The Expansion of Neoliberalism in Education: Legitimacy in the

Organization of Foreign Higher Education (FHE) in Indonesia

Sinta Maysila and Intan Sari Yuniati

Department of Sociology, Faculty of Social and Political Sciences, Universitas Gadjah Mada

Keywords: neoliberalism, higher education, legitimacy in FHE, education as commodity

Abstract: In this era of globalization and industrial revolution (4.0), global competition causes the market to dominate

including Indonesia. One of the strategies used by a state to face this situation is ratification of WTO (World

Trade Organization) agreement. However, this position causes Indonesia to be trapped in world trade flows

and cannot refuse the consequences of trading in economy, business and even education. One of the

consequences from the ratification of WTO in education is legitimacy in the organization of foreign higher

education. The legitimacy in Foreign Higher Education (FHE) in Indonesia is a dilemmatic decision in which

the existence of FHE is as on the one hand an effort to encourage Public Higher Education and Private Higher

Education to be more creative and competitive, and the other hand the legitimacy emerges contra-productive

potential for Public Higher Education (PTN) and Private Higher Education (PTS). The present study describes

how the expansion of neoliberalism is through GATS (General Agreement on Trade in Services) which is a

trade agreement among the WTO members. The agreement makes higher education a commodity. Education

is a profitable trading sector for the rulers. This is in line with Foucault’s concept on governmentality. The

discourse of the organization of FHE in Indonesia cannot be separated by the role of government that uses

power as an instrument of hegemony. The approach used in this study was qualitative with literature study

method. The result of the study is that the legitimacy in FHE in Indonesia was the relation of neoliberalism

power that influenced the regulation of higher education organization in Indonesia. This legitimacy did not

only create competition and competitiveness among higher educations but also had an impact on the

commercialization of education in Indonesia.

1 INTRODUCTION

Globalization is an integration process of various

aspects of a nation’s life against a global system. This

integration process is realised by using corporation

and relation between countries. Indonesia as one of

the nations,plays an active role in integrating

economic, social, cultural, and trade. One of the

integrations in trade is the participation in World

Trade Organization (WTO). Further, this step causes

a consequence for Indonesia to obey all agreements

made in WTO and one of them is General Agreement

on Trade in Services (GATS) which is an agreement

among WTO members that covers liberalization of 12

sectors of trade in services. GATS is the only

international agreement in multilateral trade in

services that includes higher education as a subsector

of service. In other words, GATS makes higher

education a traded commodity.

Related to higher education, the development of

technology and globalization demands Indonesia to

organize higher education with foreign dimension,

which is an international cooperation and

organization of higher education performed by

foreign educational institutions in Indonesia.The Law

Number 12 Year 2012 states that foreign higher

education shall operate in Indonesia and accredited or

recognized foreign higher educational institutions

shallorganize educational activities in the territory of

the Republic of Indonesia.Directorate General for

Science & Technology Institution and Higher

Education of Indonesia's Ministry of Research,

Technology and Higher Education state that

Indonesia cannot refuse foreign higher education as a

consequence of global free trade

(kelembagaan.ristekdikti.go.id).

By ratification of GATS, government of

Indonesia basically has shifted the perspective of

educational organization in neoliberalism principal

referring to capital globalization which is an easy

capital displacement from one country to another

without any intervention that can have an impact on

Maysila, S. and Yuniati, I.

The Expansion of Neoliberalism in Education: Legitimacy in the Organization of Foreign Higher Education (FHE) in Indonesia.

DOI: 10.5220/0010273300002309

In Proceedings of Airlangga Conference on International Relations (ACIR 2018) - Politics, Economy, and Security in Changing Indo-Paciﬁc Region, pages 73-78

ISBN: 978-989-758-493-0

the loss of state responsibility thereby it hands

education into market regulation. Though higher

education is not merely as a service to generate

profit,but a process of “sustaining and developing the

intellectual and cultural base of the society”etc. The

present studydiscusses three things; the expansion of

liberalization of higher education services in

Indonesia, higher education in Indonesia and re-

thinking of education liberalization. Sociologically,

there is a power concept used to investigate how the

relationship between technology of the self (power

from below) and technology of dominance (power

from above) called governmentality (Lash, 2007).

2 METHOD

This study used qualitative descriptive approach with

literature study method to describe the expansion of

liberalism in Indonesia by doing sociological analysis

with governmentality concept by Michel Foucault.

Literature study is a data collection technique by

collecting and analysingwritten, pictorial and

electronic documents (Moleong, 2007:54). In

addition, the data sources were theoretical books as

common reference sources and research journals,

surveys, news, and other relevant references from the

internet as specialized reference sources supported

the content, and online sites related to the discussion

(Harahap, 2014). Triangulation of data sources was

conducted by using credible data source selection.

