SWP703

Financing and Equity in the Social Sectors in Indonesia

Some Policy Options

Oey Astra Meesook

WORLD BANK STAFF WORKING PAPERSNumber 703

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WORLD BANK STAFF WORKING PAPERSNumber 703

Financing and Equity in the Social Sectors in Indonesia

Some Policy Options

Oey Astra Meesook

The World BankWashington, D.C., U.S.A.

Copyright ( 1984The Intemational Bank for Reconstruction

and Development/THE WORLD BANK

1818 H Street, N.W.Washington, D.C. 20433, U.S.A.

All rights reservedManufactured in the United States of America

First printing November 1984

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Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from the European

Office of the Bank, 66 avenue d'lena, 75116 Paris, France.

Oey Astra Meesook is an economist in the Country Policy Department of the World

Bank.

Library of Congress Cataloging in Publication Data

Oey Astra Meesook.Financing and equity in the social sectors in

Indonesia.

(World Bank staff working papers ; no. 703)

Includes bibliographical references.

1. Education--Indonesia--Costs. 2. Education and

state--Indonesia. 3. Educational equalization--

Indonesia. 4. Medical care--Indonesia. 5. Medical care,

Cost of--Indonesia. 6. Medical policy--Indonesia.

I. Title. II. Series.LB2829.0'34 1984 379.598 84-22113

ISBN 0-8213-0440-2

ABSTRACT

The purpose of this paper is to examine the role of the private

sector and the potential for recovering costs in the public sector in the

provision of education and health services in Indonesia. These policy options

are explored with particular attention to their budgetary and equity

implications.

The study concludes that the option of encouraging a greater role for

the private sector is feasible and desirable in both the education and health

sectors. To examine the equity question in education, the shares of school-

age children at different levels of schooling for households in different

economic classes and areas of residence are obtained from the data tapes of

the National Socioeconomic Survey (SUSENAS) of 1978. Government subsidies per

student are estimated for the different educational levels; these are applied

to the estimated numbers of public students to obtain the shares of government

subsidies going to different household groups. The conclusion is that the

present distribution of government subsidies in education is skewed toward the

rich, especially in urban areas, because the rich are more likely to use the

higher levels of service where the subsidies per student are greater. A

similar exercise ls done for health. An overall increase in user fees, which

incorporates a more progressive fee structure, would have the effect of

reducing the fiscal burden on the government while making for greater equity

in the distribution of benefits.

Condense

L'objet de cette etude est de voir quel role le secteur prive

pourrait jouer dans la fourniture des services d'education et de sant6 en

Indonesie et comment le secteur public pourrait recouvrer ses coats. On y

examine ces options en s'arretant en particulier sur leurs implications

pour le budget et sur le plan de l'equite.

La conclusion de cette etude est qu'il serait faisable et sou-

haitable d'encourager le secteur prive a jouer un plus grand role tant

dans le secteur de l'education que dans celui de la sante. En ce qui con-

cerne l'6quit6 en education, on a tire de la banque de donnees de l'Enquete

socio-6conomique nationale (SUSENAS) de 1978 les pourcentages d'enfants

d'Age scolaire inscrits dans les differents niveaux d'enseignement pour

des m6nages appartenant a diverses classes economiques et habitant dans

des zones differentes. On calcule les subventions de l'Etat par 6leve aux

differents niveaux de l'enseignement et on applique ces montants aux

effectifs estimatifs d'eleves dans l'enseignement public pour determiner

les pourcentages respectifs des subventions de l'Etat allant aux diffe-

rents groupes de menages. I1 en resulte que la repartition actuelle des

subventions de l'Etat dans le secteur de l'education favorise les riches,

dans les villes surtout, car ils sont plus nombreux aux niveaux superieurs

de l'enseignement ou les subventions par eleve sont plus elevees. Le

secteur de la sante fait l'objet d'une etude similaire. Une augmentation

globale des frais de participation demandes aux utilisateurs, comportant

une structure plus progressive des tarifs, reduirait la charge financiere

de l'Etat tout en rendant plus equitable la repartition des avantages.

