Human Capital Investment is Key

KOMPAS/HENDRA A SETYAWAN

Coordinating Human Development and Culture Minister Puan Maharani (holding the microphone), accompanied by Kompas Gramedia managing director Lilik Oetama (right), Kompas deputy general chairman Rikard Bagun (third left) and Kompas chief editor Ninuk Mardiana (second right), opens a limited panel discussion on Future Human Development of Indonesia with the Support of Singular Population Data on Wednesday (21/8/2019) at Menara Kompas in Jakarta.

Developed countries have proven that they can win in global competition, even without natural resources. The key is developing the quality of their citizens through long-term and focused investment.

Indonesia is now at a crossroads. The natural resources that we have always been proud of are starting to run out, especially oil and gas and timber. At the same time, the investment it has made in human capital since independence has not improved equitable welfare.

Meanwhile, Indonesia\'s infrastructure, which lags behind other countries, has caused underdevelopment and inequality. The country’s vast and diverse geography is the constant excuse.

In the first term of his presidency, President Joko “Jokowi” Widodo has tried to overcome this backwardness through massive investment in physical infrastructure. In his second term, Jokowi intends to focus on developing “superior-quality” human capital. Indonesia will never become a developed nation if it does not start developing its human resources now.

Special effort should be made to improve the quality of Indonesians beyond the dimensions measured in the HDI.

Education and health are the main pillars of human development. Educated and healthy people have a greater chance at improving their income and welfare. However, these two fundamental areas do not look encouraging in Indonesia. The United Nations Development Program’s (UNDP) 2019 Human Development Report ranked Indonesia 116th out of 189 countries according to the human development index (HDI) for 2017.

It shares this ranking with Vietnam, which ranks below the five other ASEAN countries. Special effort should be made to improve the quality of Indonesians beyond the dimensions measured in the HDI. The human development effort must also be carried out consistently and continuously, as human capital is a long-term investment that is not compatible with political age.

Around 40 percent of the current Indonesian workforce (ages 15-64) has an educational attainment of primary schooling. The average number of years spent in school has increased, but education quality has remained low.

Increasing competence

Added to the fact that the education system does not match the needs of the world of work, most people only look at education as a means for improving their social status, not for increasing their competence. The competency of employees who have completed tertiary schooling in Indonesia is equivalent to the competency of employees who have completed secondary schooling in Denmark.

KOMPAS/HENDRA A SETYAWAN

Deni Purbasari, deputy for strategic economic review and management of the Presidential Office.

Indonesians also have low literacy skills. Indonesian children scored only 397 in reading in the 2015 Program for International Student Assessment (PISA), far lower than children from Organisation for Economic Cooperation and Development (OECD) countries, who scored an average of 493.

Low reading skills means that Indonesians become easily tired when tackling dense and informative texts that require analytical skills to understand. Not surprisingly, many misunderstandings occur in reading guides and manuals that are used widely in the world of work. Reading books, newspapers and online news websites is not yet part of the national culture.

The 2015 National Socioeconomic Survey on Sociocultural and Education Modules recorded that only 13.11 percent of Indonesians read newspapers and magazines, and only 18.89 percent read news websites.

The public health sector is not encouraging. Maternal and child mortality remain high. One in three children under 5 suffer from stunting, which affects brain development and cognitive capacity, and leads to increased risk of degenerative diseases in adulthood.

KOMPAS/HENDRA A SETYAWAN

Zudan Arif Fakrullah, director general of the population and civil registration of the Home Ministry.

As many as 23 out of 100 teenage boys (13-15 years) are smokers. In addition, the leading causes of death in 26 of 100 people in the 30-70 age group were cancer, diabetes, cardiovascular disease and chronic respiratory disease – four degenerative diseases that incur high healthcare costs. This makes it difficult for Indonesians to compete in human resource productivity, which is worsened by the poor work ethic among workers.

The Global Competitiveness Report 2017-2018 of the World Economic Forum (WEF) points to poor work ethic as one of the obstacles to doing business in Indonesia. Other factors related to human resource quality are skills mismatch, crime, poor innovation capacity and poor public health.

Building character

Therefore, character development should be a fundamental part of Indonesia’s human development. Indonesia\'s first president, Sukarno, stressed the development of national character in his many speeches. Likewise, the national anthem "Indonesia Raya" emphasizes the importance of developing national spirit.

At the beginning of his administration, Jokowi spoke about a mental revolution. However, the program became mere jargon and difficult to implement.

The Indonesian people must embody the Indonesian character. Character education must be delivered at every level of education to strengthen the national character. It is not just perseverance, confidence, good working habits or superior character that is needed in global life, character education is also necessary to remind Indonesia of its diversity and the need for tolerance and acceptance.

The national spirit must also be nurtured amid the increasing identity politics that has divided the people. At the beginning of his administration, Jokowi spoke about a mental revolution. However, the program became mere jargon and difficult to implement. In addition, many ministries and agencies did not support it. Apart from formal education, national character can also be developed through structured public movements, such as the National Discipline Movement that President Soeharto initiated in 1995.

Families can also contribute to character building. However, the role of the smallest social unit in development is often overlooked. As a result, families are left to fight for themselves in these changing times that erode family values. A nation can only become strong if families are strong, because the family plays an important role in developing human quality.

However, coordination is necessary for integrated and targeted planning, implementation, assessment and management of human development programs.

Policies also fail to address major population issues. A single dataset on population is not yet available, which often leads to overlap and mistargeting in development programs. As a result, the efforts to accelerate welfare improvement have not been optimal.

Coordinating and streamlining the relevant ministries and agencies on certain issues is not easy. However, coordination is necessary for integrated and targeted planning, implementation, assessment and management of human development programs.

Human development cannot be delayed any longer. The declining attention to developing the potential of the population, which now reaches more than 266 million, will only make Indonesia lag further behind in global competition.

Compared to tangible investments like infrastructure, investing in human capital is more effective in increasing incomes and reducing poverty. Human capital investment will have a greater impact in poor and developing countries if it is accompanied by openness, including towards foreign nations and foreign capital.

KOMPAS/HENDRA A SETYAWAN

Coordinating Human Development and Culture Minister Puan Maharani (holding the microphone) opens a limited panel discussion on Future Human Development of Indonesia with the Support of Singular Population Data on Wednesday (21/8/2019) at Menara Kompas in Jakarta.

Countries that are closed off and reluctant to collaborate will find it difficult to realize their potential. Still, human development efforts will not provide optimal results if they are unfocused and are not followed with appropriate institutional improvements and incentive systems. Therefore, thorough reform of various regulations that reach the regions is needed.

Policy consistency must also be maintained in human development. The human development program should continue in a focused manner no matter who leads the nation or a region. Policies that flip-flop with a change in leadership will leave the Indonesian people more disadvantaged than other nations.