Data analysis method used content analysis or

document analysis method of theoretical testing to

increase the understanding of the related data (Elo

and Kyngas, 2008). The concept related to

governmentality by Michel Foucault was used as a

framework of thinking in analysing the expansion of

liberalism in Indonesia. Further, final conclusion was

made based on the presented data.

3 RESULTS

3.1 Liberalization of Higher Education

General Agreement on Trade in Services is a

multilateral agreement among countries which

regulates international trade in services. The trade

agreement covers 12 service sectors including

educational service, especially higher education.

Ratification of GATS appears as a consequence of

Indonesia’s commitment as a WTO member since

1994. The regulation of GATS is an integral part from

WTO which regulates liberalization of trade in which

education is one of the public service sectors to be

privatised. The direction of liberalization of education

is as a commercial or accommodated good.

Liberalization of education is generally the practice

of class interests that has the potential to eliminate

state responsibility by handing education into market,

because education world is a promising business

(Effendi, 2004).

Sociologically, in governmentality concept

according to Michel Foucault, the expansion of

neoliberalism through liberalization of higher

education in Indonesia is the rationalisation of how

power is organized and operated by a country that can

be recognised and legitimated. Governmentality is a

legitimate and right mannerof disposition of things,

including population and resources.

GATS defines four manners of how all kinds of

services can be traded. In education sector, one of the

implementations of the manners is commercial

service provider in consumer country with the

existence of foreign universities in the country.

Higher education sector has been a part of trade

commodities that promises big profits and ruled by

developed countries-United State of America,

England and Australia-that support market

liberalization (Current Commitment under the GATS

in Educational Service 2002). This kind of situation

as a form of epistemological regime of power

becomes an ontological model of power, from

hegemonic power model as a power over becomes

intensive power model (Lash, 2007).

Ratification of GATS by Indonesia has an impact

on education to be privatised. In this case, the

negotiation of the expansion of service liberalization

in GATS is performed by using initial offer and initial

request. Initial request is a list of desired sectors to be

opened by other countries. A country is required to

liberalise its certain chosen sectors or initial offer.

Negotiation for the expansion of market service

access is made bilaterally by each service negotiator

of each country which, if agreed, is applicable

multilaterally (Oratmangun, 2005). The initial offer

and initial request are the implementations of power

relation (governmentality) in which country is in the

realm of choice of action. It does not feel compelled

or there is no choice of action other than what has

been determined by the dominant group, but

potentially inside the subject there is a control over

the practice of its life based on the social control

desired by the political interests and economic

exploitation of the authorities (Lemke, 2000).

Further, ratification of GATS is also the backdrop

of the Law on Higher Education No. 12 Year 2012.

ACIR 2018 - Airlangga Conference on International Relations

Some important points related to higher education

especially the organization of Foreign Higher

Education (FHE) in the Law are: (i) Foreign Higher

Education may organize higher education as long as

it is non-profit, so there is no commercialization of

education; (ii) Allowed as long as it follows the rules

and regulations in line with the national interests, so

there is no liberalization of education; (iii) Allowed

as long as it cooperates with domestic higher

education so it does not turn domestic higher

education off and Foreign Higher Education must

obtain permission from the Government; (v) The

Government regulates the areas where Foreign

Higher Education may operate, the types of higher

education, and the courses that may be given.

Through GATS, liberalization of education in

Indonesia has been started since the New Order by

implementing a set of regulations that minimised the

role of the state in the aspect of subsidy cuts in

education and private participation in the provision of

education in Indonesia (SyamsulHadiet al., 2007:25).

Then in 2004, liberalization of education was realised

by using sources of education funding which involved

the community. In 2007, the fields that could be

invested then proceed by the Law on Higher

Education No. 12 Year 2012 that increasingly

distanced the responsibility of the state in organizing

higher education in Indonesia. In this case, the

establishment of various Laws cannot be separated

from governmentality concept as conduct of conduct

in which a certain action can present a very open

range of action choices, but it chooses its own action

which the ruler actually desires (Mudhofir, 2013).

3.2 Higher Education in Indonesia

In general, higher education in Indonesia has been

established in the early 20th century when Dutch

colonial government established

TechnischeHogeschool (THS) in Bandung in 1920.