EXTRACTO

Este estudio tiene por objeto examinar el papel del sector privado y

el potencial de la recuperaci6n de costos del sector publico en lo que respecta

a la educaci6n y los servicios de salud que se ofrecen en Indonesia. Se anali-

zan estas opciones prestando especial atenci6n a sus repercusiones en cuanto al

presupuesto y a la equidad.

En este estudio se concluye que la opci6n de inducir al sector privado

a que desempenie un papel mAs importante es factible y conveniente tanto en el

sector de la educaci6n como en el de la salud. Al examinar la cuesti6n de la

equidad en la educaci6n se tom6 de las cintas magneticas de datos del National

Socioeconomic Survey (Estudio socioecon6mico nacional) de 1978 informaci6n sobre

la proporci6n de ninios en edad escolar de distintos niveles de educaci6n en

diversas clases econ6micas y zonas residenciales. Se calculan los subsidios del

Gobierno para diferentes niveles educacionales; estos se aplican al numero esti-

mado de estudiantes de las escuelas publicas para obtener la proporci6n de sub-

sidios del Gobierno correspondiente a distintos grupos de familias. La conclu-

si6n es que la distribuci6n actual de los subsidios del Gobierno a la educaci6n

tiene un sesgo a favor de los ricos, especialmente en las zonas urbanas, porque

los ricos tienen mayores probabilidades de usar los servicios de nivel mas alto

en lugares en que los subsidios por estudiante son mas elevados. Se hace un

estudio semejante para la salud. Un aumento global de los cargos a usuarios, en

el cual se incorporara una estructura de cargos mAs progresiva, reduciria la

carga fiscal del Gobierno y produciria una distribuci6n mas equitativa de los

beneficios.

Acknowledgments

This paper was prepared under the World Bank's Research Project(672-19), "Poverty, Fertility and Human Resources in Indonesia." The authorwould like to express her appreciation to the Central Bureau of Statistics of

Indonesia for making available the SUSENAS 1978 data tapes to the project, and

to Vilma Mataac and Fereshteh Noghreh for excellent research assistance.

SUMMARY AND CONCLUSION

This paper was prepared at the request of the World Bank's

East Asia and Pacific Country Programs Department to be an input into

the 1983 Country Economic Memorandum for Indonesia. (An abridged ver-

sion of the paper appears as Annex II of the Country Economic Memoran-

dum.) The purpose is to examine the role of the private sector and the

potential for recovering costs in the public sector in the provislon of

education and health services in Indonesia. These policy options are

explored with particular attention to their budgetary and equity impll-

cations.

The paper examines the past record of the Indonesian govern-

ment and finds that the expansion in education and health facilitles

over the last decade has been quite remarkable. Moreover, an attempt

has been made to equalize access of services across different geograph-

ical regions and to increase the utilization of services. However, a

great deal remains to be done to expand the provision of services fur-

ther and to reduce inequality of access. A number of obstacles remain

in the achievement of universal primary education: the inability or

unwillingness on the part of poor parents to send their children to

school; problems of access; and high repetition and drop-out rates.

Considerable skewness remains in the availability and use of educational

and health facilities across different socioeconomic groups: there Is a

definite urban bias in the provision of services, especially at the

higher levels, and the poor are more likely to avail themselves of the

lower levels of services.

The deteriorating financial situation which now confronts

Indonesia makes it more and more difficult to increase even the existing

budget shares going to education and health which, by international and

regional standards, are still low. The situation has been exacerbated

by a decline in the proportion of costs recovered through user fees.

Thus the internal allocation of the budget among competing objectives

poses major problems for those in government: to expand higher-level

facilities; to maintain the existing facilities and finance their opera-

tion; and to improve the quality of its facilities at all levels. In

particular, recurrent expenditures, which hold the key to quality im-

provement and maintenance, are likely to come under severe pressure over

the next few years.

The study examines the financing of the education and health

sectors, distinguishing between private and public sector activities, as

well as the direct and indirect costs to the users.

In the education sector, the private sector is a significant

provider of services. Private secondary schools and universities now

account for nearly half of all the students; private primary schools are

relatively less significant, and account for roughly 15 percent of total

enrollment. Private students in general finance their education entire-

ly through school or university fees, while public students receive

government subsidies which are at least equal to the per student recur-

rent expenditure less fees. Aside from school fees, there are a number

of other fees paid directly to the schools, as well as indirect costs

which are incurred by all students whether they attend private or public

schools: the cost of books and other supplies, the cost of uniforms,

transportation to and from school, pocket money, and boarding fees for

those students who have to live away from home in order to attend

school.

