesian education hasa lot of appeal, since achievement the GOI's basic objectives of efficiencyand equity are seen to depend increasingly on sector and subsectorpackages, with broad-ranging attention to the development of the institu-tional base. It has the advantage of providing greeter scope for theGovernment to channel investment funds to areas of greatest marginal bene-fit across the subsector without the lengthy delays that might arise if aseries of specific project cycles had to be followed through. In addition,

79/ The Region wishes to go on record that there was already a "satisfactory dialogue' inthe 1970s. The report does not deny this (see para. 3.57), specific shortcomings ofthe dialogue notwithstanding. The authors merely state that during the decade of the1980e the dialogue evolved beyond its earlier, more limited, scope (see para. 3.59).

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sector lending provides the Government with a greater degree of budgetarycertainty and stability for its aectoral planning and decision-making.Furthermore, from the Bank's viewpoint, sector lending is consistent withits comparative advantage in provision of policy analysis. In the highereducation subsector, the sectoral lending approach adopted by the Bank hasindeed provided a degree of budgetary flexibility to DGHE. It has alsoplaced a greater responsibility for policy development and implementationon the Government, while at the same time allowing for a constructive Bankinput via an effective policy dialogue process.

3.66 On the other hand, a sector lending approach may weaken the Bank'sinput into decisions on the allocation of project funds, to the extent thatproject performance standards may decline or undesired outcomes merge.With the dispersed coverage of a sector loan, it is likely to be moredifficult for the Bank to maintain an adequate degree of supervision,particularly the monitoring of expenditure and achievement of projectobjectives, than is possible under a more conventional project regime.

3.67 Overall, it can be hypothesized on the basis of the experiencewith Indonesian education that at least four requirements have to be metbefore a successful sector lending strategy can be contemplated. Firstly,a solid empirical basis must exist in the form of sound sector work thatcan underpin the policy formation process. Secondly, an effective policydialogue process must be in train, based on a good and open relationshipbetween the Government and the Bank. Thirdly, there must be a consistencyin policy approach between Government and Bank at both sectoral and macro-economic levels. Finally, satisfactory implementation procedures must bein practice, especially in the areas of monitoring and evaluation.

3.68 The experience so far with sector lending in Indonesian educationpoints to each of these criteria as being a necessary condition fordevelopment of sector lending strategies. However, it must also be notedthat it is too soon to draw conclusions from the Indonesian experienceregarding the benefits and costs of this approach. Thus the futuredirections of the Bank's sector lending policies remain unclear.

6. Poverty Alleviation and Eauitv Issues

3.69 In Indonesia, with its numerous ethnic groups, far-flung popula-tion and enormous disparities in regional resources, equity questions havebeen affected through economic and social policy throughout the two decadesunder study. At the beginning of this period, about 60 per cent of thepopulation, or 70 million Indonesians, --re living in absolute poverty.During the subsequent 20 years, the GOI's development strategy (discussedin Part I of this Report) led to a dramatic decline in poverty and someimprovement in income distribution. By the late 1980s, less than 20percent of the population remained in poverty, although the "near poor,"with incomes only marginally above the poverty line, were still extremelyvulnerable to changes in their economic circumstances. The current Five-Year Development Plan (Repelita V) continaues the direction of its fore-runners in targeting human resources development as a means of alleviatingpoverty and lessening inequity in the distribution of income.

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3.70 The Bank's concern with equity issues in its overall lending pro-gram is well known. In the context of Indonesian education, the Bank hastaken an even-handed approach, clearly supporting GOI's efforts to improvethe position of the country's educationally disadvantaged population. Inthe broadest sense, the expansion of the education system has been con-sistent with equity goals, particularly in primary and lower secondaryeducation and regarding girls, remote populations and the poor. The movetoward universal primary education has played a vital role in reducinginequity, since basic education is crucial in providing the poor with thefundamental skills necessary to raise their productivity and incomes.

3.71 Gender-specific inequalities are much smaller in general educationthan one would expect in a country with Indonesia's income per capita.Women also appear to be the main beneficiaries of non-formal educationefforts. Thus the Bank can claim to have played a significant supportingrole in promoting gender equality through its two projects in this sub-sector. The technical/vocational education projects have less to offer forfemales, mainly because of their focus on occupational skills which areusually not much sought after by females (including occupations that demandheavy physical work). However, there are examples of investments intechnical education having benefitted girls, such as the Second PolytechnicProject which introduced courses in a number of commercial/administrativedisciplines which enjoy great popularity among female students.

3.72 At a project level, too, the Bank's concern to support the GOI'sefforts in improving equity has been evident, as noted in the earlierdescriptions of projects in several fields, including especially projectsin the textbook, teacher training and nonformal education areas, andcurrently in the formulation of a project in basic education. At the sametime, it should be noted that an undifferentiated pursuit of equityconcerns at the project level may be misplaced, especially if they aremotivated by a simplistic desire to spread a small volume of benefits fromsome policy or project as widely as possible, with consequent loss ofimpact. For instance, in the training field, the requirement of awardingfellowships across a wide spectrum of recipients without concomitantattention to the quality of participants can mean that inappropriate peopleare selected while more promising candidates miss out. Such problems haveeven plagued the process of project implementation through the too-frequentrotation of personnel in project-related jobs in pursuit of some ideal ofspreading the benefits of being engaged in such work to many individuals.

3.73 A review of the Bank's role in pursuing equity goals through itseducation lending program leads to several conclusions about the futuretargeting of that effort. Firstly, the need to raise the quality ofprimary and secondary education in a manner that seeks to redress income-related quality differentials across provinces is urgent. The areas oftextbook provision and teacher training, already the subject of Bankprojects as discussed earlier, remain the most important avenues for suchquality improvements. Secondly, there is evidence that inability to paythe costs of schooling (both direct and indirect) increases private schooldrop-out rates of poor students at the secondary level,80/ suggesting that

80/ World Bank, Indonesia: Poverty Assessment and Strategy Report, (Report No. 8034-IND,1990), pp. 78-80.

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programs of financial assistance to the poor might target schooling costsas a means of improving their participation rates and performance.Finally, the explicit role of nonformal education in raising basic literacyand numeracy and in providing simple productivity-improving skills suggeststhat continuing investment in this subsector is warranted, notwithstandingthe serious questions about its reach and effectiveness that remainunresolved (see Part II, Section 5 above).

7. Implementation Exoerionce

3.74 A Lesson for Pro1ect Design. An account of the projecto completedthus far will inevitably be skewed toward operations which were of novelcharacter and which Twere implemented by staff who lacked familiarity withrelevant techniques and procedures. Among the first ten educationprojects, all but two were such "opener projects." This meant that PIUswere still comparatively new to their tasks, and there had been little timefor feedback to occur.

3.75 Nevertheless, an important lesson was learned early on (and thisinsight was by no means unique to Indonesia): to keep projects as compactand uncomplicated as possible. The implementation experience of the FourthEducation Project (Loan 1237 approved in 1976) served as a demonstration ofthe inherent drawbacks of an operation that aimed at achieving too manythings at once. In their effort to undertake a substantial operation,81/the Government and the Bank agreed on a very heterogeneous project thatinvolved two Directorates General in the Department of Education, theDepartment of Manpower and the National Institute of Administration.Because only one of these four entities had previous experience with asizeable project of this kind, uneven progress with implementation wasinherent in the project design. In the event, the time from loan signingto completion was almost twice as long as estimated in the SAR.82 /

3.76 The lessons learned from experience with this project werepromptly put to use: multi-agency investment projects were avoided hence-forth and, whenever possible, projects were built around a compact corecomponent. Since later projects continued to draw additional governmentagencies as beneficiaries into education and training projects, the pre-ferences for free-standing projects meant a more rapid spread of relevantproject preparation and implementation expertise throughout the centralGovernment (a process, it may be added, which is now being extended tosubsidiary government levels).

81/ The supporting Loan (Loan 1237) of US$37 million equivalent, wvs then the sixthlargest operation in the sector worldwide. While not excessively large itnevertheless exceeded the sum of the first three credits by more than 50 percent. Theproject originally envisaged was even larger, however, its scope had been curtailed atthe request of the Government.

82/ It might be mentioned in passing that the original Implementation schedule developedby tLe appraisal mission was much closer to the eventual outcome, but was drasticallyshortened during the initial in-Bank review stage following appraisal.

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3.77 The subsequent Polytechnic Project (approved in 1978) led tosimilar implementation shortfalls, albeit on a smalle:. scale and for dif-ferent reasons. The project contained a modest (US$5.2 million, or 6.5percert of the base cost) accountancy training component, and involvedthree universities and the accountancy training institute in the Departmentof Finance. The overall direction for program development and componentimplementation was to be provided by the project management authority inthe Directorate General of Higher Education. Faced with the demanding taskof developing a new type of education in Indonesia (i.e., the polytech-nics), the project managers could only devote a limited amount of time andeffort to the accountancy component. As a result, implementation outcomesfor this small sub-project lagged behind the main project (although someuseful initial development work and key studies were carried out). It wasnot until the Accountancy Development Project (Loan 2940 approved in 1988)that accountancy training was addressed in a more focussed manner through afree-standing project.

3.78 The Timeframe of Projects. The often considerable implementationdelays, particularly among earlier projects, should be seen so much as areflection of their relative novelty or the inexperience of PIU personnel(although both were certainly contributing factors) as the result of theBank's procedures. Implementation schedules were sometimes compressed toan extent that made a timely implementation all but impossible. With theBank-wide introduction, in 1982, of country and sector implementationprofiles based on previous performance, this problem has lessened.

3.79 Financing Benchmarks. The use-of-funds record of projectscompleted so far is quite good, with loan/credit cancellations averagingless than 4 percent of the initial amount. The financing structure,expressed in terms of the planned and actual shares of Bank financing,shows a smaller than planned relative contribution from the loan/credit forthe first four projects and a higher than planned proportion thereafter.This is mostly a reflection of changing macro-economic and budgetary condi-tions ov. the reriw period.

3.80 Covenants. The record of compliance with covenants in thisproject portfolio has been very positive: of a total of 98 clauses in tenprojects for which information is available in a comparable format, 70 weremet in a timely fashion, 8 were met but with delays, 14 were partiallycomplied with, 3 were complied with after mutually agreed modifications, 1was cancelled, and 2 remained unfulfilled.

3.81 Although a detailed tracing of specific covenants and their appli-cation over time would require an excessive amount of narrative detail, oneparticular case is worth following through. This is the way in whichcovenants have tried to address a specific and pervasive problem of theeducation system (and of the civil service in general), viz., that ofmultiple employment (usually in two, sometimes in more jobs). Because ofits obvious consequences for the operation of project institutions, thisproblem has been a standing concern in education project design, and theissue has been raised repeatedly in Board discussions.83/ In the early

83/ For example, Board discussion of Credit 219 (October 27, 1970); of Credit 387 (May 22,1973); of Losn 1904 (September 16, 1980).

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education projects in Indonesia, the Bank tried to ensure full-time servicethrough salary supplements (First and Second Education Projects). This waspossible while project institutions were still in "development status,"i.-., being financed out of the development budget. As soon as they becameincorporated into the regular school system and funded from the routinebudget, however, the question of equivalence of staff with their peers inthe same civil ser .ce ranks posed serious problems. In the two ensuingprojects and in the Non-Formal Education Project (i.e., in Projects III, IVand VI), the full-time requirement was still made, although not for teach-ing staff as in the first two projects but only for key implementationpersonnel. No specific reference was made to salary supplements. Inproject XI the subject was raised again, but this time in a broader way,encompassing not only salary supplements but also other incentives such assubsidized housing or personal loan facilities. Except for a reference tothe full-time work requirement in certain PIU positions in project XII, thequestion of full-time work was not the subject of covenants until projectXXI, where the PIU of this project as well as four related operations(projects IX, X, XIII and XVII) were required to employ full-time staff.This was repeated for project XXII. Finally, in the latest project (XXV),an interesting new approach is used for the filling of certain keypositions, leaving the choice between one full-time or two half-timeincumbents. This seems to be an implicit admission of the intractability,over the foreseeable future, of the problem of multiple job holding. Itwould be worthwhile to record carefully the experience with this new model.

PART IV: CONCLUSIONS AND RECOMMENRATIONS

4.01 The aim of this study has been to review the World Bank's lendingprogram to education in Indonesia from its origins in the late 1960s to thepresent day, covering the 21 projects commenced during the period to 1988.This final section brings together some of the conclusions and recommenda-tions that can be drawn from the discussion in the preceding pages. Thesefindings are dealt with under three headings. A summary overview is pro-vided of the Bank's role in the development of Indonesian education overthe two decades, fo3lowed by some significant lessons and recommendations.Finally, returning to the questions that were raised at the beginning ofPart I, the broader implications of the study's findings are assessed.

1. The World Bank's Role in the DeveloiMent of Indonesian Education.

4.02 At the outset it should be noted that the magnitude of the ta.sk inbuilding the Indonesian education systeu over the past two decades has beenimmense. The challenge of restoring order amidst the economic and socialchaos that faced Indonesia in the mid 1960s was a truly daunting one. Thefact that the Indonesian education system is now characterized by universalprimary access, expanding secondary particips. ton, and a gradually streng-thening post-secondary subsector, is testimony to one of the most signi-ficant educational transformations seen in the developing world in recenttimes.

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4.03 A vital ingredient in achieving these results has been theconsistency and determination with which the GOI has pursued its economicand educational policy over this period, guided by the fundamental ruleslaid down by Pancasila. Educational policy has by and large followed arational long-run view of educational development within the country.Although it has not been stated in so many words and may not have beenexplicitly perceived in these terms, the Government'a approach has beendirected in a general sense by perceived relative social rates of return todifferent levels of education. In other words, the GOI endeavored torespond to societal demand given types of education, which in turn wasinfluenced by their perceived net benefits (including non-monetary onessuch as the relative ease and prestige of white-collar jobs). Similarly,the GOI saw it as essential to establish initially a sound basis forprimary education, with subsequent shifts of focus to other levels as ratesof return were adjusting over time. In all this, the evolution of theGOI's education policy has been responsive to changing conditions, and hasbeen effectively keyed to economic policy through the medium of thesuccessive Repelita.

4.04 In this environment, the Bank has had an opportunity to play asignificant role. Two salient features of the Bank's participation inIndonesian educational development are imnediately striking. The first isthe sheer size of the Bank's lending portfolio in this sector, amounting toaround US$1.5 billion over a twenty-year period. In no other country hasthere been a sectoral lending program of such proportions, reflecting ofcourse the fact that Indonesia is the Bank's third most populous borrowercountry (after China and India). The second feature is the diversity ofthe lending program, which has encompassed virtually every level and typeof education and which has spread across many government ministries andagencies. This institutional diversity has meant that there have been veryfew areas in education and training that have not been affected in somedegree by these two decades of lending. As a result, principles of syste-matic planning and implementation of investments have spread far and wide,with project units located throughout the central Government, and with anextension of this administrative and procedural framework to subsidiarylevels of Government now underway. This contribution to more systematicways of development management caiv hardly be over-rated.

4.05 One outcome of the large size, both of the Indonesian educationsystem and of the Bank's assistance to it, has been a reduction in thepotontial for misallocation of resources. Compared to a country of one ortwo million inhabitants, where even a modest investment in, say, technicaleducation could tie up a substantial portion of local recurrent budgetresources for a considerable period, and where a problem of oversupply ofspecialized manpower would loom much larger, the orders of magnitude inIndonesia have been such that even a moderately misaligned mix of sectoralinvestment did not produce massive burdens in either the budget or thelabor ma-ket. Furthermore, there has been scope for shifting of resourcesfrom one type of education to another (-eg., the recent conversion ofexcess primary teacher training capacity to general secondary eiucationfacilitiee), providing a flexibility not so readily available in smallersystems.