However, the seeds of higher education have existed

since the colonial government in the mid-19th century

with the establishment of School tot

OpleidingvoorIndischeAsrten (STOVIA), a Javanese

physician education institution in Batavia and the

next period, School of Law for the Bumiputra class

(Opleidingschool van InlandscheRechtkundigen) was

also established in 1909 in the same city, and then a

medical school in Surabaya in 1913 named

NederlandschIndischeArsten School (NIAS) with a

seven-year study period. There were fundamental

reasons why Dutch colonial government preferred to

establish medical higher education. One of them was

due to tropical climate in Indonesia that caused many

diseases. School of engineering (THS) was

established by the Dutch to meet the needs of

educated engineers needed to establish various

physical infrastructures supported colonial rule in

Indonesia. However, with the outbreak of the First

World War, the relation of Dutch and Indonesia

became intermittent. This made it difficult for the

sending of educated engineers to Indonesia and vice

versa. It then triggered Indonesian government to

establish its own higher education institutions

(Basundoro, 2012).

After THS was established, many higher

educations were built included De Nood-

universiteitor emergency university with five

faculties and separated places, the faculties were

faculty of medicine, law, literature and philosophy.

At the same time, The Government of the Republic of

Indonesia based in Yogyakarta also revived the

university by establishing GadjahMada University in

1946 which was initially managed by a foundation

organized by several education figures. Sultan of

Yogyakarta, Sri Sultan Hemengkubuwono IX,

provided his front part of the palace (pagelaran) as a

place for lecture activities (Basundro, 2012).

From year to year, the number of higher education

is increasing, during the period 2011-2015 the

number of national higher education increased by 617

or 16%, with annual growth of 4%. The highest

growth of Higher Education was in the period 2013-

2014 that increased by 6.4% or 266 of new Higher

Educations. While the lowest growth of Higher

Education was in the period 2014-2015 that increased

by only 1.1% or 49 of new Higher Educations

(Ristekdikti, 2016).

The increasing number of higher educations in

Indonesia from time to time shows that the needs of

educated personnel are increasing. The needs are

based on the increasing demand of human resources

with certain education levels, for example in applying

jobs. It cannot be denied that to work in an institution,

company or place that promises prosperity in old age

requires a minimum of undergraduate education.

Higher education offers many choices to the

community to determine where they will take an

education. These open choices seem to give

opportunities to the community to choose, however

on the other hand these choices have been regulated

by the country by establishing schools. This is in

accordance with Foucault’s opinion that conduct of

conduct is not about how one’s action affects the

actions of others, but the existence of a particular

action can present a very open range of action

choices, however eventually that person chooses an

action desired by his country (Mudhofir, 2013).

The Expansion of Neoliberalism in Education: Legitimacy in the Organization of Foreign Higher Education (FHE) in Indonesia

Similar with the era of Dutch colonial government

that established physician higher education because

they did not want to be infected by diseases of tropical

country, the country organizes education not only to

practice the mandate of the Constitution but also

perpetuate the dominance of certain groups. This

dominance is present when the existing higher

education can only be accessed by certain elites, such

as the community with middle and upper economic

class. But the dominance is not perceived by the

community because the system changed it into

something common. The system from the country is

influenced by neoliberalism, the consequence in

education is that FHE becomes a discourse as the

product of market demand. FHE is not for all classes

but only few people can access it.

3.3 Re-thinking of Education

Liberalizationof Education in

Indonesia

Education is a commodity in which there is

recognition from the government over private parties

in organizing education so that it has to be regulated

in WTO. Education is in a negotiation begun on 1st

of January 2001 and agreed in the declaration of Doha

in 2001 (Jandhyala, 2001:33). Until now, the

liberalization of education in GATS frame in

Indonesia is still a debate. Not only in Indonesia, the

debate on the commercialization of education

happens in other countries, for example according to

Philip Altbach (2001), if higher education is regulated

by WTO, it potentially causes the loss of academic

autonomy and foreign education in a country will be

left behind and indirectly changes the concept and

practice of state higher education. While a different

opinion is stated by Michael R Czinkota (2005) that

“Higher education may see itself exempt from

international service industry rules, but it certainly is

not immune from rules of economics, particularly

when it comes to issues of supply, demand, and

money” and the demand on higher education and

development of cross border education in various

types makes higher education a promising business.

In governmentality concept, in which power takes

place through hegemonic norms into factual power

(intensive facts), the implementation of trade in

service liberalization in GATS does not take place

automatically but through the provision of a

hegemonic commitment. For example, market access

which is a commitment of a country to give an access

to foreign service providers to operate within the

country according to the desiredmodes of supply and

if the access is given then all FHE from the member

countries of WTO can operate within the country and

has to be treated equally.

Further, as governmentality form which gives a

very open range of choice, member countries can set

rules or domestic regulation related to trade in

services. However, the domestic regulation is a

barrier for other countries so it has the potential to be

eliminated because basically the power over trade in

services is in accordance with the will of the

authorities. For example, the Law on Higher

Education which requires FHE to be a non-profit and

organized by cooperating with Indonesia’s higher

education is one of domestic regulation barriers

because by the regulation, a profit FHE cannot

operate in Indonesia.