In the health sector, private services are provided by private

doctors, both modern and traditional, private hospitals and clinics,

private maternity centers and a small number of private health cen-

ters. The government provides services through the government hospi-

tals, public health centers and subcenters, and community health volun-

teers. Private patients pay in full for hospital services, whereas

public services are subsidized. For public services, considerable

additional private costs are still incurred: drugs prescribed by the

doctor, transportation and so on. There are three levels of financing

operating costs for government health services: national, provincial

and local.

To examine the equity question in education, the shares of

school-age children at different levels of schooling for households in

different economic classes (poorest 40X, middle 30%, and richest 30%)

and areas of residence (urban or rural; Java or the Outer Islands) are

obtained from the data tapes of the National Socioeconomic Survey

(SUSENAS) of 1978. Variations in enrollment rates and in the propor-

tions of students in public schools across household groups mean that

the distribution of government subsidies in education across household

groups will be different from the distribution of school-age children.

Government per student subsidies are estimated for the different educa-

tional levels; these are applied to the estimated numbers of public

students to obtain the shares of government subsidies going to different

household groups. Although primary-school subsidies are more or less

equitably distributed, in the sense that their shares in the different

household groups correspond closely to the shares of primary school-age

children, at higher levels of schooling the shares of subsidies become

more and more biased towards the better-off households. Under the

assumptions being made, children in the upper income classes account for

28 percent and 33 percent of the junior and senior secondary school-age

groups but would receive 33 percent and 55 percent of the subsidies at

these levels. Similarly, urban children account for 20 percent and 23

percent of the junior and senior secondary school-age groups while

receiving 29 percent and 50 percent of the subsidies. University sub-

sidies are heavily biased towards rich urban households. The upper

classes in urban areas receive 71 percent of university subsidies; they

account for only 14 percent of the relevant age group.

In a similar exercise for health, the shares of people in

different household groups who were sick at any time during a period of

one week are compared with the shares of those who visited a public

health center, a hospital or a doctor in private practice. The middle

income classes in rural areas are the main users of public health cen-

ters; hospital visits are made by the upper income classes in both urban

and rural areas, as are visits to private doctors.

Thus the study finds that the present distribution of govern-

ment subsidies in education and health Is skewed towards the rich,

especially in urban areas, since the rich are more likely to use the

higher levels of service where the subsidies are greater. It concludes

that the option of encouraging a greater role of the private sector is

feasible and desirable in both the education and health sectors. With

respect to the public provision of services, an overall increase in user

fees which incorporates a more progressive fee structure would have the

effect of reducing the fiscal burden while making for greater equity in

the distribution of benefits.

Table of Contents

Page

I. Introduction 1

II. Education 3

The Record 3

The Problem 12

Financing 17

Who Gets What? 20Policy Options 26

III. Health 38

The Record 38

The Problem 42

Financing 43

Who Gets What? 45Policy Options 49

IV. Conclusion 54

Appendix Tables 55

:

I. Introduction

The Government of Indonesia has, in recent years, directed greater

attention towards the social sectors by allocating a greater proportion of its

expenditures to them, as well as by enunciating more clearly its goals in

these sectors in the Outline of the Direction of the State (GHBN).

Although further progress towards these goals can be achieved by

addressing the problems of inadequate facilities, unequal geographical

distribution, and poor quality (as discussed later), two policy questions of

pivotal importance now face the government. The questions, notwithstanding

their philosophical aspects, are necessitated by economic considerations, and

concern the finding of additional and substitute resources, and the functional

balance in the allocation of those resources.

With regard to the first of these questions, there are two major

issues. First, is there a role for the private sector? If so, that role must

be defined and the means of bringing about the desired character and level ofprivate sector participation determined. Second, whether and haw much the

government should recover the costs of providing services through the

imposition of user fees in public facilities.