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4.06 Notwithstanding the magnitude of the Bank's lending program inIndonesian education, however, it must be borne in mind that the Bank hasheen but one of a number of players in the arena over the period studied.Although the lank has indeed been the largest single external supplier offunds to Indonesian education, substantial assistance has also been pro-vided through a number of other bilateral programs, multilateral agenciesand NGOn, many of which have had a significant influence on the course ofevents in the education sector. Furthermore, when the Bank's contributionis expres6ed as a proportion of total GOI budget allocations to education,it is seen to be a relatively modest component of aggregate educationexpenditures in the country.

4.07 In Part I of this Report the evolution of Indonesian economic andeducational policy was charted chronologically. Interpreting this experi-ence was complicated by the intricate nature of the Indonesian administra-tion and by the delicate shifts in GOI Bank relationships over the period.Nevertheless, a clear story emerges. The twenty-year history of Bankinvolvement can be divided into several major phases of Bank involvement,ranging from a cautious beginning in the late 19609, where manpowerpreoccupations dominated the Bank's approach, through a period of modestexpansion during the 1970s, and culminating in a period of significantlyincreased activity during the last decade.

4.08 One general characteristic of the lending program has been theseemingly inexorable way in which one project has followed hard on theheels of the previous one. At a sectoral level, this continuing stream ofinvestments has no doubt reflected both the desire of Bank staff to be seento be getting the funds utt into productive use, and the GOI's interest inmaintaining an external resource flow into the sector. At a subsectorallevel, the sequential approach appears to have come about as a result bothof the push of the lending program and the pull of available implementationcapacities created during the previous operation(s) in the subsector. Suchan approach may not have been faulty per se, since many subsectoraldevelopment programs are too large and complex to be tackled through asingle lending operation. But this approach seems on occasion to havepreempted a wider comparison of investment opportunities that umight haveshown a stronger case for alternative uses of scarce investment funds inother subsectors.

4.09 Many of the major achievements and problems in Bank involvementwith Indonesian education can be discussed subsector by subsector. In PartII of this Report, the developments within each subsector were considered,and the Bank's role evaluated. Some highlights from this assessment arethe following.

4.10 In the primary subsector, the attainment of universal education tograde 6 has been a major achievement, although the lark's role in thisprocess has been an indirect one,84/ through its support of textbookdevelopment and teacher training. In the secondary area, the early years

841 The Region objects to the word *indirect. howevar, improved tiacher training andprovision of textbooks vere mainly alming at quality enhancement, not at theattaicment of universal primry education per se vith vhich the sentence is concerned.

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saw Bank interest mainly in vocational/technical education, with generalsecondary education coming into prominence only more recently. Permeatingthe Bank's strategy in both primary and secondary subsectors has been agrowing concern vith quality. In this regard, the sequence of textbookprojects has illustrated a capacity for the system to adapt and learn fromexperience, although textbook supply is still short of requirements in bothquantity and quality, hardly surprising in view of the system's enormoussize. In the teacher-training area, despite the substantial numbers ofindividuals who have been put through training programs, the overallquality of teachers at all levels remains poor. To an important extentthis problem is due to the low morale and professional status of theteaching profession in Indoneeia, a feature shared with many othercountries. It could be suggested that the Bank might have been moreoutspoken over the years in attempting to persuade the GOI to tackle theproblem of low teacher salaries, as a prerequisite towards raisingeducational quality across the board. However, the fact that the Bank asearly as 1975 (in the Education Sector Survey) tried to address thisproblem, points to its perseverance and deep-rooted causes.

4.11 In higher education, the Bank's concentration on manpowerobjectives in the early years can be seen in retrospect to have had asomewhat confining effect on its assistance. More recently, the Bank'sstrategy has encompassed wider objectives, in particular the goal ofbuilding a self-sustaining capacity in Indonesian higher education. Such astrategy has the potential to develop a range of "appropriate" andsustainable institutions in the subsector, with institutional standardsattuned to available resources and to the country's needs. The achievementof such praiseworthy aims has, however, been constantly frustrated by.Ademic structural pro'lems in the organization and administration ofhigher education in Indonesia.85/

4.12 In the area of vocational education, the Bank's role has mirroredthe changeo in thinking in this field on a wider stage. At the juniorsecondary level, early insistence on specific in-school vocational curri-cula has given way to a greater recognition of the value of on-the-jobtraining backed by sound basic general education. At the senior secondaryand post-secondary levels also, a move away from institution-based pre-service training towards in-service programs, has been fostered by recentBank projects in a number of areas, including science and technology,public works, and accountancy, as well as in the traditional area ofagricultural training.

4.13 Finally in this brief summary, nonformal education needs to bementioned. As noted elsewhere in this Report, a judgment on the efficacyof nonformal educational ende&'vor is seriously hampered by lack or unavail-ability of data and by the absence of rigorous evaluation studies. Subjectto this reservation, it may at least be said that the Bank has played anactive part in building up one of the largest nonformal educational systemsin the world. The continuing hope that nonformal education will provide a

85/ The Region restates its position that the Bank also pursued objectives other thanmanpover development during the early years of the review period, and the authorsvouid like to point again to the respective orders of magnitude involved (see alsofootnote 56).

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significant means of rectifying inequities of educational access in acountry of the size and diversity of Indonesia is a stimulus to the Bank tomaintain its involvement in this area, but it continues to be a hope basedon supposition rather than on hard factual evidence.

2. Lessons and Recomendations

4.14 The principal lessons relating to Indonesian education that can bedrawn from this study ar- summarized below in the same sequence in whicithe major issues are discussed in Part III above and followed by some moregeneral points. This sequence does not reflect any particular priority ororder of importance in the conclusions drawn and recomuendations made.

4.15 Firstly, Part III Section 1 pointed to the potential dangers ofover-reliance on mechanical manpower forecasts as a basis for educationalplanning. Tho lessons, by now to a large extent heeded within the Bank,relate to the need for flexibility in the incorporation of manpowerplanning considerations in formulating educational strategies, and to theimportance of labor market information systems as a concomitant part of anyscheme to upgrade manpower through on-the-job training.

4.16 Secondly, the consideration of the training components of loans inthis study has pointed to a number of areas where improvements are neces-sary. In the matter of selection of candidates for overseas training, moreattention needs to be paid to the desired level of critical mass in anagency or region in determining numbers selected for training. There is aneed for more effective pre-departure training, better monitoring ofstudent progress during periods of study, and improved handling of reentryprocedures to ensure that the training received is put to optimum use onreturn. The value of a well-staffed and well-organized project implementa-tion unit for overseas training programs has been demonstrated, forexample, in the Science and Technology Training Project. At a broaderlevel, hofever, a closer evaluation is needed of the relative benefits andcosts of sending trainees overseas vis-&-vis developing local trainingcapacities with the assistance of overseas experts. There is at least apresumptive case for a long-term program of building specific trainingcapacity within Indonesia in conjunction with the more general goals ofnational hLgher education development.

4.17 Thirdly, this study has shown once again how fundamental is thetask of institution building in the process of educational development.Nevertheless, despite an awareness on the part of both the GOI and the Bankof the importance of establishing and maintaining a sound institutionalinfrastructure in education, the record of twenty years contains manyshortcomings. The problem of internal and external inefficiency .'nparticular has plagued the provision of public education in Indonesiathroughout the review period. At the departmental level there frequentlyhave been fragmentation, lack of coordination and uncertainty of direction.At the institutional level, inadequate structural arrangements and poormanagement have been evident. Opportunities for introducing clearer goals,stronger incentives to staff, and closer performance monitoring throughout

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the education system have been insufficiently pursued.86/

4.18 The task of institution building is baaic to the long-run goal of

increasing the self-sufficiency of the Indonesian education system. Thishas, of course, been an ongoing process since Independence, and even in therather short period of the Bank's involvement in the sector there has beenundeniable progress in that direction. The development of textbook capa-city, the creation of the Inter-University Centers, and the staffing of thesecond-phase polytechnics by graduates from the first project are just afew examples of achievements in this respect. Yet, there is still amplescope for further effort in creating and strengthening national capacities.This is not to say that Indonesian education should aim at complete self-reliance. No education system, even in a highly develc:d country, can

afford to isolate itself from research and teaching originating beyond itsfrontiers. Nevertheless, to be sustainable in the widest sense, an educa-tion system and the people who work in it must be able, on their own, todevelop and adapt the system to the changing needs and circumstances of thecountry and its people. This ultimate goal of institutional developmentand flexibility should continue to be a central theme of the Bank'sassistance to Indonesia's education sector.

4.19 Fourthly, this study has tried to demonstrate the impottzn.^ ofmaintaining a systematic policy dialogue, tracing the development of thisprocess from its origins in the sector work of the mid-1970s, through theplanning discussions for expansion of higher education during the 19808, tothe wider scope of the policy dialogue evident today. Prior to theEducation Sector Survey Report of 1975, there was no comprehensive dis-cussion between the GOI and the Bank. After 1975, the Bank was in aposition to move toward a wider perception of sectoral problems. The

sector survey provided a framework for policy discussions with the GOI andwas used for some time as a basis for the planning of investments in thesector. It is apparent from this evidence that a comprehensive sectorsurvey facilitates an informed and effective dialogue as a basis for laterinvestments.

4.20 In higher education, the policy dialogue process has opened up newchannels of communication with the Departments And Directorates concerned.It has been an essential component of the development of sector lendingstrategies for Indonesian higher education. The value ;o both the GOI andthe Bank of encouraging further dialogue in other subsec:ors is apparent.

4.21 One area where improved communications are merited is in the plan-ning, monitoring and sequencing of successive projects within a subsector.The policy dialogue is an obvious vehicle for reviewing project experienceand future lending operations on a regular basis. Such a process couldcombine the express possibility of periodic course corrections with anexplicit continuation of support for the subsector.

86/ The Region vishes to stress that institution building is a long-tesr procecs, end thatin other sectors In Indonesia, similar shortcomings persist. While this Is csrtain'ytrue, the point made in this paragraph is that institution building efforts could havebean more *yet-satic end determuied.

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4.22 Fifthly, with regard to the prospects for development of furthersubsector-wide lending strategies in place of more targeted loans, theIndonesian experience is still too brief to provide a reliable guide to thefuture. In higher education, the introduction of subsector lending hascertainly allowed a welcome degree of budgetary flexibility to the DGHE,although it is not clear whether adequate monitoring and evaluation of loanexpenditures under this type of lending will be possible. In the previoussection, four necessary conditions for implementation of a sector-lendingstrategy were suggested on the basis of Indonesian experience: a solidempirical base, an effective policy dialogue, consistency between govern-ment and Bank objectives, and satisfactory implementation procedures.

4.23 The sixth issue discussed in Part III was poverty alleviation andequity. It deserves repeating in this context that, although the equitabledistribution of project benefits has remained an explicit goal of most loanoperations in the education sector, this is not always easy to acbieve. Ina number of instances, attemits to spread benefits thinly over a wide areain pursuit of equity goals has simply resulted in such a dilution of proj-ect impacts that the desired benefits have not been achieved at all.

4.24 Nevertheless, the role of equality in educational access as ameana towards alleviation of poverty should not be allowed to slip fromview, and lessons from experience in Indonesian education must be heeded.Two of the most important relate, firstly, to the prospects for usingtarget&d qaality improvements in basic educ'tion as a means for redressinginequities in educaton6al orovision __oan income grou.&ps (i.e., acrofsregions), and, secondly, to the need for financial assistance to help low-inco.*e households meet both the indirect and (where appropriate) directcosts of schooling for their children.

4.25 The final point concerns the experience with project implementa-tion in Indonesian education. A number of findings have been noted in thisdiscussioan. An early lesson was the neod to keep projects as simple anduncomplicated as possible, following the unsatisfactory implementationexperience of the multi-component Fourth Education Project. Furtherexperience pointed to the need for realistic time schedules for projectimplementation rather than the adoption of compressed time-frames thatcould not be met. The record of compliance with covenants has beengenerally good, and the Indonesian case illustrates the importance of well-planned and well-specified covenants as a means of articulating somematters of specific agreement between the Borrower and the Bank in the useof loan funds.

4.26 There remain two issues where discussions in various sections ofthis Report carry implications for policyt the GOI's financial commitmentto education, and assistance to private education. Despite the substantialabsolute size of the GOI's budget allocation to education, and the factthat it appears to be a growing proportion of GNP (see Annex 4, Table 2),the Government's financial provisions to education are low by regional. andworld standards. Bearing in mind the difficulties of making internationalcomparisoas, it can be noted that UNESCO statistics indicate that, in 1985,

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Indonesia allocated 2.3 percent of GNP to public education,871 comparedwith an average of 4.3 percent for Asia and 5.6 percent for the worlii (seefurther Annex 4, Table 15). If participation rates in Indonesian educationare to grow, if quality is to be enhanced, and if the long-run viability ofeducational structures is to be maintained, the levels of provision foreducation will have to rise. Some increased financial comnmitment from theGovernment will be an important prerequisite to a number of needed measuresin which the GOI must take the initiative, including an attack on thechronic problems associated with low productivity, inadequate income anddiminishing professional status of teachers, provision of adequate levelsof operation and maintenance expenditure, and the expansion of administra-tive capacity at decentralized levels in the education system.

4.27 Financial considerations are also implicated in considering thefuture role of private education. As noted in Part II above, the privatesystem has played a vital role in expanding of educational opportunityespecially at secondary and higher levels of the system. Yet the Bank'sattitude to assisting private institutions has been at best equivocal.Private schools have benefitted to some extent from several Bank assistanceprograms, for example in textbook development and teacher training. In thefuture, a broadening of this support to include equipment and physicalfacilities should be contemplated. Given the importance of private insti-tutions in secondary and higher education and the fact that the GOI isalready assisting with teaching staff, this would be a logical development,not without precedent elsewhere. In higher education, direct assistance toa selected group of private institutions may also serve as a vehicle forpromoting the concept of accreditation which would eventually narrow thehuge quality differences now apparent ir. the subsector.

3. Broader Implications

4.28 In the first section of Part I, the scene for this study was setagainst a background of the Bank's appzcoach to educational investmentacross the whole spectrum of its operations. The question was asked as towhat the Bank had learned from progress in thinking about the economics ofeducation over the two decades of its involvement with the education sectorin Indonesia. Now at the conclusion to this Repo-z, the reader is invitedto reconsider the points made in paragraphs 1.02 to 1.16 above, so that thebroader implications of the study can be drawn together in a way thatpoints up some lessons for the future.

4.29 As has been noted, the Bank has had some significant successes atthe subsectoral level in its evolving program of assistance to Indonesianeducation. But it can be suggested that these subsectoral achievementsought to add up to something more. There has beer, perhaps inevitably, alack of uniform criteria in the Bank's approach (which may stem, in part atleast, from the very size of the country and its education system).

!ZI Note that this figure appears to cover central Department of Education expenditureonly. Urofficial estimates that account for other forms and levels of publicexpeanditure would more than double this figure.

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Projects, particularly in the first half of the review period, have beenappraised and justified generally in terms of a narrow subsectcral view of"needs," where objectives have related to specific intermediate target.rather than ultimate educational goals. Certainly the aim of "manpowerdevelopment" has been prominent in the justification of Bank projects. Yetappeal to this goal has tended to be either based on inherently unreliablemanpower forecasting procosses (as in earlier projects), or too broad to beoperationally useful (as in some of the more recent projects). Moreover,there has been little effort to show that a given project aimed atalleviating manpower shortages could be expected to do so at less cost thanalternative ways of achieving the same ends. The absence of an overalleconomic yardstick for evaluating (and juxtaposing alternative) investmentpossibilities has inevitably given the sectoral project portfolio acompartmentalized appearance, which inhibits an integrated assessment.However, this reservation should not distract from the great progress inIndonosian education over the two decades, and from the Bank's importantcontributions to it.8 8 /

4.30 The findings from the Indonesian experience, can be applied toBank lending for education more widely. They suggest that current moveswithin the Bank for a re-thinking of the Bank's approach to educationlending should be encouraged and strengthened. In particular there appearsto be a need to develop a more articulated sectoral strategy which:

igs based on a clear statement of the economic and socialobjectives of the borrower;

* iG influenced by the demand and supply of manpower, but notconditioned by it;

a is flexible with respect to changing conditions and changinglabor market signals;

* provides a clear basis for determining investment prioritiesbased on an understanding of relative social rates of return(or simlilar indicators) as broad benchmarks; and

* builds in appropriate monitoring and evaluatior mechenisms sothat progress towards goals can be assessed.

