Wednesday, November 9, 2011

On Indonesia’s Island of the Gods, A Private University Fit for the World

Bali’s unique natural and cultural assets draw tourists from all parts of the world. Indeed, tourism is one of the primary contributors to Bali’s growth, playing a role in business that account for some 80 percent of its GDP, according to the International Labor Organization.

None of this is lost on the Indonesian government. Its new Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) officially identified the food production and tourism industries as the most vital for growth in Bali and East Nusa Tenggara. This would suggest that tourism will continue to develop in the future despite current infrastructure constraints.

There is no doubt that tourism has contributed to tremendous growth in jobs and prosperity for the people of Bali. However, history strongly suggests that there is a need to diversify. Shocks to Bali’s tourism sector, especially following the terrorist attacks in 2002 and 2005, brought disaster to both companies and employees facing unexpected reductions in tourist arrivals.

The tourism industry is also vulnerable to external shocks. Unforeseen disasters or economic crises, especially in countries like Australia, Japan and China whose citizens lead in visiting Bali, can also significantly affect the industry.

Even though such events may be highly unlikely in the short term, it is impossible to make definitive statements given today’s volatile economy, the global financial crisis and disasters such as the flooding in Thailand and the nuclear crisis in Japan.

While food production in Bali has been prioritized by the government as the island’s second major industry, it is also important to consider other options in the service sector. If well-planned and developed, services can bring high value-added growth to the economy. The service sector is also less likely than manufacturing to negatively impact Bali’s environment and traditions.

Of all the options, on that could significantly draw on Bali’s international brand is the establishment of a high-quality private university.

Bali is known to attract leading thinkers and government leaders to dialogues on pressing global issues such as climate change, health inequity and economic development. The upcoming East Asia summit is but one example of a world-class event, involving leaders of 18 countries. This summit for the first time will also be attended by the leaders of the United States and Russia. Access and proximity to such engaging events would prove a useful source of inspiration to any leading private university.

The establishment of a high-quality university is by no means an easy task and would require strong support from the local and the national governments and the assistance of experts from renowned universities in India, China and Australia.

If Bali’s government lacks the resources to pursue such an ambitious plan, it can always look to other sources of financing and partnerships to support this vision. One example is the $516 million partnership between Indonesia and Australia that will promote the improvement of tertiary education here over the next five years. Given the size of this fund, one might think that the establishment of one well-designed private university is too limited in scope for the fund’s larger objectives. However, this idea has the potential of serving as a gateway to global thinking on a variety of topics. The university could also disseminate and share knowledge with other private and national universities located throughout Indonesia.

The establishment of such an institution could also be seen as a test to the larger nationwide plan to revamp and further improve the university system. Another source of funding and support for such an initiative could be working directly in partnership with a major Australian university. Bali could also consider redirecting some of the gains from tourism revenues to an education fund that would support the development of a university.

The primary goal of this type of university would be to attract a diverse international student body and faculty. Cultural diversity is an essential part of any globally recognized university as there is much to learn from the experience of different countries.

The ability to exchange ideas and share experiences would prove invaluable to future graduates of the university — both Indonesian and foreign. This in turn could better equip the younger generation of Balinese to prepare themselves for future challenges. A world-class university would also increase the ability of its students to command global salaries.

To ensure that this university does not become one only for the rich, a variable pricing scheme such as the one used at state universities in the United States could be used to provide opportunities for local Balinese who may not be able to afford higher rates of tuition.

Even in the case of universities in London, foreign students often pay twice the rate as locals. For those who are especially in need of support, scholarships could be provided by either the corporate social responsibility divisions of leading Indonesian companies or by the government.

It is important to understand that many of the benefits of such a university might only bear fruit in a 15 or 20 years, as more and more graduates set out to make a positive impact in the world. In that time, such an institution could mature, develop and grow a successful and consistent brand as well compete in global rankings. However, it is the long-term benefit to the people of Bali in terms of education and opportunities beyond tourism upon which one cannot place a monetary value.

At a time when many nations are grappling with the consequences of the myopic policies of both governments and the international financial sector, it is time for Bali to make a stand and set itself apart. With the pressing challenge of increasing the quality of private tertiary institutions as they rapidly expand to meet growing demand in Indonesia, the challenge and opportunity become even more pertinent.

According to a recent interview by the Oxford Business Group, the president and rector of Pelita Harapan University expects restrictions on the establishment of campuses of foreign universities to be lifted in 2014. Should this change in policy become a reality, the education sector in Bali could hold substantial business potential for both the government and Balinese society.

Such a development would benefit Bali by creating high-quality human resources, diversifying the economy and reducing the economic risk of overdependence on tourism.

By Girish Nanda an associate consultant at Strategic Asia Indonesia, a Jakarta-based consultancy that works to promote cooperation among Asian countries (Jakarta Globe)

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