- 4 -

productivity, and the costs of the education that contributed to those higher

earnings, including foregone earnings of students who could otherwise be

contributing to the economy as well as the direct education costs, show

substantial rates of return when compared with primary education. The figures

are 22% for junior secondary graduates and 27% for senior secondary graduates

when compared to primary school graduates. These high rates of return hold up

even when there is a waiting period before a graduate gets a job. For

example, if the wait is as long as three years, the rate of return is still

14%. Thus the government as well as parents are justified in assuming that

secondary education is desirable. 1/ Estimates in another study based on the

1978 SAKERNAS data for urban males indicate social rates of return well above

any alternative discount rate for all levels of education, with the possible

exception of junior secondary education as a terminal qualification. 2/

Judged against the goals of the government, the development of the

education sector in Indonesia over the last decade has been quite

remarkable. The Second Five-Year Plan (Repelita II) included very specific

quantitative targets involving a primary school enrollment rate of 85% for the

7-12 age group by 1979, a continuation rate of 85% from primary schools to

junior secondary schools, and of 81% from junior to senior secondary

1/ David H. Clark, How Secondary School Graduates Perform in the Labor

Market: A Study of Indonesia, World Bank Staff Working Paper No. 615, 1983,

pp. 31-32.

2/ George Psacharopoulos, Indonesia: Manpower Considerations in the Energy

Sector, mimeo, May 1982, Table 7.1, p. 36.

-5-

schools. 1/ The magnitude of the overall expansion in facilities has been

truly impressive. The numbers of primary and junior secondary schools

increased by 62% between 1968 and 1979, while the number of senior secondary

schools increased by 96%. Total school enrollment at all levels rose by 7.5%

per year between 1970/71 and 1980/81, with the rates of increase being greater

at the higher levels of schooling. Whereas only 23% of first-grade pupils in

1964/65 had graduated in 1970, close to 50% of first graders in 1969/70

graduated in 1975/76. The literacy rate improved from 47% in 1960 to 61% in

1971 and 72% in 1980.

As far as public schools were concerned, much of the expansion has

taken place over a relatively short period covering Repelita II and III and

has been financed largely out of oil-export revenues: for primary school

construction through a special Presidential Instruction (INPRES-SD) item in

the development budget and for secondary school construction from the general

Department of Education and Culture development budget. From 1974 to 1976,

16,000 new primary schools were built, and in 1977 and 1978 15,000 more were

added under this program. During this period, nearly 200,000 primary school

teachers were hired.

There was a conscious attempt to equalize access of services across

different geographical regions by applying simple but effective criteria. For

example, the allocation of INPRES-SD for the construction of primary schools

has been biased in favor of the areas with fewer facilities. In Phase I of

the construction program (1973-1974) allocations were made to the provinces

based on the total number of primary school-age children (7-12) who were not

1/ Ward Heneveld, "The Distribution of Development Funds: New SchoolBuilding in East Java", Bulletin of Indonesian Economic Studies, Vol. XIV,No. 1, March 1978, p. 63.

enrolled in school. The district/municipality (kabupaten/kotamadya) share of

the provincial allocation also depended on the percentage of the 7-12 age

group who were not enrolled in school. INPRES-SD also specified that each

district (kabupaten) should receive enough units to allow for at least one

building in each subdistrict (kecamatan). The criterion used in Phase II

(1975/76) was similar but was based on the projection of new pupils expected

to be accommodated in the district/municipality up to 1978. Similarly, the

current expansion of 1,000 junior secondary schools in 1982/83 will be

allocated first to subdistricts where there are no junior secondary schools at

all and then to subdistricts where there are no government junior secondary

schools.

The government also made an attempt to increase the utilization of

services. It abolished tuition fees for the first three grades in primary

schools in 1977 and for the last three grades in 1978. Writers in the early

1970's had the impression that fee levels before the abolition were already

high for many students and that raising them would limit enrollment to the

relatively well-to-do. 1/ It has also been observed that school enrollment

rates have increased dramatically, especially since school fees were

abolished. However, this statement is difficult to evaluate without taking

into account the simultaneous rapid increase in school places and the transfer

of some students from religious schools. 2/

Much of the expansion in education was carried out by the private

sector, especially at the higher levels. Private schools have sprung up to

1/ Ruth Daroesman, "Finance of Education, Part I", Bulletin of IndonesianEconomic Studies; Vol. VII, No. 3, November 1971.