Such an approach would not place exclusive reliance on any one measure suchas a manpower forecast or a calculated social rate of return, but ratherwould use all relevant information as a guide to decision-making. The kegelements in such a strategy would be rationality (in an economic sense),sector-wide consistency, and flexibility.

a8/ The Region points out that there have been projects vhich differed from the patternoutlined In this paragraph. The qualifiers used in the text ("particularly in thefirst half of the review period,- "generally," "tended to be*) should make it clearthat the authors did not mean to extend this characterization to the entire portfolio.

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AM I

INDONESIAN EDUCATION AND TEE WORLD BANK:AN ASSESSMENT OF TWO DECADES OF LENDING

Hanvow*r Forecastine in Early Bank Proiects

1. This Annex provides further detail on the use of manpowerforecasting methods in early Bank projects in the Indom-.sian educationsector, with particular attention to the part played by the Sector SurveyReport of 1975.

First Education Proiect (Credit 219)

2. The role of the Bank in manpower development dates from the veryfirst education project, signed in 1970, which was designed to assist theGovernment to develop technical education. At that time Indonesia was onlyslowly starting to emerge from thi, turmoil of the 1960.. While educationalgrowth had been very rapid after Independence in 1945, progress had 'beenseverely chocked during the later political and economic upheavals. In1970, during the early years of the "New Order" government, the country wasextremely short of most types of skilled manpower. Several initiatives toimprove data and build a systematic picture of education and training werestarted in the late 1960s, including work on the Government's First Five-Year Development Plan (Repelita I) 1969-74, the Naticnal Assessment Studyby the Ford Foundation, UNDP and UNESCO, and a feasibility study forNational Education Center conducted by UNDP. The Bank, however, wasanxious to make an immediate contribution to manpower development, withoutwaiting for the outcome of these studies. Its view was that shortages ofmanpower were so acute that prompt intervention was justified in a"firefighting" role, and its first project was designed as "a modest inter-vention which would meet urgent needs without pre-empting the findings ofthose ongoing studies and planning."n/ The result was the First EducationProject.

3. This project was designed to:

(a) construct and equip five technical training centers (TTCs),each center intended to serve a group of neighboringsecondary senior technical schools;

(b) train teachers from the secondary technical schools to enablethem to teach in the centers in the various fields of engi-neering; and

(c) provide technical assistance to help in project implementa-tion, curriculum development, and the training of technicalteachers.

1/ Wnrld Bank/OED Project Performance Audit Memorandum, Indonesia, First EducationPriject, 1980, p. 2.

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4. Two features of the project are of interest. The first is thatthe project adopted an innovative approach to practical training in indus-trial skills. Existing senior technical secondary schools (STHs) lackedadequate facilities for practical work, but the provision of workshops foreach STM was uneconomic due to small school size (about 300 students perSTM). The centralized workshop complex (TTC), designed to serve a clusterof STHs, was justified as a more economical means of providing workshoppractice. Table Al shows the planned and actual outcome of enrollments inthe TTCs.

Table Al:First Education Project (Credit 219)

Planned Enrollments and Outcome

...... ...... ......... .................. ..................................

Name Planned Capacity Actual Capacityof in atInstitution Appraisal Report Project Carpletion 1976

..............................................................

Jakarta TtC 3,600 1,981Bandung TTC 3,360 1,636Surabaya TTC 2,880 1,392Medan TTC 2,160 1,504UJang Pandang TTC 1,800 969

Total 13,800 7.482

Source: World Bank/OED: Project Performance Audit Nemorandun, Indonesia,First Edication Project, 1980, Anex 9.

5. While this is ostensibly a poor outcom.e, with actual enrollmentsreaching only 54 percent of target at the tiue of project completion,enrollments reached 81 percent of target by the following year, and wereexpected to exceed 90 percent once some electronics classes (temporarilyclosed through staff shortage) were reopened.2/

6. The second key feature of the project was its somewhat diffuserelationship to the wider process of eqonomic and manpower planning inIndonesia. The Project Completion Report argued that the project had beenconceived as an integral part of the wider planning process: "in accordancewith Government policy, the objective of the project was to improvepractical training for industrial skill development...in Indonesia."_/ At

2/ ibid, p. 30.

2/ World Bank: Project Completion Report, Indonesia, First Education Project, 1977, p.17.

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the time of project appraisal, however, the linkage was not so clear.Informal discussions betwee,n the Government and the Bank about an educationproject started in January 1969, and by 1970 the Bank had completed theprocess of project reconnaissance, identification, and appraisal. Duringthe time of project appraisal, several wider planning studies were beingcarried out by the Government and international agencies. These wereimportant studies, designed to elicit not only statistical data of a purelytechnical nature, but also to provide "broad guidelines on options forpolicy decisions on the reorientation of the education system."O/ Theproject appraisal was completed, and the credit processed, vithout waitingfor the completion of these studies, and as far as can be ascertained, nointerim findings were incorporated in the project appraisal. The resultwas a project which passed from appraisal to implementation with virtuallyno supporting quantitative evidence to support it. The reconnaissancemission developed a forecast of required manpower requirements for skilledworkers based on the experience of adjacent countries in a similar state ofdevelopment, but the SAR made no attempt to derive figures specifically forIndonesia. Indeed, the report commented repeatedly that Indonesia's meagredata on manpower requirements did not permit any reliable quantitativeestimates. The consequence is that the supporting rationale for theproject is couched in terms of shortages of middle level technical manpowerwhich were simply assumed to be so obvious as to be axiomatic, andexpressed at a level of generality which would exclude very little.

I. While the "firefighting" nature of the early Bank involvement isreadily understandable in terms of the perception of widespread manpowershortages, there was a price to pay for not waiting for the outcome of thewider planning studies. Early in the period of project implementation theGovernment decided to abolish junior secondary technical schools. One ofthe premises on which the TTCs had been based was that only successfulgraduates of the junior secondary technical schools would be eligible forthe TTCs. The expectation was that such candidates would have had anopportunity to elect their field of training immediately upon entry to theTTC. As a consequence of the abolition of these schools, a common firstyear program had to be introduced into the TTCs to compensate for the lossof the basic level training at junior secondary level. The overall resultwas that the TTCs operated with more basic level workshops and less inten-sive use of advanced workshops than originally envisaged._/

Second Education Project (Credit 288)

8. The objectives of this project were to:

(a) strengthen preservice and inservice training programs formiddle-level agricultural workers; and

(b) create a strong central agency (Agency for AgriculturalEducation, Training and Extension--AAETE) to administerDepartment of Agriculture education and training programs.

4/ World Bank: Staff Appraisal Report, Indonesia, First Education Project, 1970, p.2.

5/ World Bank/OED: Project Performance Audit Report, Indonesia Pirst Education Project,1980, p.3.

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9 The project components consisted of equipment and furniture forAAETE, construction, equipment and furniture for various agriculturalsenior secondary schools (SPMA) and institutes, a forestry training center,and the provision of specialist consulting services.

10. This project was originally designed as part of the firsteducation project. Components tor agricultural training originally hadbeen included in the preparatory work for the first project, but weresubsequently excluded on the grounds that, although there existed a nrimafacie case for supporting agricultural training, there was insufficientinformation on existing agricultural training programs and institutions.6/Further work by the Government, IBRD and FAO resulted in the secondproject.

11. Manpower requirements were derived by assuming that by the end often years the Department of Agriculture would have replaced the large majo-rity of its middle level technical manpower that had only primary educationwith graduates of senior secondary agricultural schools, and adding to thisforecast the estimated attrition rate of middle level staff who already hadat least some secondary education.7/

12. Table A2 shows planned enrollment and the outcome of the projectat project completion in 1977.

Table A2:Forecast and Outcome, Second Education Project

Type of Planned Actual 1977 Differenceinstitution No. Enrollment Enrollment Amotnt X

AgriculturalSchools 14 3000 3057 +57 +2

AgriculturalTraining 1Institute

Admin. personnel 400 567 +167 +42Agric. teachers - (a) 60 n.a. n.a.

Forestry TrainingCenters (FTCS) 2 160(b) 144 -16 -10

Notes: a) No target setb) One of the project FTCs with 150 places was replaced during

ifplementation with an 80 place center.

Source: World Bank/OED: PPAR, Indonesia, Second Education Project, 1980. p. 23.

§' World Bank: Staff Appraisal Report, Indonesia, second Education Project, 1972, pp.l,A.

Z/ ikLd, Appendix 11.

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13. While the post-completion e.vidence is incomplete, a recent fieldsurveys/ suggests that enrollments in the original senior %econdaryagricultural schools have continued to exceed their original targets.

Education Sector Survey Report (1975)

14. In both the first and second education projects the methods usedto estimate requirements for trained manpower were crude, and during theearly 1970s the Bank carried out an Education Sector Survey to develop astronger base for needs assessment. From a manpower point of view thecentral feature of this sector survey was the attempt to build a foricastof manpower requirements.

15. The forecast started by assuming th-ee alternative growth ratesfor GDP of 7, 9 and 11 percent a year between 1971 and 1981. The baseassumption of 7 percent corresponded roughly to the Repelita II target of7.5 percent real growth of GDP. The second step was to divide the 1971sto3ck of workers into four broad occupational categories of professionals,technicians, skilled workers, and others. The proportion of professionalworkers (Level A) was assumed to stay at its 1971 level under the 7 percentGDP growth option, and rise moderately under the 9 percent and 11 percentalternatives. The ratio between professional work-rs and technicians(Level B) was assumed to stay at its 1971 level of 13 for all three growthalternatives, and the proportion of skilled workers (Level C) was assumedto rise from its 197i level of 10 percent to 12 percent under the 7 percentand 9 percent GDP growth patterns, and to 12.5 percent under the 11 percentGDP growth rate. The report argued that these ratios and assumptionsappeared "justified in view of the more complex production processesimplied by steeper GDP growth paths.")/ Subtracting the 1971 stocks andallowing for attrition (and omitting for the sake of simplicity theresidual category of unskilled workers), the following skill patterns wereprojectedt

Table A3:Projected Annual Average Manpower NHeds 1971-81 (OOOs)

..................................... *-Ass'.med Annual GDP Groith of:

7X 9X 11X.........................................

Profesilonals (Level A) 15 20 23Technicians (Level B) 49 64 73Skilled Wtrkers (Level C) 165 185 205

.................................................................

Source, Wdrld Bank, Indonesia, Education Sector Survey Report, 1975, p. 6.

8/ World Bank/OED: Impact Evaluation Report, Indonesia, Sustainability of the SecondEducation Project, 1989, pp. 28-29.

i/ World Dank, Indonesia, Sector Survey Report (Report No. 443a-IND), 1975, Appendix B,p. 27.

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16. The forecast noted that converting these occupational data intoeducational and training requirements was "burdened with many uncertain-

ties" and adopted a set of "arbitrary but consistent" assumptlons.10/ Thus,it was simply postulated that in the case of the 7 percent GDP growth rate50 percent of additional professionals would need university education, 40percent of technicians would require completed secondary together with somepostsecondary training, and 25 percent of skilled workers would need lowersecondary vocaticnal schooling. Thes. proportions were increased by 5 and10 percentage points respectively for the 9 percent and 11 percent GDPgrowth rates. The annual education and training requirements resulting

from these assumptions are shown in Table A4.

Table A4:Projected Annual Average EVucation/Training

Requirements 1971-81 ('000s)

Assumed Annual GDP Growth of:7X 9X 11X

Level A (Professionals,university education) 8 11 14

Level 8 (Technicians,postsecondary training) 20 29 37

Level C (Skilled workers,vocational training) 41 56 7e

Source: World Bank, Indonesia Sector Survey Report, 1975, p. 7.

17. The final step in this calculation was to compare these annualrequirements with the likely output of the education system. The crucialfindings from this comparison were that:

(a) th2re might well be some difficulty at university level interms of quality or the proper balance between differentfields of study, but in overall numbers the country's highereducation system would be sufficient to meet the needs ofeven the highest GDP projection;

(b) at Level B the existing system would not be able to train thenecessary technicians even under the assumption of moderateGDP growth;

(c) the main quantitative shortfalls would be even more apparentat Level C, skilled workers. While the general education

lo/ ibid, p. 28.

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system should be able to provide the corresponding non-vocational basis, the necessary complement of vocationaltraining did not exist; and

(d) the forecast recognized that Levels A, B and C together madeup lees than 10 percent of the total labor force. It arguedthat Level D, the unskilled and semiskilled workers, were notbeing adequately reached by the existing school system, andthey should be provided with a good basis of generaleducation.

18. While the Sector Survey's main policy directicns were derivedlargely from the manpower forecast, those directions appaared to be sup-ported by other types of information. The Survey noted several pieces ofevidence, all pointing to decreasing employment probabilities for educatedmanpower, with a concentration of unemploymen in the younger age groups,and with the most serious problems for those with secondary eduQation.ll}While there was conflicting evidence on this point, one of the sourcesshowed that among secondary graduates, those from vocational/technicalschools (STM) enjoyed clearly superior employment prospects. Thisinterpretation of the unemployment statistics will be dealt with in detaillater, but there is no doubt that they were understood as endorsing thefindings of the forecast of manpower requirements, which advocatedcurtailing the growth of general and in particular general secondaryeducation, and concentrating on the production of vocational skills.

19. Closely allied to the unemployment problem were the Survey'sremarks on substitutability between different categories of labor. Theauthors were well aware of the possibilities for substitution between dif-ferent categories of educated labor, so that effective manpower demandmight not be the same as manpower requirements, but insisted that there wasa uniquely correct mix of "persons with given characteristics, e.g., educa-tion, skills, etc. necessary to produce an output of a certain size andcomposition (given the present or assumed future capital stock andtechnology)." 12/ The Survey was particularly critical of what it calleddownward substitution, where a person occupies a job below that for whichhis education nominally fits him, noting that suc. downward substitutionoften involved university dropouts or less qualified graduates lackingappropriate experience (p.25). In any event, "the possibilities of verti-cal substitution between neighboring skill categories are already largelyutilized, ...and it may not be possible to continue with lt much further...with an increasing pace of GDP growth, given the underlying techno-logical complexity." 131

20. The construction of the Sector Survey forecast and the associatedarguments on unemployment and the limits of substitutability, have beendescribed in detail, because they reveal the overall set of attitudes thatunderpinned the policy recommendations of the Survey. This was a report

IL/ ibid, Appendix B, pp. 12-14.

12/ ibd, Appendix B, p. 24.

13/ ibid, p.7 and Appendix B, p.25.

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auffused with the notion that each GDP growth rate dictated a uniquelycorrect set of manpower coefficients; while effective manpower demand mightdiffer from these ideal coefficients, substitutability between categoriesof labor was, at best, a limited expedient. In any event, so the argumentran, Indonesia appeared to have exhausted the possibilities for suchsubstitution, with the evidence of youth unemployment statistics pointingtoward increasing difficulty for those without vocational skills. Almostall of these arguments were soon to prove mistaken, but at the time ofwriting in 1975 they were thoroughly in accord with the tenor of educa-tional planning, and they set the pattern for the Bank's involvement inmanpower development throughout the latter half of the 1970s.

