Indonesian President Joko “Jokowi” Widodo is currently in Canberra cheerleading for the recently ratified free trade agreement between Indonesia and Australia, and generally doing a charm offensive to bolster the relationship between the two countries. He delivered a speech to Parliament (in Bahasa no less) and my twitter feed has been buzzing with cheeky photos of Australian politicians rocking their finest batik. It’s all been very kumbaya. Then Monash University announced this morning that it would be opening a campus in Jakarta, the first foreign university to be allowed to open in Indonesia… ever I guess.

In the context of Indonesia’s domestic politics, and especially given what Jokowi is trying to accomplish in his second term, this is a big deal. Jokowi has made it clear what his goals are for his second term in office: boost manufacturing and exports through trade deals, draw in more foreign investment and develop Indonesia’s human capital. Now, there are some obvious potential drawbacks of this strategy. A singular focus on export-led growth usually means laborers will suffer, because keeping wages low is important if foreign firms are going to open factories in Indonesia. But anyway, for better or worse, that’s the plan they have settled on for the economy and the free trade deal with Australia is an important component of that (we’ll need a few more years of data before we can say how important).

The sticking point, for Jokowi, is that Indonesia has a long history of economic nationalism and protectionism. Domestic industries and state-owned firms have long been shielded from international competition, and calls to liberalize trade are often portrayed as a betrayal of Indonesia’s national interest. For years Indonesia has had a Negative Investment List, which places strict limits on foreign ownership in certain sectors. Over the years, Jokowi has been chipping away at the Negative Investment List, and opening up more and more industries to full or partial foreign ownership. This is a trend he would like to see accelerate in his second term, and as I wrote in New Mandala, he has bought off most of his political enemies and formed a super-coalition in order to ensure that Indonesia continues to open up economically, with minimal domestic political interference.

What the Monash announcement shows us is that he’s not just serious about opening the economy in order to build factories and boost exports and FDI, but also for the development of human capital. If you asked me last year what was one of the major things we should watch for in Jokowi’s second term, I would have said reforms in higher education. Indonesia’s educational system does not have a sterling reputation. It’s under-funded and the incentive structure is all out of whack. Scholars are pushed to publish as much as possible, which creates pressure on them to cut corners and cheat rather than produce quality work. There is a lack of financial and institutional support, and there are almost no foreign faculty in Indonesia.

University rankings are obviously kind of bullshit, but they can give a general idea of educational quality for comparative purposes. Universitas Indonesia, the nation’s flagship university, ranked 296th in the 2020 QS World Rankings. Monash, by comparison, chipped in at 58th. Paradoxically, this is precisely the reason that foreign universities have struggled to find a foothold in Indonesia - there are certain people who are afraid that if foreign universities are allowed to set up shop they might cast a spotlight on the chronic under-performance of local schools. There is also the tricky question of attracting good quality foreign faculty - they would surely have to be paid a decent salary which would be higher than what most Indonesian university lecturers command at present.

That the Monash campus in Jakarta has been given the green light tells us that Jokowi and his administration are willing to take on those challenges in the interest of getting improved educational outcomes. It’s a tricky domestic landscape to navigate, and they will step on some toes - but they are focused on the goal of improving educational outcomes, and are willing to take some licks to get there. That they have moved so quickly to greenlight this campus, and announced it in the middle of Jokowi’s visit to Australia to champion the free trade deal, indicates a high level of commitment on the part of this administration to opening Indonesia up in order to accelerate economic growth and improve the climate of higher education. And that’s why it’s a big deal.