2/ Heneveld, "Indonesian Education in the Seventies", p. 151.

-7-

fill the gap and absorb students. 1/ The variability in quality is greater in

private schools than in public schools: some are very selective while others

accept students who fail to earn places in government schools. While the

government has been primarily responsible for the expansion in primary

schools, the private sector has accounted for the greater part of the

expansion in secondary schools up to the end of the last decade.

In spite of the remarkable progress documented above, much still

remains to be done. The reason is that Indonesia started from a very low

base. Although education is considered to be a constitutional right and the

government is indeed providing enough school places to allow for universal

entry into primary education, some obstacles remain in the achievement of

universal primary education. First, there is inability or unwillingness on

the part of poor parents to send their children to school. Even though there

is no tuition fee at the primary level, indigent parents may not be able to

afford the entrance fees, uniforms, boarding fees, books and supplies or the

contributions that are required of them by the school-parents' BP3

(Educational Aid Association) and by the schools themselves from time to

time. In a study in 1977 it was found that the cost of uniforms and

transportation was roughly double what had to be paid to the school

directly. 2/ There is also evidence from the National Socioeconomic Survey

(SUSENAS 1978) that parents who are poor or who have had no schooling are less

likely than those with some schooling to send their children to school (see

1/ Daroesman, "Finance of Education, Part I", p. 67; and Heneveld,"Indonesian Education in the Seventies", p. 146.

2/ C.M. Widodo, A Study of Educational Costs in Primary and SecondarySchools, Proyek Pembiayaan Pendidikan, BP3K, Department of Education andCulture, Jakarta, 1978.

-8-

Appendix Table 1). Moreover, each of these factors has an effect when other

factors are taken into account, including variations in access to and quality

of schooling (see Appendix Tables 2 and 3). Continuation in school is

likewise dependent on the ability of the marginal cases to keep up with the

various fees and expenses. 1/

Second, in some parts of the country the lack of demand is due simply

to problems of access. Even after the INPRES-SD program, there are some areas

which do not have schools nearby. The lack of suitable sites for schools or

the lack of funds for the purchase of such sites has meant that some INPRES-SD

schools are situated near previously existing schools rather than in a poorly-

served area. In 1976/77, 74% of all villages in rural areas had primary

schools, but the range across provinces was still large, from 26% to 100% (see

Appendix Table 4).

Third, the repetition and drop-out rates in primary schools are very

high. In 1978, one student out of six in the first grade was a repeater and

one out of eight in the second grade. 2/ In 1972/73, 10.4% of primary school

children dropped out of school and by 1975/76, the figure remained high at

6.5%. 3/ Drop-out rates are higher in the higher grades, III to V, (around

10%), while they are low in grades I and II (1% and 6%) 4/, suggesting perhaps

1/ Heneveld, "Indonesian Education in the Seventies", p. 151.

2/ Ruth Daroesman, Alternative Educational Strategies and their FinancialImplications, BP3K, Department of Education and Culture, Jakarta, 1978;Heneveld, "Indonesian Education in the Seventies", p. 144.

3/ Heneveld, "Indonesian Education in the Seventies", p. 144.

4/ Statistics from BP3K, Department of Education and Culture, Jakarta.

that children are pulled out of school to help support the family. Analysis

of household-level data has shown that nearly half of the children aged 10-12

who are not attending school are working (see Appendix Table 5.) And a study

in East Java in 1975 found that INPRES-SD school pupils were poorer than other

primary school pupils and the grade I drop-out rate in the 52 INPRES schools

in the study was about 14%, much higher than the 2% for the province as a

whole. The evidence from the SUSENAS data suggests that it is the children

from the lower socioeconomic classes who are more likely to lag behind their

peers in school. The deviation of actual year in school for a child compared

with the average for his age is related to the level of household income and

the level of educational attainment of the parents (see Appendix Tables 6

and 7).