Fourth Education Pro1-ct (Loan 1237)

21. This project fitted into the framework of the first two projectsarnd the Education Sector Survey. The broad ot.jectives of Repelita II wereto increase employment opportunities, achieve a more equitable distributionof income and to aim at balanced regional growth. To achieve this, it wasenvisaged that the economy would have to undergo substantial structuralchange away from agriculture and toward manufacturing. Within manufactur-ing, the largest relative employment growth would take place in chemicalsand oil derivatives, nonmetallic mineral products, and basic metals, all ofwhich would require substantial inputs of technical skills.14/ Against thisbackground, the objectives of the project vere to:

(a) help meet the country's manpower requirements at skilled andsemiskilled worker levels;

(b) provide disadvantaged rural and urban groups with skills thatwould enable them to earn additional incomes or to improvetheir livelihoods; and

(c) contribute toward an improvement in public service training.

22. These objectives are obviously consistent with the strategyadvocated in the Sector Survey, and indeed the manpower forecast con-structed in the Survey was explicitly used as the basis for estimatingnumbers of places made available In the Fourth Education Project. Themeans of achieving these objectives were complex, with the Department ofManpower and the National Institute of Administration (LAN) involved inproject implementation, as well as the Department of Education, but thelinking theme of the project was the evidence from the manpower forecast ofthe Sector Survey which pointed toward particular deficiencies of techni-cians and skilled workers. The project incorporated explicit estimates ofannual surpluses or deficits, which had only been discussed in broad termsin the Survey. The forecast was that Level A (Engineers/Technologists)15/

14/ World Bank: Staff Appraisal Report, Indonesia, Fourth Education Project (Report No.875a-IND), 1976, pp. 3-4.

15/ The rorecast used in this project differed from that in the Sector Survey in thatLevel A (Professionals)- with an annual manpower requirement of 15,000, was nowmodified to Level A (Engineerh/Technologists) with an annual requirement of 10,000.

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would be in emall surplus over the Repelita II period (1974-79), whereasther- would be annual deficits of 20,000 technicians and 22,000 skilledworkers.

23. The project consisted of the construction of a variety of techni-cal training facilities, including technical teacher training faculties

(FKIT), centralized workshops (TTCs), after the model established in theFirst Education Project, vocational training centers, and mobile training

units (ITUs) that would service both urban and rural areas. In these termsthe project was well designed to contribute to the broad objectives of

Repelita II.

Table AS:Forecast and Outcome, Fourth Education Project (Loan 1237)

. . ..... .... ... . . . . . . . . . . . . . . . . . . . . . . . . . .

Type Ptanned Actual Differenceof Enrollment Enrollment (Surplus+Institution or Deficit-)

Peoartment of Education:

Technical teacher trainingfaculties 2,050 2,749 +34XCentralized workshops (TTCs) 11,900 10,500 -12X

Deoartment of NaauOwer:

Vocational training centers 11,610 8,500 -27XInstructor training center 150 460 +207XMobile training wnits 9,300 -

"at'onl Instlutof A dinistration (LAN):

New facilities 1,100 1,390 +26X

.. . .................................. .........................................

Source: Vorld Bank, PPAR, Indonesia, Fourth Education Project (OEDReport No. 6312), 1986. pp.7-10. 24-55.

24. It is apparent from Table A5 that this project produced a widerange of operating outcomes, but in broad terms it achieved its enrollmentobjectives. Those components of the project which had not reached theirtargets by the time of project completion in 1984 either met the target (asin the case of the centralized workshops) or come very close (vocationaltraining centers) in the next year or two. It needs to be noted, however,that the report suggested that one of the reasons for the shortfall invocationaL training center enrollments was that there had been insufficientstudent interest in some of the courses.16/

16/1 World Bwak/OZD: PPAR, Indonesta, Fourth Education Project (OED Report No. 6312), 1986,p.8.

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25. It should also be noted that the proposed mobile training unitelisted in Table AS were in the evert not financed by the Bank but by theGovernment. The Project Completion Report records that while the targetspecified at project appraisal was an increased capacity of 9,300 trainees,the actual number of trainees in 1983/84 exceeded 50,000. While it mightseem that the Bank would welcome this excellent quantitative outcome, it isquite clear that it thought that the mobile training units were of verypoor quality. The Project Completiou Report was careful vo note that theHTUs were astablished from the national budget "without intervention oftechnical assistance,"17/ and the PPAM recorded that "the audit mission sawtwo mobile training units; both had broken down and had evidently not beenused for some time."18' Its comment that "they may not be representative"leaves the assessment in doubt.

Polytechnic Prol-ct (Credit 869)

26. The (first) Polytechnic Project was cast in a similar mould asprojects reviewed so far, and aimed, like them, at increasing the supply ofmiddle level technical manpower. It also drew heavily upon manpower fore-casts to provide the justification for this investment. Given the closesimilarities, there is no need to describe the project in detail, but someobservations are worth citing.

27. Firstly, the forecast used in this project ostensibly covered theperiod 1975-90. In itself this was a bold undertaking, given the rapidrates of economic growth and transformation that were known to haveoccurred under Repelita I and II. But the starting point for the forecastwas precisely the same set of assumptions and base-line observations fromthe 1971 Census that had been used for the Sector Survey. These observa-tions were extrapolated to 1975, and then used to project to 1990.19/ Ineffect, the demand for polytechnic graduates (a type of manpower that didnot even exist at that time) was inferred from a 20 year projection basedon a set of Census observations that were already seven years old and whichwere known to be unreliable.20 / Even more daringly, the forecast thenattempted to translate these broad requirements into disaggregated demandfor engineers, engineering technicians and accountants in 1990. Thedetailed procedure is not described in the Bank documents, but the methodrelied heavily upon the application to Indonesia of manpower coefficientsderived from international comparisons, despite the acknowledged fact that"comparative data from other countries show considerable variation."21/

17/ lbid, p.44.

18/ lbld,. p.9.

19/ World Bank, Staff Appraisal Report, Indonesia, Polytechnic Project, 1978, pp.3-4.

20/ World Bank, Education Sector Survey Report, 1975, Appendix B.

2t/ World Dank, Staff Appraisal Report, Indonesia, Polytechnic Project, 1978, p.4.

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ANNEX 2

INDONESIAN EDUCATION AND TEE WORLD BANK:AN ASSESSMENT OF TWO DECADES OF LEDING

Traiiazn Comnonents in World tank Education Prolects in Indonesia

I. Introduction

1. The incidence of fellowships and other forms of technicalassistance in World Bank projects worldwide has risen dramatically in thepast twenty years. Before 1969, only 6 percent of Bank loans or IDAcredits includtid training couponents; by 1989, virtually all operationsapart from stractural adjustment loans included some training components.In Indonesia, too, there has been a remarkable development, from an averageof less than 10 percent of total Bank Group finance devoted to technicalassistance in the first eight (completed) education projects, to over 30percent in current loans. Across all sectors in Indonesia, about 25percent of loan proceeds is now allocated to fellowships, training andtechnical assistance.

2. Since Indonesia's first Bank-assisted education project began in1970, it is estimated that some 2,000 Indonesians have undertaken graduatestudy abroad on loan/credit funding. Short-term non-degree programs pro-bably accovnt for several thousand more, and participants in short-termtraining programs conducted domestically may be numbered in the tens ofthousands. In addition, while the Bank is currently considered the domi-nant source of funding for overseas fellowships, other donors have con-tributed some 30,000 fellowships over the past twenty years.

3. This Annex provides an assessment of the Bank's technical assis-tance, specifically overseas graduate degree programs, overseas short-termprograms, and the use of foreign con3ultants in the 21 World Bank loans andcredits to the education sector in Indonesia since 1970.1/ Four projectshave been chosen as case studies: the First University Development Project(Loan 1904); the Second Teacher Training Project (Loan 2101), the SecondaryEducation and Management Project (Loan 2472) and the Second UniversityDevelopment Project (Loan 2547). Descriptions of these four operations aregiven in Part II of the Main Report. They were selected as beingrepresentative firstly of Bank concerns with the development of skilledmanpower and with Bank activities in non-education sectors, and secondly ofthe Government's concern over the introduction of quality components into arapidly expanding system. This Annex will concentrate on overseas degreeand short-term non-degree programs, and on foreign consultants activelyengaged in the educational process; it thus excludes most domestictraining. Although a study of domestic training would be very usefulbecause of the resources used and the probable continuation of cascade and

1/ Data sources for this Annex include: Dank documents (SARs, PPARs, SupervisionReports, PCRs and Audits), special studies cominssioned by the Governent or by theBank, and project-related reports or other GOI documents (such as Repelita). Severaldozen iuterviews were conducted with Bank officials in Washington and with projectpersonnel, Department of Education officials and academics in Indonesia.

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other short-term programs, it was not teasible to include it in this studybecause of the large size and disporsion of such programs.

It. Prolect Initiation

4. There appears to be no standard practice in the Bank for describ-ing the elements of the technical assistance components in the SARs. The

combinations and proportiorvt of total loan funds devoted to technical

assistance components in the four case studies were described as follows:

Loan 1904: Fellowships and Training 252Professionallspecialists 322

Loan 2101: Fellowships 101Professionals/specialists 101

Loan 2472: Fellowships/specialista 182Training 242

Loan 2547: Fellowships 501Specialists 112

5. Technical assistance needs in projects arise from several sources.GOI priorities are &et out in the Five-Year Plans, in turn based on pro-grams developed in each of the Directorates-General of a Department throughnational consultative meetings and coordinating memos. The Five-Year Plansare the basic framework into which all projects must fit. Within the Bank,sector studies, country economic reports and special studies, together withthe regular discussions between relevant GOI authorities and the Bank'sResident Mission and visiting staff provide the major inputs for projectidentification. Within both GOI and the Bank, interests of individualofficers and agencies exert influence on direction and emphasis ofprojects; to a lesser extent, educational trends and styles influenceselection of new projects, especially on the Bank side. Since the early1980s, when the Bank stepped up its lending program to Indonesian educa-tion, most projects have included funds for the early preparation and deve-lopment of subsequent projects, thus determining the direction of futureoperations in already identifiable directions.

6. Neither project officials nor Bank staff could state with anyexactitude how the proportions of technical assistance in the form offellowships, domestic and overseas short-term training, and the use offoreign consultants were arrived at, except to say that "there was not muchscience to it." Indonesian officials stressed the subtle negotiations andtrade-offs that occurred and that are difficult to describe without a fullknowledge of project background and of the personalities of the negotia-tors. The general impression given was that the fellowships element inparticular was a 'residue' after agreement had been reached on other,usually physical, inputs. It seems safe to conclude that the Bank didinfluence the proportion of its financing to be used for technicalassistance, while the Borrower had a greater say over the choice of targetinstitutions. The end user/beneficiary appeared to exert almost no influ-ence over decisions at this stage.

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7. The determination of requirements for and utilization of foreignexperts is generally a rather contentious area. Both Borrower and Bunkstaff acknowledged in interviews that there has been over-provision offoreign consultancy services in education projects, but that provisions ineducation projects have been generally lower than in other sectors.Indonesian officials also pointed out that negotiations over the loanyroportion. for foreign experts are generally easier than with grants,where this component may reach as much as 60-iO percent of total cost.Over-provision of foreign experts is not a new problem, nor is it specificto Indonesia.2/ The objection is not to foreign consultants as such, butto their large numbers. One Bank staff expressed the extreme view that thelevel of foreign consultants is the 'price' the Borrower has to pay toobtain the loan. Interviews with Borrower officials, however, did notsu-,port this view. Where amounts of foreign consultants' time were deemed"excessive," it was generally because the client did not have a clear ideaof their use, and submitted to suggestions from the Bank.

8. Two important issues of a general nature are not discussed inproject documents, although they may have been considered at upstreamlevels either within the Bank or between the Bank and the Borrower. Theseare, first, that there is no discussion of alternative investments in theSAR9, either for the project as a whole, or for the proportiors of tech-nical assistance components. This is a wider problem which is discussed inthe Main Report. Second, there is no explicit consideration of the appro-priateness of devoting fellowship opportunities among existing staff com-pared to training new entrants to the system. In two of the four cases,provision was made in the SAR for training of new staff entry (Loans 1904and 2101); the Science and Technology Training Project also makessubstantial provision for new entries. The Secondary Education andManagement Training Project by contrast, specifically disallowed trainingfor new staff. The basis for these decisions is not addressed in the SARs.In the Second University Development Project, it was noted that theGovernment had waived its requirement that civil servants should have beenemployed for at least two years (formerly five years) prior to departure.Candidates would instead sign a contract requiring them to teach at auniversity for at least twice the period spent abroad plus two years. TheSecond Teacher Training Project also indicated that of the 300 fellowshipsfor Masters and PhD training in Element B, about half should be for newstaff. No information is available on the extent to which this waseffectively carried out.

9. Fragmentation of the data collection and analysis functions hasbeen a serious obstacle to planning for the introduction of quality,particularly the need for teacher improvement. School and universitystatistics are the responsibility of the Research and Development sectionof the Department of Education (B6litbang) which also has the formal

1 See, e.g., World Bank and a variety of OED reports on this subject, such as: A Reviewof Training In Bank Financed Projects, March 1982; The Role and Use of Conoultants inBank Group Projects, 1977; Evaluation in World Bank Education Projectot Lessons fromThree Case Studiev, 1985; end A Review of Bank Operations in the Education Sector,1978.

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responsibility for long-term educational planning. Historically, this unitwas developed and staffed by IRIP faculty with strong interests inpedagogical matters. The section has recently strengthened its capacityfor analysie but there remain severe problems with basic data reliability,especially in the double counting of teaching staff.3/ The Planning Unitin the Secretariat General was given real planning authority or.ly in theFifth Plan; they do not have a data collection/ analysis function. Theyhave been involved recently in developing more bottom-up planning and inimprovements in private sector resources for education. The DirectorateGeneral of Higher Education has institu_ed a continuing planning exerciseamong universities, now beginning its third decade, but it still suffersfrom lack of information management resources. No long-term plan foreducation across all levels yet exists. The Bank is of necessity limitedto such data as are available, and its own sector studies generally providea broader view over the entire system than any single document from theGOI, apart from the Five-Year Plans.

10. An example of the difficulties caused by inadequate data can beseen in the targeting of training activities. University staff statisticsare presented by employment status.4/ over & third of all teaching staff instate univeLsities are classified as 'non-permanent.' Of these, half areemployed in another department of the same faculty, sc that 'permanent'staff in one department will be counted as non-permanent in another.Similar double counting exists across faculties. At secondary level,teachers are enumerated by school; since multiple jobs are common, andc-ommonest among those with skills in short supply, the statistics regularlyoverestimate the numbers of teachers actually available. This problem hasbeen most acute among teachers in teacher-training schools (which have ahigher incidence of multiple jobbing than any other kind of school) and insubjects such as sciences, mathematics and languages, all of which aretarget disciplines in Bank-assisted projects.

11. Another difficulty in determining targets for staff training isthe activities of other donors. Bank documents generally identify majordonor initiatives in a given project area, but not in terms of fellowshipsoffered, or numbers of foreign consultants employed. The exception iscooperative arrangements with the Bank in providing consultants or fellow-ships; in these cases, involvement of other donors can be considered in thetargeting.

12. Needs identification studies have not been carried out for fellow-ships or foreign experts as part of project preparation. In at least onecase (Loan 2472), such a study was commissioned after the beginning of theproject but, according to officials, had no practical application in thedevelopment of targets. Because job description in the civil service hasonly just begun, and because criteria for promotion have not yet been

3/ A decision taken in December 1989 to conduct a teacher census may alleviate some ofthese problems.

41 For exaumle, a staff member of an Economics Faculty who was sent abroad to studyLibrary Science and take over the library on his return is listed in universitystatistics as a member of the Economics Faculty where he still receives his salary,rather than as a member of the Library staff.

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developed, needs assessment studies often do not distinguish between theneeds of a post and the needs of individuals currently in that post.

