Sovereign wealth fund to boost education, research

The Jakarta Post, page 3

As a state treasurer and a lecturer, Finance Minister Sri Mulyani knew what she was talking about when she alleged that the trillions of rupiah that had been allocated for education in recent years was not well spent. She questioned with a two-fold increase of the education budget from Rp 200 trillion to Rp 400 trillion, has education quality improved?

On Tuesday, President Joko “Jokowi: Widodo broached the idea of saving “some” of the state budget allocated for education to form a sovereign wealth fund for education – and Sri Mulyani explained that the plan was made “to make better use of the education budget.”

The government will start saving money for the sovereign wealth fund starting with the 2018 state budget, the mechanism of which is subject to further deliberation, especially, as Sri Mulyani said, in regards to the management of the sovereign wealth fund.

She said because the government does not want to violate the Constitution, the education budget will always account for 20 percent of the state budget. But there is no good plan on how to spend the budget, creating a lot of possibilities in which it could be misspent.

The fund will be merged with the current Indonesian Endowment Fund for Education (LPDP), a scholarship program overseen by the Finance Ministry to financially support Indonesian students seeking to attain a higher education either in the country or overseas.

The LPDP is considered to be a sovereign wealth fund, part of which is invested in various financial instruments such as government bonds.

Research and Technology and Higher Education Minister Muhammad Nasir said if the future internal fund is managed by ministries, the unused money has to be returned to the state. If it is managed by the LPDP, the unused money can be disbursed in the next year.

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