The reasons for the high repetition and drop-out rates include the

small number of teaching hours (2 1/2 hours per day for grades I and II on

average, which is low even by Southeast Asian standards). This results from

multiple teaching jobs held by teachers to make up for the relatively low

salary scale. 1/ In some cases it is because teachers live in a different

village from where they teach and need to get to the school on foot or by

bicycle. In addition, the general practice is to use inexperienced teachers

to teach the first grade. There is suggestion from an experiment that when

more experienced teachers, with ten or more years of teaching, were used in

1/ One study reported that 35% of junior secondary school teachersinterviewed in the survey and 61% of senior secondary school teachers had morethan one job. (C.M. Widodo, Pendapatan Guru dengan Kerja Rangkap, BP3K,March, 1978, p. 9). Even at the primary level, it is thought that 50% ofprimary school teachers in urban areas teach in more than one school. (DouglasLamb and Ruth Daroesman, Financing Education, Central-Local FinancialRelations Review for the Government of Indonesia, Sectoral Study No. 6, March1982).

- 10 -

the first grade, the repetition rate fell. It is also claimed that drop-out

rates have declined with the abolition of the school fee in the first three

grades and that similar results may be expected with the abolition of fees in

grades IV to VI. 1/

Although there is probably no excess demand for primary school

places, the problem is different for higher levels of schooling. There is

clearly excess demand for secondary school and university places. The recent

rapid increase in primary school enrollment has led to a sharp increase in the

demand for secondary education. As pointed out earlier, the private sector

has been very active and is now supplying about half of the total number of

places in the secondary schools and universities. Entry into these

institutions is dependent, first of all, on the ability to pay the costs which

include fees, uniforms, books and supplies, transportation and boarding

expenses, the last two items being more significant where schools or

universities are not locally available. Secondary schools which have more

applicants than places select the candidates on the basis of their grades or

entrance examination results. At the university level, four different sets of

selection procedures exist for state universities, three of them involving

examinations. To give some idea of the demand for places relative to the

supply, the centralized examination (PP1) for entry into the ten most

prestigious universities had 12 applicants for each place, while the PP4

system which selects students for the ten degree-granting teachers' colleges

1/ Heneveld, "Indonesian Education in the Seventies", p. 151.

- 11 -

(IKIP's) had 4 applicants for each place in 1981. 1/ Secondary-school leavers

typically sit for more than one examination and those who can afford it also

apply to private universities. A number of applicants who are admitted to

private universities eventually turn these down if they are also offered

places in a state university.

Notwithstanding the government's success thus far in reducing the

inequality of access to schooling, considerable skewness remains in the

availability and use of educational facilities across different socioeconomic

groups: there is a definite urban bias in the provision of services,

especially at the higher levels (see Appendix Table 4), and the poor are more

likely to avail themselves of the lower levels of services. At the secondary

level, schools are more available in urban areas and many students from rural

areas have to live with urban relatives in order to attend. 2/ Government

investments in different levels of service will therefore affect different

socioeconomic groups unequally. If the investment is only to improve schools

without increasing enrollments, then higher income groups who already attend

will tend to benefit disproportionately; if the investment is to enlarge

enrollment capacity, then it will tend to help ever-lower income groups.

1/ H.C.A. Somerset, "Secondary Education, Selection Examinations andUniversity Recruitment in Indonesia: Some Key Issues", February 1982.

2/ William T.S. Gould, Some Spatial Issues in Secondary Education inIndonesia, mimeo, April 1982, Sulawesi p. 3.

- 12 -

The Problem

The increase in the size of the education sector budget over the past

decade or so has been due mainly to the increase in the size of the total

central government budget itself and, to a smaller extent, to the rising share

of education in the total budget. The central government budget has grown

from around 14% of GDP in 1970/71 to 21% in 1980/81 1/, while the share of the

education sector in the budget has risen from 8.0% in 1975/76 to 8.9% in

1980/81 and 9.4% in 1982/83. 2/ Given the deteriorating financial situation

which now confronts Indonesia, in which government revenues are increasing at

a slower rate and the government faces an increasing budget deficit, it could

become more and more difficult to increase even the existing budget share

going to education which, by international and regional standards, is still

low.