III. Participant Selection

13. Because of pressure of time, criteria for training have often beenreformulated or reinterpreted after the signing of the loan. A delay oftwo years is not uncommon before selection and placement are confirmed andcandidates ready to travel. These delays have been caused by the lengthyadministrative procedures involved at all stages of the process. First,user institutions must be informed of the availability of fellowships. Itthen takes time for the responsi.le officials to distribute the informationto their staff and for them to request application forms, to look for suit-able programs, to correspond with overseas institutions and to undertakenecessary language training or other academic testing where required.Users/candidates must inform the CPIU of placement inquiries and makeapplicatio- for funding and the CPIU or an overseas implementing agencymust make arrangements for authority from GOI for passports, travel, etc.The CPIU then has to inform candidates of arrangements and to coordinateall these activities with tbq entry times at the host institution. Changesmay also be made because of local needs not apparent at the time of nego-tiation, or for equity purposes. Delays also occur because of lack ofcounterpurt funding. Or. the part of the candidate, delays may happenbecause of initial failure in language tests or other events which causewithdrawal and substitution.

14. Criteria for selection of overseas post-graduate participants arenot given in the SAR or legal documents, apart from a blanket statement inrecent loan agreements that such criteria will be agreed upon by theGovernment and the Bank. Selection of individuals for overseas studies hasbeen entirely a matter for the Gcvernment, and one in which the Bankappears to have taken no active part. The formal criteria used by theGovernment for all its overseas fellowships have been of a very generalnature and served rather to delimit the pool of potential candidates thanto select individuals. Minor variations have been apparent from project toproject, but criteria have generally included: limitations on age (whichmay be up to 50 years in some cases); civil service status; satisfactorycompletion of the P4 program of civic instruction; possession of at least aSarjana degree; good health; and recommendation from a direct superior.

15. Selection of individuals has been through self-selection or selec-tion by a superior, or through group selection. These are not mutuallyexclusive, but rather are points on a scale--at one end the highly moti-vated teacher wiho has sought out and made application for overseas train-ing, and at the other a passive acceptance of a top-down decision. Theadvantages of these options depend on the purpose of training: the lattermay be better frrn the point of view of balanced development of the facultyor user institution, and the former probably better at identifying highlymotivated individuals. Selection by a superior has been "...absolutely anormal procedure...in a hierarchical bureaucracy...but little is yet known

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about the considerations underlying the superior's decisionn"5/ Where agroup is selected for participation, it is likely to be the decision of asuperior officer3 this vill be discussed further under program selectionbelow. Very little is known about selection procedures in the administra-tion, except that they appear to be very unit-focused.

16. "Seloction" has also occurred in le project-specific ways, forexample, where a project has taken over funding of follows already abroadwith financing from non-Bank sources, where it has continued funding begununder a previous project, or has anticipated training for a subsequentproject. Such trade-offs have shown useful flexibility, but complicate anyassessment of impact. Loans 1904 and 2547, for example, follow thispattern, with 106 follows from Loan 1904 being funded after the closure ofthat loan by the Second University Development Project; similarly theSecond Teacher Trairding Project continued funding for some staff who didnot complete their studies under the preceding project. Target assessmentis also made more complicated where training is undertaken by another donorin cooperative arrangements with Bank projects; e.g., the British Council,Nuffic, ILO, UNESCO, and various other donors.

17. Assistance in the selection of staff for overseas study has oftenbeen written into the terms of reference for consultants; however, the timetaken to select, recruit and prepare candidates, and the generally longtime lag in recruiting consultants have seldom in practice allowed for thiskind of interaction. Typically, fellows have already been placed and manyof them have been already left for overseas by the time the consultantarrives.

18. SAR targets are normally expressed in terms of numbers of Mastersand of PhD degrees to be obtained, or in terms of man-months of studies.It was evident from interviews with returned staff that faculties did notexercise much authority over the subject areas and specializations of thoseapplying for overseas fellowships. Nor was there any long-term planningfor staff development, or for the role of other fellowship donors in reach-ing a 'target.' There was rarely any policy over upgrading from Masters toPhD level; this was determined exclusively by availability of finance.Finally, selection was so heavily dependent on such considerations asEnglish language proficiency that targeting by degree level was nearlymeaningless. If the aim of the fellowships program is to provide higherquality training for any who can benefit from it, as it seems in practiceto be now, targeting by Masters and PhD level is unnecessary and mis-leading. If the aim is to achieve a desired balance of Masters and PhDtrained staff vie-k-vis first degree qualified staff, then there needs tobe more attention to preliminary English language training, long-term staffdevelopment plans and coordination with fellowships provided by otherdonors.

/I Sediono Tjondronegoro, wProblems of Re-entryt Personal and Institutional: An EarlyIndondsian Case Study," BAPPEKAS/OT0 1989. The study refers only incidentally toWorld Bank returnms, but the author notes that 83 percent of the returnees in hisstudy reported that they were selected by their superiors.

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19. Lack of corporate memory in universities and in government unitshas often meant that a prospective fellow is not aware of how many personsin that department/faculty/unit are already studying abroad, nor in whatspecializations. Frequent changes of administrative staff, especiallyDaans, has meant that this information is not easily accessible.6/

20. Where overseas training has accounted for a major part of loanfuiese, selection criteria and practices tend to be much more strict. TheSecoi-d University Development Project, the Science and Technology TrainingProject and the Higher Education Development Project have all made use ofselection teame, in some cases including a member from the country of thehost institution(s), but always with academics prominent in the subjectfield. Under Loan 2472, for example, a committee was sent out to visitcountries most likely to provide appropriate training and to identify suit-able courses; such identifi:ation tours are common to many projects, butthere appears to have been no dissemination of information among projects.

21. The Government has set up an Overseas Training Office (OTO) inBAPPENAS which is developing more effective selection procedures, includingthe use of an academic potential test (TPA). The OTO has also set up aNational Steering Team for Overseas Training (HASTOT). Within theDirectorate General of Higher Education, a system of joint interviews withDGHE and donor representatives has been established and is frequently givenresponsibility for individual selection. Where the pool of candidates islimited and where international standards of excellence are more easilyidentified (e.g., in higher education), selection is more reliable than inprojects where selection is either determined by inclusion of certaintarget schools (and thus automatically of their staff), or where the poolmay be nationwide and scattered, with comon qualifications difficult toidentify.

22. Selection of candidates for short-term overseas programs hasoperated in several ways. Where selection has been for short-tei-m estab-lished courses for adminietrative trainees, selection has been throughappointment by superior officers. Sometimes there appeared to be littleconnection between the purpose of the training and the qualifications ofthe participants. In the case of sandwich training and refresher coursesfor university and IKIP lecturers, self-selection has been the most commonpractice.7/ For instructor training programs, selection has mainly been ofincumbents of posts (e.g. Deans, Section Heads of Units, etc.).

IV. Selection of Consultants

23. Selection of foreign consultants has also been a time consumingprocess. General TORs determined by CPIUs not infrequently had to be

6/ It is a cultural attribute that rather than prohibit any staff member from applyingfor a fellowship on grounds of poor preparation, lack of language proficiency, orother causes, a Dean, Professor or Head of Department is more likely to let all staffwho so desire make application for higher degrees and to leave rejection to the donoror recipient institution.

7i Proyak Pengembangan Pendidikan Tenaga Kependidikan P3TK A&C, Swakelola, mimeo, nodate.

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revised by the user or the LPIU after arrival of the consultant because of

a lack of consultation between the CPIU and the uaer institution at the

planning stage. In early projects, overseas agents were appointed by the

projects to identify consultants, and to employ and manage them, with very

little input from the client or user. Since 1984, project managers have

had the responsibility of selecting consultant., but could use agencies for

preliminary identification and short-listing. Government officials still

feel that selection procedures for foreign consultants leave much to be

desired. Selection through CVs alone is risky, but expensive schemes of

face-to-face interviews have not yielded much better results, either.

Cultural sensitivity has not been a critarion listod in the TORs, but it isgenerally acknowledged to be the most critical component of a successful

consultancy. The second most important aspect in all but the highlyspecialized research areas is ability to work in the Indonesian language,

also a qualification seldom mentioned and seldom obtained.

24. TORs for consultants in Loan 1904 (First University Development

Project) were wide and not position-speciiic. Each consultant was expectedto:

* develop a given undergraduate curriculum;develop resources required for implementing thiscurriculum;

e prepare a manpower development plan for implementing the

curriculum;* upgrade staff teaching and research skills;* prepare an action program for development of the

department;* deliver lectures and perform other teaching activities;

and provide assistance in research activities.

25. After arrival at the target universities, these tasks were slight-ly refined to cover four main functions: first, to develop undergraduatecurricula including patterns of courses, outlines and course notes and to

identify and develop instructional materials and procedures to support newcurricula and courses; second, to upgrade teaching staff capabilities by

conducting seminars and developing joint activities in curriculum revision,materials development and research, and to prepare staff to go abroad foradvanced degrees; thirdly, to teach staff and advanced undergraduates; and,lastly, to assist in developing a departmental or area research agenda and

collaborative research projects.

26. Consultants for the Second Teacher Training Project (Loan 2101)were selected on specific TORs, some of which gave only the subject and theperiod of time. In Element A of the project, consultants dealt only with

teachers in service while in Element B consultants were used as substituteteachers, taking the places of staff studying aDroad. Formal terms of

reference for Loan 2101 were not greatly different from those of Loan 1904.They were: to review curricula; to review and clarify the emerging grad-

uate programs; to review and clarify student selection; to guide research

projects; to assist in textbook-writing projects; and to assist the post-graduate faculty in upgrading the quality of the undergraduate school. Inthe Secondary Education and Management Training Project (Loan ?472),

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consultants were engaged for management training, equipment procurement,development of the national examination system, and improvement of theTeachers' Centers and of English language teaching. Qualifications neededwere five years' experience and a PhD.

27. Overall, it is apparent that the criteria for selection of consul-tants in the projects studied have been either extremely wide or extremelylimited. There also seems to have been an unwarranted optimism about theavailability of long-term qualified consultants, so that targets have oftenhad to be modified or funds reallocated when suitable candidates were notavailable.

28. Multiple visits from consultants have frequently been arrangedwithin a single project. This was particularly efficient in the agricul-tural training projects and also in the teacher training projects. Thereexists as yet no register or other means of exchanging information on con-sultant performance between projects. This is an acknowledged need amongproject managers and Department of Education officials. The principalobstacles to this include the unwillingness of some major donors to releasetheir consultants registers; privacy provisions where references may bedamaging; and the danger that an adverse assessment may arise not from theconsultant's service, but from inadequate preparation for his reception,inadequate counterpart staffing, inappropriate assignments, etc.

V. Program Identification and Placement

29. From universities and IKIPs, identification of programs andplacement was commonly made by the candidate, at least in the early stagesbefore the appointment of an overseas academic agency. Candidates informedof financing possibilities wrote to overseas institutions and applied foradmission; where they were successful, they could then apply for financingunder the project. Self-placement probably had the advantage of ensuringthat the program was one desired by the participant. But since few LPIUsor user institutions had wide experience of overseas institutions (espe-cially in the first three case studies), the choice was generally limitedto institutions where colleagues or personal friends of the candidate hadstudied. Non-academic reasons for choice were common. The CPIUs attemptedto build up collections of university catalogues, handbooks, researchbrochures, etc., but continually faced problems of disseminating thisinformation among LPIUs and user institutions. Only where a Dean,Professor or Head of Unit had extensive personal contact, abroad and couldadvise on placement was this system fairly secure (as in the SecondUniversity Development Project--Loan 2547).

30. In the Second Teacher Training Project, there were three separatePIUs, one for Primary Teacher Training, one for Secondary Teacher Trainingand one for Administrative Staff Training. Selection and placement activi-ties, however, were concentrated in the second PIU, which undertook thefunctions of advertising among potential overseas institutions, distri-buting their application forms to prospective fellows, and dealing with allof the administrative tasks associated with placement. The SecondaryEducation and Management Project aleo had three PIUs, but in this case eachPIU managed its own placements through overseas agents which were alsoclosely involved in provision of programs.

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31. Overseas academic agencies, such as MUCIA and SUNY, had theadvantage of being able to match the candidate's background and experiencewith the facilities and specializations of the host university, and couldserve as an intermediary in translating and interpreting academic recordsand admission requirements. Both agencies had wide experience with

Indonesian graduates from their participation in other fellowship programsfor USAID and the Ford Foundation.!/ Both placed candidates throughout theUSA and also in other countries, but in all these projects, sel;-placementoccurred as well. In the Secondary Education and Management Project, theLanguage College of the Pacific placed candidates in various institutionsbut the project also negotiated with a number of academic institutions forplacement in specific programs.

32. The Bank was concerned that the selection, placement andmonitoring functions should be institutionalized in the Department ofEducation. It has concentrated its efforts on a unit which would manageBank projects in particular. The Government has been equally anxious tosee this expertise developed, but wanted to ensure that it would not be

limited to Bank projects. It appears that for the time being these activi-ties will continue to be under OTO for all government departments exceptthe Department of Education which will manage its own program in tandemwith donors. Both Government and Bank have also been concerned that train-ing abroad should not be limited to, or even over-concentrated in, a singlecountry. This appears to have been effectively achieved in the fourprojects just reviewed.

VI. Preparation for Overseas Studv

33. The greatest single obstacle to overseas study, in both degree andnon-degree programs, is language proficiency. Provision for languageinstruction, testing and upgrading is now provided in some projects, but inother cases is left to user institutions (and in many cases to individualcandidates). In spite of recent government initiatives in basic Englishlanguage training through OTO and various donor activities designed to

improve language competence in universities, the lack of language skillscommonly becomes apparent only at the placement stage, delaying and some-times cancelling departure. The problem has generally been far more acuteamong participants from the administration and among primary school teachertrainers than among university lecturers, and far more severe in the pro-vinces than in Jakarta. The obstacles to overseas study arising out ofinadequate language competence was recognized as a risk in the FirstUniversity Development Project, but was not mentioned specifically in otherprojects, although it was most severe in the secondary and administrative

training projects.

34. Both OTO and DGHE have conducted pre-departure training courses towhich fellowship holders in Bank projects have also been invited if theirdepartures coincided with the programs. Where foreign agencies such as

8/ Final Report Cooperative Program DGHE/MUCIA, First University Development Project,June 1988; State University of New York, Indonesia Project 1957-1983, Views from aDistant Land, by John H. Slocum, 1974.; and Indonesia Second University DevelopmentProject, Overview of the Academic Development Program, 1987-1989, DGHE and WUCIA.

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SUNY and MUCIA have been involved in management, orientation programs havebeen provided on arrival at the host institution. On occasion, speciallanguage programs for administrative trainees were conducted as part of theservice of the contracted agency in the US. For the short-term academiccourses where candidates were mostly older, the language problem wasapproached simply by trying to see that eac), group had at least one memberwho was reasonably proficient in the language to act as translator andtutor. The language training problem has been tackled most directly bybilateral donors, who have frequently provided tuition-free training forthose selected to go abroad on fellowships funded through Bank projects.

35. Where administrative units have undertaken training programs todevelop staff in a new area, or where universities have been preparingstaff for new departments or subjects, problems have arisen in matchingbackgrounds of candidates with the new specialization.9/ Because of theIndonesian universities' long tradition of recruiting staff from amongtheir own graduates, and limiting fellowships to those already in service,it has been necessary to re-train teachers to work in the new faculties.Thus, persons with agricultural backgrounds but not engineering may be sentto undertake a program in agricultural engineering, or biologists may besent to study for a higher degree in chemistry, and so on. Suchinadequate or inappropriate matching generally requires additionalpreparation in-country or longer periods overseas. This would seem to bean area where recruitment of new staff might be more cost- effective thantraining of existing staff.

VII. Management of Programs

36. Each of the four case studies had multiple project implementationunits (PIU), either one central and several local (Loans 1904 and 2547) orseparate PIUs for each Directorate involved (Loans 2101 and 2472). AllSARs mentioned problems of coordination among PIUs as a risk. In Loans1904 and 2101, the main responsibility for fellowships, apart from identi-fication of candidates, lay with the central PIU. In Loan 2101, a specialunit called TAMU (Technical Assistance Management Unit) was set up inElement B to manage all fellowships and foreign consultants. In Loan 2472,each element or unit managed its own technical assistance. All four prcj-ects had education officers in the central PIU, and Project 2547 hadspecialists in fellowships administration and consultant management atinternational, national and local levels.