Progressive liberalization principal in GATS

requires member countries to gradually reduce and

even eliminate all barriers of trade in service

including higher education. The wider access of FHE

in Indonesia (liberalization of higher education) by

using the Law on Higher Education as a foundation

causes the Law which involves higher education

(domestic regulation) will obey to the regulations of

GATS, and some of the regulations in the Law may

be sued by another country for being regarded as a

barriers. If there is a rejection of Indonesia to other

countries’ requests it can cause a rejection of other

countries to other sectors desired by Indonesia in

return for such rejection. It shows that the power

relation is actually inherent in which there is an

influence of the interests of the authorities and it is

increasingly affected and continuously under the

control of the rulers who in this case are the dominant

member countries of GATS. In the concept of power,

domestic regulations cannot be separated with the

influence of regulations related to mechanism of FHE

in Indonesia which has to be harmonized with the

regulations of GATS and it has an impact on the

commercialization of National Education System that

basically contradicts the essence of Indonesian higher

education as a mission of state or public service.

In the middle of various debates, there are some

considerations based on the aspect of strength,

weakness, opportunity and threat over the potential of

profit and loss from the legitimacy in foreign higher

education which potentially promotes the efficiency

and improvement of educational service quality and

foreign exchange savings due to reduction of overseas

study finance. From the aspect of weakness, there is

a potential for limited professional standardization

and accreditation of educational institutions, local

institutional resistance to the unpreparedness to

compete with foreign educational institutions, and

weak coordination and participation of stakeholders

ACIR 2018 - Airlangga Conference on International Relations

(businessmen, academicians and the community).

Then from the aspect of opportunity, there is a

potential for open opportunities for international-

quality education, improving the quality of education

and professionalism of educators, and cooperation

with overseas education. While from the aspect of

threat, local education institutions are less

competitive, and local higher educations in Indonesia

are marginalized due to various problems such as

inequality and lack of access, quality, effectiveness,

efficiency and accountability of higher education in

developing countries.

4 DISCUSSION

The question in this study is how the expansion of

neoliberalism towards higher education services in

Indonesia. The results show that the joining of

Indonesia as a member of WTO is an entrance for the

expansion of the principle of neoliberalism.

Neoliberalism refers to capital globalization, that is a

transfer of capital between one country to another

without the ability of the country to intervene which

causes to the loss of responsibility so that it hands the

education to market regulation because education

world is a promising business.

Neoliberalism emphasizes that all actions are

referred to merely get profits and ignore the aspect of

religious, social, cultural, and politics. In this case the

ruling states as the owners of the largest capital seeks

to penetrate national borders and commoditize

educationthe findings of this study, neoliberalism

approaches used in neoliberalism of education in

Indonesia were international and non-international

governance approach. Non-international governance

was performed through domestic and international

market to influence higher education policy in

Indonesia. It included the legitimacy in Foreign

Higher Education (FHE) which was intensively

pursued as a part of the education sector in GATS.

Neoliberalism as capital globalization performed

both international and non-international governance

that refused intervention of public authority.

Neoliberalism as international governance had had an

authority guaranteed by multilateral agreements.

Globalization of education without international

governance marked by the legitimacy in FHE in

Indonesia and became the competitor for both public

and private Indonesian higher education. It is in

accordance with an opinion by Supriyanto (2004:23)

that Foreign Higher Education has the potential to

develop rapidly in Indonesia so it needs special

attention to stakeholders of Indonesian Higher

Education considering the heterogenic conditions and

problems of higher education. Legitimacy in the

establishment of Higher Education in Indonesia

cannot be separated from the influence of

neoliberalism both in international and non-

international governance. The ways to overcome

these problems include improvements in quality and

competitiveness between FHE, Public Higher

Education and Private Higher Education. Globally,

domestic higher education has to be able to compete

with internationally recognized FHE.

5 CONCLUSION

Globalization is an entrance for neoliberalism

principal through international governance to

legitimate trade in services particularly in higher

education sector. Neoliberalism through WTO and

ratification of GATS makes higher education a

profitable commodity for certain parties in power.

The power relation between Indonesia and world

organization causes mechanism of education policy

especially higher education in Indonesia to be in

accordance with the agreement of liberalization as a

consequence of ratification of GATS. Higher

education The current high education is a form of

domination relation controlled by a state where the

state is also influenced by neoliberal. It shows that the

choices of action on various social relations are

basically influenced by the interest of a nation, in

which basically in the concept of governmentality,

the choices of action of a state is not limited to

cooperation relation in education sector but the

interests of the ruling states

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