37. Before the end of 1984, overseas age.ts were appointed to managefellowships and to recruit, select and manage foreign consultants. In late1984, the Government announced a new regulation requiring overseas fellow-ships and consultancies to be managed within the project (Swakelola).

38. The new regulation on self-management was clearly based on theconviction that by this time project staff had sufficient experience toensure the appointment of suitable consultants, and that this experienceneeded to be consolidated and institutionalized. Under the terms of the

91 In a recent bilateral selection program, candidates for a proposed Faculty of BasicSciences were employed in the Faculty of Agriculture, but had been recruited from aFaculty of Dentistry.

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regulation, overseas agencies could still be utilized for specific taskswhere the project directors considered it necessary, but the foreign agencywould no longer be an equal partner ir the project. Some officials saw the

regulation as an attempt by the Government to ensure more efficient use ofconsultants as well. Each of the four project studies has continued to use

overseas agents for such specific tasks, and the more recent ones (Loans2472 and 2547) have negotiated contracts with several agencies rather than

with a single one, as was the case in Loans 1904 and 2101.

39. The Bank has shown considerable interest in the selection of over-seas agencies to manage fellowships and technical assistance. It has

pressed for a specific selection in at least one case, and has objected toanother. It has requested projects to provide the details on evaluatingagencies, and has asked them to justify their selection. Once the agencyhas been chosen, however, there appears to be very little contact between

it and the Bank. One agency in fact noted that it would have appreciatedmore contact with the Bank during its period of operation.

40. Under the new arrangements, some projects (e.g., the Science and

Technology Training Project) have appointed Indonesian staff to monitor

progress of fellows abroad; in other cases, the Cultural Section of the

relevant Indonesian Embassy undertakes monitoring and payment of allow-ances. One concern is the financial position of fellows. Since Bank funds

may not be used to enable families to accompany fellows during study

abroad, and since the fellows' income in Indonesia may drop to less than

half the normal level after six months abroad (basic salaries are continued

but all allowances cease and income from additional jobs is lost), finan-

cial hardship is frequent among families left behind. This is the most

common complaint found among fellows studying abroad, and an area wherepreparatory counselling may be useful. It is, however, a point for

Government rather than for the Bank to take up.10/

41. Finally, the Swakelola system can be expected to see greater acti-

vity in the marketing of courses by overseas universities and agencies.This nas already been a feature of some projects, where staff of overseas

institutions directly approach project managers with offers of specially

designed programs, particularly short-term courses, or programs for staffwho cannot meet entrance refquirements of the major universities. There has

been a predilection for such courses within projects, since they virtually

'guarantee' satisfactory passes, an aspect more popular in administrativetraining than it has been for university staff. There have also beenadverse comments from Bank staff about marketing practices of some institu-

tions which 'guarantee' courses, particularly that overseas trips for proj-ect staff have been financed out of the fellowships component. In general,

of course, trips by project staff concerned with placement and managementcan be justified, and even feature prominently in some CPIU placementefforts, but there appears to be little cross-project exchange of informa-

tion obtained.

101 An inltiative under the Second Teacher Training Project to obtain views of returnedfellows on problems faced in training and at re-entry elicited responses which werelargely concerned with inadequate financing for their families left behind.

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VII. Re-entry of Fellows

42. None of the SARs for the four case studies included any activitiesor concern with re-entry of fellows after training. The only project whichhas made an explicit provision for this was the Science and TechnologyTraining Project. The Secondary Education and Management Training Projectestablished an Overseas Fellowship Committee, one of whose tasks was tomonitor re-entry and to assist in finding suitable employment for retur-nees. However, the difficulties of calling together the highly-placedmembers of the Committee has meant in practice that little could be done.The Government has become very much aware of the lack of re-entry moni-toring, and future projects will almost certainly give more attention tothis aspect.

43. It appears that few fellows keep up any contact with their homeinstitution while abroad, or with their host institution after return.There are several explanations for this. Actual preparation for studyabroad is generally compressed into a very short period immediately beforedeparture so fellows often cannot arrange for maintaining contact withtheir department while away. Where self-placement has occurred, thespecialization of a fellow may not be very closely related to the needs ofhis department reducing the incentive to keep in touch. Furthermore, therehas been a lack of clear guidance in fellowship holders' contracts, andcontact with the CPIU/LPIU or their department/faculty or administrativeunit has not been mandated. There are instances of fellows who havecontacted an academic overseas because of work reported in academicjournals, and have maintained the contact after return; in these cases, re-entry has been less of a problem because the candidate has a clear idea ofthe work to be accomplished. Such cases appear to be rare except amongthose who have undertaken research degrees.

44. When a fellow eigns a contract for overseas study, he is requiredto return to his original job after completion of study. No teaching postmay be left vacant for more than 6 months, however, and fellows commonlyreturn to find their previous posts filled; they then typically 'float' forseveral months until they can be appropriately placed. It is not uncommonthat they are set to teaching subjects outside their recently-acquiredspecialization; they may also at this time be absorbed into project oradministrative work. It is also usually several months until their fullsalaries and allowances are resumed.

45. In administrative units, the problem of re-entry is equally if notmore severe. There is, in the opinion of some officials, a fairly cleartendency among regional staff trained overseas to flow to central govern-ment administration, thus negating the purpose of training. However, nostudies yet exist on what happens to returnees, so that these views have tobe considered as tentative. Where a specialized subject such as statisticsor computing has been studied, re-entry is less of a problem, tbough there-entry lag may not be shorter. But where courses have been of a fairlygeneral nature, such as in educational administration or leadership andmanagement, neither "structural" nor "functional" positions are available

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on return.ll/

46. Tracer studies of returnees have been attempted, bat they arehighly labor intensive, and suitable supervision and planning has not beenforthcoming. The tracer study for the Second Teacher Training Projectcovered IKIP graduates, not fellows funded under the Bank loan.12/Another tracer study for the same project abandoned the effort of tracirngthose already returned, and opted for a three year longitudinal study ofthose who returned in 1985 only. The difficulties of analyzing the re-entry problem are exemplified by a simple exercise undertaken as a part ofthe present study. About 200 returnees were asked about problems of vuti-lizing their new skills after return. Although the candidates were listedas having returned at least six months before the questionnaires were sentout, more than 30 were still abroad, one claimed that he had never applied

for a fellowship, and only about ten percent of the questionnaires werereturned. This is not an unusual result for surveys undertaken throughpostal questionnaires.13/

IX. The Impact of TraininE Programs: MeHtina Tareets

47. This section discusses whether projects have met their targets fortraining, and how appropriate those targets were. Some of the dataproblems that arise in setting and evaluating targets have been mentionedabove: double counting in the statistics or arising out of funding frommore than one souzce; the problem of degree upgrading; multiple attendanceat short or long courses; and problems of counting withdrawals and

failures. Because of these complications, meeting targets in terms of man-years may be different from meeting targets in terms of number of persons.

48. The First University Development Project was the only case studywhich expressed fellowship targets in terms of percentages of total staffof relevant departments to possess Masters or PhD qualifications by the endof the project. It was expected that by 1985 one-third of the total of1,300 (then) staff of the target faculties would have Masters or PhDdegrees, and that by 1990 half of the expected total of 1500 (projected)staff would be so qualified. The extent to which these departmentaltargets were reached cannot be identif4ed from data currently available.

The Project Completion Report evidently used total staffing figures from1980 to measure the impact of staff development in 1988, but variations

114 "While all civil servants hold functional positions, a few selected areas such ashigher education, research and a few others, are considered vital areas and are thusprovided with functional allowances to make them somewhat competitive with the privatesector. If, however, individuals are lucky enough to be appointed to a structuralposition (this is a closed system of appointments where individuals are asked to fill.in posts rather than such post being opened for competition), then they can expecteven further supplements." Final Report, Study on the Impact Evaluation Study inIndonesia, OTO/LPEM, 1989. This was part of a USAID study and referred to students inthe USA.

12/ Teacher Selection and Placement: a Study of Indonesian Practices and Policies (SecondIBRD/Indonesia Teacher Training Project, Element B), DWHE, MODEC, September 1988).

13/ The questionnaire for the tracer study in the Second Teacher Training (para. 47 above)also had a very low rate of response, as did a study for the Ford Foundation ofstudents funded under their auspices.

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from year to year in staff and student numbers (used to evaluate the impactof staff training on new intake) were so great as to make the analyses verydubious.14/ Further clarification of these figures is required before anyaccurate assessment of the goals of training under the project can be made.No figures were available in the PCR for the overall impact of training.

49. The PCR for the First University Development Project gives a listof 394 participants in Masters and PhD programs, of which 89 or some 20percent were from non-project institutions or subject areas. Diversionsaway from project institutions or subject areas was a discretionary movewithin the DGHE, arising from the fact that domestic development fundingreinforces loan funding so that target faculties in effect deprive otherfaculties of domestic sources of funding. For equity reabons, some fellow-ships were thus diverted to those faculties which 'lost' funding as aresult of the loan. Such diversion did not appear to occur in other proj-ects. Non-degree training in this project amounted to about 10 per cent ofthe whole, and was for the purpose of training university administratorsand editors.

50. By design, training for primary teacher trainers (Element A of theSecond Teacher Training Project) was thinly spread over a large number ofschools. Lack of proficiency in English and inadequate academic qualifica-tions resulted in targets for this group not being reached, so the placeswere taken up by IKIP lecturers. Similarly, targets for staff of schoolsfor special education could not be met and special education studies weretaken up by teachers from general and sports schools (see next para.). Theabolition in 1989 of the secondary level schools for training primaryteachers (SPG) has resulted in dispersion of former overseas trainees toother schools. Achievement of any kind of critical mass is thus verydoubtful.

51. Of the 129 persons undertaking Masters degree programs in ElementA of Loan 2101, 96 percent were from schools and 4 percent from theadministration. The impact on schools may be surmised from the distribu-tion of fellowships: 4 schools received 4 fellowship holders each; 5schools 3 each; 15 schools 2 each, and the remaining 68 schools in theproject each received one fellow. There is no indication as to how theschools or individual teachers in the school were chosen, or how theirskills were utilized on return. While the emphasis in the SAR was onmathematics and science aducation and languages, only 40 per cent ofMasters candidates (33 persons) were in this field. Special education forthe handicapped was also a major concern in the SAR, and more than 25per:ent of the fellows specialized in this field--but only three were fromscnools for the handicapped, the remainder from general primary teachertraining or sports teachers schools. Nearly 6C per cent of the teachers inElement A undertaking Masters degree were over 40 years of age at the timeof their fellowship.

52. Training of secondary school teacher trainers (Element B of Loan2101) were awarded to IKIP (72 percent) and to FKIP (28 percent). Four

14/ For example, staff numbers in one faculty were shown as varying from 230 in 1976 to 95In 1987, and to 250 in 1989, and student enrollments varying from 620 in 1978, risingto 2080 in 1986, and then dropping to 1200 by 1989.

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IKIP averaged 24 candidates each, and the remainder 5 staff each, whileFRIP averaged 3. FKIP in remote areas were given only one fellowship each.In terms of priority areas, Element B had nearly one-third of its traineesin the designated priority area of science and mathematics and just underone-third in general education subjects. Element B also provided sandwichand refresher courses and study tours. Sandwich coursas exceeded theirtargets (52 planned, 58 sent); and targets were greatly exceeded inrefresher courses (11 planned, 235 sent). The sandwich courses weredesigned for those studying for doctoral degrees in-country, whilerefresher courses were for those unlikely to qualify for overseas degreeprograms. Both programs appear to have been well planned. As noted below,Element C participants were drawn from other agencies and little informa-tion is available about this training program as the relevant progressreports do not mention it.

53. Training within the administration, whether long- or short-term,may have reached critical mass as defined by the Impact StudyL5/ (that is,at least two persons per basic administrative unit, one of whom trainedabroad), but not by the Bank's rule of thumb which is approximately 40percent of staff of any unit. Training at regional level, a goal of boththe Government and the Bank as a means of reaching more delegation ofauthority and more bottom-up planning, was achieved in terms of provisionof some fellowships to all provinces, although only one province obtainedas many as 9 fellowships, and no other received more than 3 or 4. Theregional governments obtained about half of the total fellowships underLoan 2472. Within the central Government, the Secretariat General received38 fellowships, or 2 percent of its total staff of 1,700.

54. In its short-term program, the Secondary Education and ManagementTraining Project recruited two-thirds of its 100 candidates from thecentral administration and one-third from regional education offices. Theywere trained in group programs in selected subjects: personnel management,management information services, educational planning, financial manage-ment, office management, organizational development and logistics.Although considerable planning appears to have gone into the identificationof the programs, and numerical targets met, several officials thought thatthere was a divergence between the purpose of the program and the selectionof the participants. Courses in personnel management, for example, werenot provided specifically for the relevant unit (Biro Personalia), but wereoffered to candidates from many units. Experience in other specializedcourses was similar, so that critical mass in any one unit was notachieved. Project files convey the impression that there is pressure todevelop programs and send participants abroad, but less attention is givento matching selection of participants to the program content. Of the morethan 80 supervision reports consulted for this study, only one was con-cerned with the content of a fellowship training program, the others onlywith speed of disbursements.

55. The Second University Development Project is more likely toachieve crii:ical mass in its inter-university centers. Where fellowships

15/ LP2E (Institute for Education and Conmmunty Development), Report on the Evaluation ofthe nmalementation and Imsect of the Teacher Trainlne Proiect II (World Bank IX),(Jakarta, March 1989).

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have been provided to non-center universities or faculties, it has been onthe understanding that the returnee must serve in the centre for at leastas long as the overseas training period. The problem of withdrawing com-petent staff from non-project faculties to serve in the centres on returnare being met by a provision for these staff to work part-time in theirhome universities and part-time at the centre, and eventually to return totheir home universities with practical experience as well as academicresearch competence. Internships, on the other hand, show less likelihoodof meeting targets, since the period specified for study abroad appears tobe too long for senior staff, who feel that the opportunity cost is toohigh.

56. As to the planned and actual utilization of consultants, it is notpossible to draw any conclusions because of lack of standardized reporting.But it seems clear that preliminary plans are more often revised than not.

57. Numbers are not, of course, the only criterion for critical mass.Where participants see their study simply as a means to deepen their ownunderstanding of their subject, or as a means to higher income and promo-tion, or where their overseas experience has been conducted in a groupwhich acts as insulation against the deeper effects of the internationalacademic community, they may return in large numbers and still not form acritical mass. The development of change needs also to be based on theunderstanding that returnees, whether degree or short-term, have of thedesired direction and pace of change in their institution and of their rolein it. While these changes are implicit in the project as a whole, theyare by no means explicit in selection of participants or in their orienta-tion or re-entry.

X. The Im2act of Training Programs: Quality and Teaching Practices

58. Very little can yet be said about the impact of project-assistedtraining on quality improvements, particularly changed teaching practices,since this aspect has not received adequate attention from either theGovernment or the Bank. Fellowship candidates may or may not be encouragedto develop and apply new teaching procedures as part of their study abroad;the extent to which this occurs will be determined by a participant and hissupericrs, or it may happen merely on the initiative of the participant.For example, the SAR for the First University Development Project statesthat fellows would take courses in curriculum development and instruction(teaching methods and development of instructional materials) in additionto their academic course. However, under the system of self-placement itis doubtful whether this occurred. Insufficient attention has been givento the labor-intensive nature of such arrangements.

59. In one project, fellows were requested to prepare textbooks andwere given a four month extension for this purpose. It is doubtful thatquality textbooks can be prepared in so little time and Indonesian off i-cials say that tlhey have not seen such textbooks in use.

60. Almost all of the group programs developed abroad had a signi-ficant element of practical work related to Indonesian conditions, butbecause the selection of participants in short- term academic courses was

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often not relevant to the program, the applicability of these exercises isdoubtful. Participation in more than one short course was not uncommon;one project official had attended three short courses before, during andafter his involvement in the project, and found them all 'very useful,' butnot directly relevant to his work.

61. The MUCIA Final Reportl6/ showed that of 53 former trainees, or 30percent of the relevant group, 17 said they had changed their methods ofteaching, 32 reported that they now did more research, and 37 taught moreadvanced courses after return.

62. In regard to quality impacts of overseas training programs, theissessment of the Second Teacher Training Project concluded:

"The new knowledge and skills that the scholars gained from theirtraining had not as yet benefited the institutions despite earlyeffort in that direction, simply because of incompatible assign-ments and the scope of work that had not been based on their newskills. A slightly different case was found amongst the princi-pals of schools and inservice centers. A very high turnoveramong them hampered the effort to share their new skills andexperience with the teachers. Only 50 per cent of the mastersdegree scholars were assigned to teach the new subjects they werestudying abroad. One of the reasons was that the subjects hadbeen taken up already by other colleagues." (Element A).

"The returning scholars had immediately involved themselves inthe various academic activities at their institutions, althoughwith limited impacts. Only one or two cases where some tangibleoutcomes were produced, as exemplified by one of the IKIPs thathad the scholars improved the quality of its magazine publica-tion. However, most of the impacts had only been at the indivi-dual level. As a group, the scholar had not yet been able toserve as a 'critical mass' in developmental and innovativeefforts in their respective institutions. One of the reasons wasthat some of them had not been assigned to functions commensuratewith new skills and experience." (Element B).

"The impact of the foreign study programs had not been indicatedat Pusdiklat, partly because most of the scholars were non-Pusdiklat staff working elsewhere. Secondly, not much traininghad been going on at and organized by the institution. At thispoint it is probably too early to expect impacts of the programsto occur." (Element C).

63. No impact study is yet available for the Secondary Education andManagement Project. A series of studies were contracted out to a consul-tancy agency, whose work is ncw being revised. The second slice of thisprogram, now being negotiated, will coordinate activities in training ofadministrative staff with UNESCO/UNDP; these agencies have been involved ina parallel but separate series of activities. The Second University

16/ 0O0/World Bank, First University Development Project, Final Report, CooperativeProgram, DGHE/NUCIA, 1983-87, (June 1988).

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Development Project has built on the experiences of previous projects. Asa research-centered activity, the orientation of this project has beentoward quality improvements based on continuing contacts with overseasuniversities and research institutes through its fellowships, internships,visiting scholar and conference programs, as well as through its industryconnections within the country.

64. To summarize, the broad picture which emerges from this study isone of high expectations from overseas study programs which, however, arenot matched by adequate attention to the crucial role of such training andto the amount of support needed. There is little doubt that it is theteacher trainers, researchers and teachers themselves who will make thedesired changesl without them, no amount of buildings and equipment can beeffective. Yet the emphasis in past projects has centered more on physicalthan on human resources inputs. More recent projects appear to have takenthis into account in terms of larger proportions devoted to training and tolinks between overseas and domestic training. It will be equally necessaryto develop adequate support systems, through the following measures: moreinput from users in the planning stages; development of better informationabout the potential pool for candidates; development of suitable selectionprocedures which match the program with the candidate; simplification ofapplication procedures, more efficient systems for distribution of informa-tion about opportunities; development of national competence in placementand administration; a re-entry program with its basis in pre-departureorientation for the participant; and clearer staff development programs forthe user institution. However, central and local PIU staff are to becommended on the success they have had under difficult circumstances inprograms to date.

XI. Conclusions and Recommendations

65. In this final section, in addition to a summary of pointsdiscussed in more detail above, some issues of continuing concern to theGOI and the Bank will be taken up.

66. The Bank's approach to education projects in Indonesia has beenone of almost exclusive attention to inputs; outputs are largely a matterof reaching targeted numbers. The SARs do not discuss the rationale fordeciding the extent of fellowships or training vis-&-vis other elements,nor division between long-term degree and short-term training. Little cantherefore be said about this subject, except that the Government hasrepeatedly indicated that it considers fellowships to be the most importantcontribution to educational development and that it prefers a greater shareof loan funds to go into fellowships, and a lesser proportion intoconsultancies.

67. The rising role of sector loans within the Bank has also hadimplications for Indonesian training. Generally, the GOI favors thislending instrument for the flexibility it affords, not least in determininghow much can be used for fellowship training and consultancies. Of the 21education projects to date, however, only one (the Higher EducationDevelopment Project) has been supported by a sub-sector loan. Anotherpossibility which has been discussed recently is a core loan, available

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annually and supplemented according to need by specific investmentprojects. It is worth considering whether such loans might be used fortraining purposes linked to needs for upcoming loans, so that appropriatelytrained staff would be available at the beginning of a project. AlthoughBank officials have said that the Bank would never again consider a loan onthe lines of the Fourth Technical Assistance Loan (which provided forconsultants to prepare new project proposals), some attention should begiven to advance preparation of staff so that they can participate in theactivities of the project at an earlier stage than at present. A moreregular source of fellowship financing could also assist the GOI'e effortsto develop long-term staff planning in education.

68. Once the Bank has determined the proportion of a loan to be usedfor training, it evinces little interest in the selection of participants,the relevance of the training provided, or the deployment of the partici-pants after their return. However, the Bank monitors the selection ofoverseas agencies to manage fellowships and consultancies, but once theappointment has been made, there is little if any follow-up. This is inmarked contrast to the intensity of monitoring at all stages ofconstruction and of equipment purchases.

69. Because of the emphasis on inputs, there has been almost nodiscussion of the Bank documents of the expected contribution of thosetrained; thus the rationale for selection has not been explicit and anassessment of impact of such training has been entirely lacking. The lackof integration between selection of participants and the study program hasbeen most marked in the area of short-term training within the administra-tion. In other cases, inputs directed towards quality improvementmentioned in the SAR were neglected in practice. Examples include: theprovision for teaching courses, made impossible by the self-placement ofcandidates; the effort to develop textbooks, where the time was clearlyinsufficient and no follow-up was made; or the provision for Englishlanguage training which was not forthcoming.

70. Problems associated with the development of new faculties,especially those in science and technology, need to be addressed morewidely than simply on a project basis. Targets for priority disciplineshave not been reached because the pool of eligible candidates has been sosmall. As a result, available fellowships have been diverted to non prio-rity subjects/candidates. One means of dealing with this problem is thedevelopment of bridging programs in-country preliminary to selection. Thisis already being done on a small scale by bilateral donors, but the need isboth enormous and urgent.

71. Although more attention is now being given to language prepara-tion, lack of such programs continues to exert an undue influence.Existing courses give insufficient attention to writing, and to thedifferent study requirements of overseas institutions. A great deal moreattention to upstream work in preparation of candidates would shorten awardperiods and reduce costs. Particular attention needs to be given toparticipants coming from more remote areas which provide little possibilityfor participants to upgrade their language skills.

- ill -

72. Until a few years ago, it was thought that low salaries and theresulting pressure to work in more than one job, were the chief obstaclesto quality teaching. More recent studies have shown, however, that holdingmultiple jobs is not a characteristic of the lowest paid teachers, but ofthose in shortest supply 17/ Whilo the eventual answer is obviously thepreparation of more high quality toachers in subject areas such as scienceand mathematics where supply problems are greatest, better control of themultiple-job problem and its consequences could well be dealt vith in termsof non-salary incentives, including clearer criteria for advancement,priority in research funding or other efforts to Link incentives toproductivity. Clearly, such measures would have to come from a governmentrather than a Bank initiative.

73. Generally speaking, the potential of senior staff studying over-seas appears not to be maximized. For example, they could play a much moreactive role in the identification of consultants, in development of specialtraining programs (such as the training of laboratory staff on specificequipment to be used in projects), in the development of lasting academicand professional contacts between home and overseas institutions, and inmore efficient use of foreign consultants.

74. One welcome recent development has been the greater emphasisplaced on including new entries (i.e., fellowship holders not yet employedby a university) into bonding arrangements for placement in targetinstitutions, as well as for candidates from private institutions (whichaccount for such a large proportion of total enrollments at secondary andtertiary levels). It may be useful for the Government and the Bank todiscuss on a more general level the desirability of concentrating a certainproportion of all overseas training on such schemes with a view towardseventual, rather than immediate, impact.

75. Some PIUs have attempted to debrief participants returning fromoverseas training but results have been uneven and this practice seems tobe neglected in project planning. The Bank may wish to consider the use-fulness of regular programs for meeting returnees a few years after projectcompletion. Another such possibility would be Sank financing of in-countryseminars bringing together participants in a single specialist field fromall univorsities to encourage and sustain research and teaching activities;Better inter-project consultation on fellowships and consultants matterscould be considered as well; in particular, exchange of experiences inoverseas programs and agencies for placement and monitoring would beuseful.

76. Counterpart arrangements have presented significant problems inthe use of consultants. One approach which might be considered would be tosend the counterpart abroad early in the project to assist in the selectionof a consultant or to conduct discussions and to advise candidates of thespecific and general background of the consultancy work. The main problemin obtaining suitable counterparts in projects is thought to be insuffi-cient pay. Certainly the extreme salary differences between counterpartsand foreign consultants continue to be a major disincentive to the former.

171 C. M. Widodo and R. Daroesman, Pandapatan Guru Deugan Keria Rangkap, BP3K, Departmentof Education, 1979.

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77. Much progress has been made in the use of Irdonesian consultants,but a number of skills still appear to be in short supply. Some means ofcooperative activity might be considered, with foreign consulzants advisingoccasionally on methods of analysi- and presentation, but with majorresponsibility continuing to be given to the national consultants.

78. In future asessments, there is a need to look not only at theproblems mentioned above, but also the relation of ohort- and long-termoverseas programs to in-country programs such as cascade training, wheresignificant costs are involved but where the long-term impact is uncertain.

79. Drawing together the conclusions from this Annex, the followingrecom,mendations emerge:

(a) The Bank should consider means of assisting the GOI in itslong-term staffing plans in a more sustained way and not onlythrough specific project-related interventions.

(b) Within projects, preparation should give more attention tothe expected function and utilization of trained staff onreturn from both short- and long-term study assignments.

(c) During selection, more consideration should be given todetermining critical mass, especially vis-&-vis the very thinspread of participants across many agencies and regions.

(d) The advantages and disadvantages of training for new entryover retraining of existing staff should be consideredexplicitly.

(e) Both GOI and the Bank should investigate ways of providingbetter upstream access to English and other foreign languagetraining in order to widen the pool of qualified cardidatesand speed up the process of selection and placement.

(f) Qually improvements of overseas training through seminarsand participation of returning fellows in planning furtherstaff development should be actively pursued.

(g) Both GOI and the Bank should give more consideration to theexpansion and improvement of national higher degree programs,and foreign consultants should be more intensively employedin this function.

(h) The needs and views of user institutions should be given moreweight in designing training programs.

(i) The Bank should consider a wider distribution and possibletranslation of the many useful studies on Indonesian educa-tion which it produces and which are currently available forinternal use only.

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ANNEX 3Table 1

INDONESIAN EDUCATION MND TUE WORLD NK:AN ASSESSKENT 0J TWO DECADES 0 LINDING

Indonesia: SMuar of World -k-Assisted Education Project. (3171-90)

Credit/ Credit/ Date of Loan/ OrlginalNo. Loan No. FTY a Title lb jLgsgLi.) Credit Signuna Closing Dato

(9U$. 111)

1. Cr. 0219 71 First Education 4.6 11/06/70 12/31/76

2. Cr. 0288 72 Second Education 6.3 03/09/72 12/31/76

3. Cr. 0387 73 Third Education 13.5 06101/73 12/31/81

4. Ln. 1237 76 Fourth Education 37.0 04/15176 12/31/80

5. Ln. 1433 77 Teacher Training 19.0 06/06/77 06/30/83

6. Ln. 1486 78 Non-Formal Education 15.0 09/14/77 06/30/83

7. Cr. 0869 79 Polytechnic 49.0 12/29/78 06/30/85

8. Ln. 1692 79 Second Agricultural Training 42.0 05/07/79 06/30/85

9. La. 1904 81 University Development 45.0 11/13/80 12/31/87

10. Ln. 2101 82 Second Teacher T_.auniug 79.6 04/05/82 06/30/88

11. Ln. 2102 82 Second Textbook 25.0 04/05/82 06/30/87

12. Ln. 2258 83 Public Worke Mav,power Development 30.0 04/18/83 12/31/87

13. Ln. 2290 83 Second Polytecmnic 107.4 06/22/83 12/31/89

14. Ln. 2341 84 Third Agriculrwal Training 63.0 08/22/83 06/30/90

15. Ln. 2355 84 Second Non-Forma, Education 43.0 12/16/83 09/30/90

16. Ln. 2472 85 Secondary Educattau and Management Tng. 78.0 11/05/84 09/30/88

17. Ln. 2547 85 Second University iDevelopment 147.0 06/18/85 12/31/91

18. Ln. 2599 86 Science and Technolcgy Training 93.0 07/16/85 12/31/92

19. Ln. 2705 86 Hanpower Development and Training 58.1 06/26/86 06/30/93

20. Ln. 2940 88 Accountancy Developmeut 113.0 06/10/88 06/30/94

21. Ln. 2944 88 Higher Education Development 140.0 06/10/88 12/31/91

22. Ln. 2992 89 Tree Crop. Human Resource Development 18.4 10/31/88 12/31/94

23. Ln. 3112 90 Public Works Institutional Dev. & Tng. 36.1 08/24/89 12/31/95

24. Ln. 3134 90 Professional Human Resource Development 117.5 12/18/89 03/31/95

25. Ln. 3158 90 Second Secondary Education and Management 154.2 02/12/90 06/30/96

La Refers to date of Board approval.lb The word "Project* at the end of each title ha been omitted for the sake of brevity.

IRDONESIAN EDUCATION AND THE WORLD BANKsAN ASSESSKENT OF TWO DECADES OF LENDING

Indoneelas Prolect Coats and Component Catetories

Total Distribution of Base Costs (2)Credit/ Prolect Cost Civil Furni- Equip/ Train-No. Loan No. FY Title Years SAR PCR Works ture ment TA lng Other

1. Cr. 0219 71 First Educatlon 1970-76 7.6 10.7 T 47 3 36 5 9 -

L 25 2 66 4 /a - 2 lb2. Cr. 0288 72 Second Education 1972-76 12.3 21.3 T 68 6 12 9 La -

L 48 - 33 5 Ic I s -3. Cr. 0387 73 Third Education 1973-81 39.2 104.4 T n.a. n.a. n.a. n.s.

L - - 77 le 7 16 If LE4. Ln. 1237 76 Fourth Education 1976-84 64.2 63.3 T n.a. n.a. n.a. n.a. n.a. n.a.

L 24 1 44 27 Ih /h 4 Lb5. Ln. 1433 77 Teacher Training 1977-84 42.8 34.6 T 19 1 20 10 8 11 42 Li

L 16 - 37 11 16 25 6 b F6. Ln. 1486 78 Non-Formal Education 1977-84 33.1 28.5 T 11 - 44 L1 13 6 3

L 5 1 43 24 23 17. Cr. 0869 79 Polytechnic 1978-85 104.0 84.6 T 39 - 21 li 24 - 17 11

L 24 - 36 11 40 lk 1k -8. Ln. 1692 79 Second Agriciltural Traainig 1979-85 70.9 60.5 T 68 3 a 20 In 1n -

L 53 _ - -_ _9. Ln. 1904 81 University Development 1980-88 63.2 43.1 T - - - - - _

L 19 - 18 49 37 -10. La. 2101 82 Second Tbacher Training 1983-88 172.2 - T 30 4 15 9 7 3

L 20 3 24 12 10 511. Ln. 2102 82 Second Textbook 1982-87 117.7 - T 10 1 48 13 - 28 la

L 17 2 60 11 - 24 la12. Ln. 2258 83 Public Works Manpower Development 1983-87 47.9 - T 18 1 16 33 32 - 0

L 14 - 19 - 49 -

Total Distribution of Base Costs (2)Credit/ Proiect Cost Civil Furni- Equi.1 Train-

No. Loan No. FY Title Years SAR PCR Works ture ment TA mnR Other

13. La. 2290 83 Second Polytechnic 1983-89 165.5 - T 26 2 29 15 1 27

L 18 1 39 17 1 23

14. Lu. 2341 84 Third Agricultural Training 1983-90 105.4 - T 44 2 15 7 - 32 la

L 45 - 24 12 - 19 L15. Ln. 2355 84 Second Non-Formal Education 1983-90 71.6 - T 30 - 27 4 17 20 la

L 18 - 36 7 15 23 la

16. Lu. 2472 85 Secondary Education & Management 1984-88 129.7 - T 15 - 35 20 In 33 /n -

Training L 16 - 49 19 25 1

17. Ln. 2547 85 Second University Development 1985-91 244.5 - T 6 - 21 6 30 9

L 4 - 23 11 50 13

18. Lu. 2599 86 Science and Technology Training 1986-92 169.1 - T n.a. n.a. n.a. n.a. n.a. n.a.

L - - - 2 67 32

19. Ln. 2705 86 Manpower Development and Training 1986-93 91.1 - T 4 - 15 27 26 28

L I - 14 38 41 6 LS20. Lu. 2940 88 Accountancy Development 1988-94 164.5 - T 3 - 16 18 38 25

L - - 22 25 48 5

21. Lu. 2944 88 Higher Education Development 1988-91 235.3 - T 11 1 11 Le 2 23 52 .1L 20 2 19 lo 4 45 10

22. Ln. 2992 89 Tree Crops Human Resource Dev. 1988-93 26.6 - T - - 11 fr 9 63 17 11

L - 11 J 12 77 -

23. Ln. 3112 90 Public Works Inst. Dev. & Tng. 1989-95 54.0 - T 11 /a Lt 23 lu 34 14 18 1!- L 2 It 23 L 46 14 15i

24. Lu. 3134 90 Professional Human Resource Dev. 1989-95 168.8 - T 3 La It 3 20 69 5 /1

- L I t 3 23 71 2 11

25. Lu. 3158 90 Second Secondary Educ. & Management 1990-96 223.4 - T 0 IV - 35 /x 7 1Y 52 6 /V., 2L

L 37 Lx 10 lO So 3 L2

I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.

Not**:

nT - Fiscal Years; Title a Project title; Years - Implementation Period; SAR - Staff Appraisal Report;

PCR - Project Completion Report; T * Total; L - Loan; TA - Technical Assistance (Foreign).

/- Professional Services for Civil Works.

lb Cancelled, undisbursed.

Ic a Includes professional services.

d- Identified only as 152 man-months, presumably included under TA; remainder of training vas provided; by other donors.

le - Printing and distribution of textbooks; vehicle purchase.

If- Teacher training.

lA - Considerable input from the Canadian government not included here.

h- 122 man-years of fellowships and 175 man-years of specialized.

1i Includes furniture.

LI U Includes local training, evaluationlpolicy studies and project support.

Lk - Training identified only as 1,200 man-months; and includes professional services.

11 PIU Operation. 0

Im * Traininag identified only as 2,000 man-months.n- Including fellowships; under TA; and Training refers to local training.

lo Educational exchanges and re-integration programs.

LD Includes research.Ia - Includes incremental staff salaries.

Ir Includes vehicles, books and journals.

Is Includes land.

It - Included in equipment.

/u - Includes furniture, books and library materials.

hv Incremental recurrent costs.

hw - Less than 0.52.

1x - Includes books and educational materials.

LI a Includes studies, project preparation, MAE. U

/z - Includes unallocated funds. S

#4

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ANNEX 4(page 1 of 10)

INDONESIAN EDUCATION AND THE WORLD BANKAN ASSESSMENT OF TWO DECADES OF LENDING

Statistical Tablel

TABLE 1: Indonesia - Selected Demographic Indicators,various years(a)

1960 1970 1980 1986

Population (m.) 94.7 116.2 149.5 166.4

Urban population (2) 14.6 17.5 20.6 25.0

Pop. density (per sq. km) 49 62 77 88

Pop. growth rate (Z p.a.) 2.1 2.0 2.3 n.a

Life expectancy at birth (yrs.) 41.2 47.3 53.5 57.0

Infant mortality (per thous.) 149.9 120.9 105.0 n.a

Crude birth rate (per thous.) 45.8 40.7 34.6 28.0

Crude death rate (per thous.) 22.5 17.2 13.1 11.0

Note: (a) - Year "1960" denotes any year between 1959 and 1961; likewisefor other years listed.

Source: World Bank, World Development Report, various years.

- 118 -

ANNEX 4(page 2 of 10)

TABLE 2: Indonesia - Selected Economic Indicators,Various Years

1965 1970 1975 1980 1985

GDP (billion Rup.)current prices 24 3340 12643 45446 94721constant 1985 prices 26524 35155 51771 75778 94721real GDP per capita('000 Rup.)(B) 252 294 382 518 580

Share of GDP at Market Prices(Z)

agriculture 52 47 32 25 26industry 14 18 34 43 38services 34 35 35 32 36

Price Indices (1985-100)

GDP deflator 0.1 9.5 24.4 60.0 100.0consumer prices 1.8 12.9 31.3 62.9 100.0

Central Govt Expenditure

Total (bill. Rup.) 2.5 660 2592 10827 20770As 2 of GDP 10.4 19.8 20.5 23.8 21.9

Education Expenditure

Central gov. (b.Rp.) 5 57.5 230 900 2165other levels of gov. (b.Rp.)) 31.5 118 439 832as 2 of total gov. exp.(b)) n.a. 8.7 8.9 8.3 10.4as Z of GDP(b) ) 1.7 1.8 2.0 2.3

Annual Growth Rates(%) 1960-70 1970-75 1975-80 1980-85

GNP 4.5 7.6 7.1 4.1GNP per capita 2.4 5.1 4.7 2.0

Note: (a) at 1985 prices(b) Central government education expenditure only

Source: IMf, International Financial Statistics (various years);IMP, Government Finance Statistics Yearbook (various years); andWorld Bank data.

- 119 -

ANNEX 4(page 3 of 10)

TABLE 3: Indonesia - Selected Labor Force Data:various yoars(2)

1960 1970 1980

Total labor force (m.) 34.8 41.1 53.6Female (2) 27.8 30.9 29.2Agriculture (2) 75.0 66.0 55.0Industry (2) 8.0 10.0 15.0

Participation rateTotal (M) 36.7 35.4 35.9Male (2) 54.2 49.5 51.1Female (2) 20.0 21.6 20.6

Note: (a) see note Table 1

Source: World Bank data

TABLE 4: Indonesia - Literacy Levels: Selected years

Proportion of Dopulation literate(a)k

1961 1971 1980

Urban Male n.a 87.6 91.2Female n.a 66.1 76.0Total n.a 76.7 83.5

Rural Male n.a 65.5 73.2Female n.a 40.1 52.3Total n.a 52.2 62.4

Total pop. Male 52.8 69.5 77.5Female 26.1 44.6 57.7Total 39.0 56.6 67.3

Note: (a) Population of 15 years and above

Source: UNESCO, Statistical Yearbooks, various years

hNNEX-14- 120 - (page 4 of 10)

TABLE 5t Indonesia - Educational Attainment of Population(a):1976, 1984

1976 1984

Total population(B) ('000) 88,224 110,441

Highest educational level achieved (2)

No schooling 28.1 23.61st level incomplete 39.2 37.9

completed 23.4 25.62nd level junior 5.8 7.3

senior ) 3.5 5.0Post secondary ) 0.5

Note: (a) Population of 10 years and aboveSources UNESCO, Statistical Yearbook, various years.

TABLE 6: Indonesia - Educational Attainment of Populationby age group: 1980

Groun Ag! Highest Educational Level Attained (2)No First Level Second LevelSChool Incomplete Completed Junior Senior

All persons 15-19 11.2 35.5 37.3 14.5 1.620-24 14.6 36.8 27.8 9.6 10.825-34 20.7 36.1 25.8 7.4 8.935-44 37.2 33.0 18.4 5.2 5.245-54 53.2 31.4 10.2 2.6 2.155-64 63.5 25.9 7.4 2.0 1.065+ 77.3 17.1 4.0 1.1 0.5

25+ 41.1 31.6 16.8 4.7 4.9

Females 15-19 14.2 37.2 34.5 12.5 1.520-24 18.8 39.1 -6.5 7.4 8.025-34 27.7 37.1 22.8 5.7 6.035-44 51.4 29.0 13.0 3.4 2.845-54 70.0 21.5 6.1 1.5 0.955-64 81.3 13.7 3.5 1.0 0.465+ 90.2 7.5 1.7 0.4 0.2

25+ 53.9 26.6 12.9 3.3 3.0

Urban persons 25+ 21.9 26.0 23.1 12.1 14.1Urban females 25+ 34.8 24.2 20.3 9.8 9.5

Rural persons 25+ 45.9 33.6 15.1 2.7 2.5

Rural females 25+ 59.0 27.3 10.8 1.5 1.3

Source: UNESCO, Statistical Yearbook, 1988

- 121 -

ANNX4

(page S of 10)

TABLE 7: Indonesia - Growth in Educational Enrollments:1945/46-1986/87

1945146 19%0/61 1973/74 1986/87

Primary 2,523,000 11,587,000 13,069,456 26,444,756(10.2X)(a) (0.9S) (5.6?)

LowerSecondary 90,000 1,062,000 1,535,701 6,132,057

(16.5%) (2.8S) (11.2Z)

UpperSecondary 18,000 362,000 683,945 3,498,989

(20.02) (4.92) (13.4X)

HigherEducation 10,000(b) - 253,000(c) 1,282,787(d)

(15.8?) (12.3X)

Note: (a) Bracketed figures are interval average annual rates of growth.

(b) Approximate figure for 1950, following the establishment ofIndonesia's first university, Gadja Mada, in 1949. Prior tothat date very emall numbers of studesits had been enrolled atpost secondary institutions established as part of the Dutchcolornial administration.

(c) 1972

(d) Includes all undergraduate, graduate and nondegree enrollmentsin public and private higher education.

Source: Indonesia, Basic Education Study, Report No. 7841-IND, 1989:Table 1.4; Indonesia, Education Sector Survey Report, ReportNo. 443a-IND, 1975, Annex 3; USAID, Indonesia Education andHuman Resources Sector Review, 1986, Ch. 9, p.2.

- 122 -ANNE 4

(page 6 of 10)

TABLU 8s Indonueia - Gross Enrollmont Ratio* 1960-1985

Group Level Gross Enrollment Ratios (a) {

1960 1965 1970 1975 1980 1985

Male lot 86 79 83 94 115 1222nd 10 18 21 25 35 n.a3rd 1.2 2.5 4.7 n.a n.a n.a

Female lit 58 65 73 78 100 1152nd 3 7 11 15 23 n.a3rd 0.3 0.7 1.3 n.a n.a n.a

Total 1st 71 72 78 86 107 1182nd 6 12 16 20 29 423rd 0.7 1.5 2.8 2.4 n.a n.a

Note: (a) Gross enrollment ratios are inflated by high rates of graderepetition and large numbers of over- and under-age pupils, bothof which are significant features of Indonesian schooling.

Source: UNESCO, Statistical Yearbook, various years.

TABLE 9: Gross Enrollmnt Ratios: various countries:1983-86

Country Primary SecondarvMale Female Male Female

Indonesia 121 116 45 34Thailand 99 96 35 35Malaysia 101 101 59 59Philippines 107 106 66 69South Korea 94 94 97 92Papua New Guinea 47 37 20 15Singapore 118 113 70 73

Average, lower-middle income 111 100 50 41countries

Source: Indonesia, Basic Education Study, Report No. 7841-IND, 1989:Table 1.10.

- 123 -ANNX 4

(page 7 of 10)

TABLE 10s Indonesia - Net and Total ZErolla nt ratios: 1986

1 2- 3 5 6 Aae Normal Number Number Total Net Total

level in school in school Pogul- Enrollment Enrolmentof at normal at all *to Ratio Ratiog

schoolina level lovelo (315) (4/5)(mill) (mill) (mill) (M) (Z)

7-12 Primary 24.38 24.57 26.71 91.3 92.0

13-15 LowerSecondary 4.88 8.90 11.90 41.0 74.8

16-18 UpperSecondary 2.75 4.89 10.34 26.6 47.3

Source: Indonesia, Basic Education Study, Report No. 7841-IND, 1989:Table 1.5.

TABLE 11: Indonesia - Actual and Projected TransLtionRates from primary to lower secondary school, 1974-93

Year Transition rate (2%

1974 58.41975 62.41976 65.51977 65.31978 70.51979 73.71980 73.81981 71.51982 69.41983 70.81984 66.81985 64.81986 64.91987 67.21988 69.71989 74.81990 77.11991 79.91992 82.81993 85.0

Source: Indonesia, Basic Education Study, Report No. 7841-IND, 1989:Annex Table 1.8

- 124 -

ANNEX 4(page 8 of 10)

TABLE 12: Indonesia - Third-level Students Studying Abroad:various years

Country of Study 1970 17 1981 1986

USA 662 1090 4070 8155

W. Germany 1201 3543 3185 2260

Australia 285 529 880 1083

Netherlands 382 n.a 613 530

Othar 967 1713(a) 2209 2128

Total 3497 6875 10957 14156

Note: (a) includes Netherlands

Source: UNESCO, Statistical Yearbook, various years.

- 125 -

ANNEXA(pose 9 of 10)

TAME 13: Indonesia - External Technical and Capital Assistance - 1986

Education asProportion of

Education Soctor All Sector Total

US$=. S US$m. X X

Assistance

Multilaterals

ADB 29,000 21 497,300 15 5.8IiBRD() 58,100 42 1,007,100 30 5.8

Sub-Total 87,000 63 1,504,400 45 5.8

Bilateral 15,268 11 1,473,025 43 1.1

Total CapitalAssistance 102,368 74 2,977,425 88 3.4

TechnicalAssistance

Multilateral 1,295 1 61,301 2 2.1Bilateral 33,787 24 282,152 9 8.3NGO 1,380 1 44,751 1 3.1

Total TechnicalAssistance 36,462 26 388,204 12 9.4

TOTAL 138,830 100 3,365,629 100 4.1

Note: (a) Includes all Bank capital and technical assista&ce.

Source: UNDP, Report on Development Cooperation to Indonesia in 1986(Jakarta: UNDP, 1987), Tables ES.1 and ES.5.

- 126 -ANNX 4

(page 10 of 10)

TABLE 14: Indonesia - Distribution of World Bank Assistanceby Soctor - 1986

US$=. X

Natural Resources 200,000 20

Agriculture, Forestry, Fisheries 70,000 7

Transport and Communication 314,500 31

Trade, Finance 64,500 6Human Settlements 300,000 30

Education 58,100 6

Total 1,007,000 100

Source: UNDP, Report on Development Cooperation to Indonesia in 1986(Jakarta: UNDP, 1987), Table ES.5.

Table 15t Educational Expenditur. as Proportions of GNP:Various Countries - 1985

Country/Region Total Public Expenditure on Education in 1985(2 of GNP)

Hongkong 2.8 (a)Indonesia 2.3Malaysia 6.6Philippines 1.3Singapore 3 . 8 (b)Thailand 3.9

Asia excluding Arab States 4.3All developing Countries 4.0Ail developed countries 6.0World 5.6

Notes: (a) 1984(b) 1987

Sources UNESCO, Statistical Yearbook 19e9, Tables 2.12, 4.1

- 127 -

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