The resource situation of the government in education has been

exacerbated by the fact that the proportion of costs recovered through school

fees in total recurrent expenditures has been declining. Not only were fees

abolished for primary schools in 1977 and 1978, but the degree of cost

recovery has gone down at the secondary and university levels as well (see

Table 1). Fee income per student in constant rupiah in 1980/81 was two-thirds

of the 1975/76 level for junior secondary and university students, and just

1/ Bureau of Planning, Department of Education and Culture, AnalisaPerkembangan dan Perbandingan, ABN Rutin dan Pembangunan, DepartemenPendidikan dan Kebudayaan, 1979/1980-1982/1983, Pelita III, Table 16.

2/ Bureau of Planning, Department of Education and Culture, in Annex 2.9 tothe Government of Indonesia Request for the Polytechnics II project.

- 13 -

Table 1: FEE INCOME AND COST RECOVERY THROUGH FEES, BY LEVEL OFSCHOOLING, INDONESIA, 1975/76-1980/81

Level of SchoolingLower Secondary Upper Secondary University

Total Fee Income (Rp billion)1975/76 I/ 4.58 4.72 3.721976/77 1/ 5.69 5.80 4.731977/78 1/ 7.43 7.36 5.64

1979/80 8.58 8.36 7.081980/81 10.21 9.88 8.93

Annual Per Student Fee (Rp)1975/76 4,321 10,876 28,8371976/77 5,080 11,577 34,0291977/78 6,472 12,453 32,414

1979/80 5,053 10,296 34,8771980/81 5,465 11,176 36,292

% of Fee Income in Total Recurrent Expenditures1975/76 8.7 19.6 18.11976/77 10.4 21.2 20.51977/78 10.1 17.4 18.1

1979/80 7.8 13.9 15.71980/81 5.6 10.4 13.1

1/ Before 1979/80, fee income data were given by calendar year. For 1975/76we have taken half the sum of the fee incomes for 1975 and 1976, and so on.

Sources: Fee income from Bureau of Planning, Department of Education andCulture; public school enrollment and total recurrent expenditures from JohnSmyth, "Central Government Education Expenditure Projections, 1980/81-1990/91", mimeo, November 1981, pp. 13 and 15, and Annexes 1, 2, 3 and 4.

- 14 -

over one-half of the 1975/76 level for senior secondary students. Thus the

proportion of total recurrent expenditures recovered through fees has declined

substantially between 1975/76 and 1980/81: from 9% to 6% for junior secondary

students; from 20% to 10% for senior secondary students; and from 18% to 13%

for university students. 1/

In addition to the paramount task of at least defending the existing

share of the education budget in the total, the internal allocation of that

budget among competing objectives poses major problems for those in

government: to expand facilities at the secondary and tertiary levels; to

maintain the existing facilities and finance their operation; and to improve

the quality of its facilities at all levels.

In particular, recurrent expenditures, which hold the key to quality

improvement and maintenance, are likely to come under severe pressure over the

next few years. The massive investments in schools of the 1970's out of

INPRES necessarily entail recurrent expenditures to finance teachers'

salaries, teaching materials, maintenance of facilities and so on in

subsequent years. The experience of the period 1974/75-1979/80 suggests that

a Rp 100 expenditure from the capital budget for education in any given year

was associated with an incremental expenditure of Rp 18 in subsequent

recurrent annual budgets. However, for the period 1980/81-1990/91, when

allowance is made for improving the salaries of teachers, the correlated

1/ Bureau of Planning, Department of Education and Culture.

- 15 -

increase in the annual level of total recurrent expenditure on education will

be approximately Rp 31 for every Rp 100 of capital expenditure. 1/

At this juncture, however, the investment program in education is

being stepped up. For example, there are plans to build 1,000 junior

secondary schools and 150 senior secondary schools in 1982/83, so that the

development budget allocation to the Directorate-General for Primary and

Secondary Education 2/ will more than double, jumping by Rp 190 billion

between 1981/82 and 1982/83 from Rp 185 billion to Rp 375 billion. These

capital expenditures have the effect of crowding out the routine budget, which

for this Directorate-General will increase by only 11% between 1981/82 and

1982/83. Yet assuming that 75% of the planned allocation in the development

budget for 1981/82 are for capital expenditures, an increase of Rp 26 billion

per year in the annual recurrent expenditure, a 15% increase over 1981/82, is

called for from these new investments alone. Similarly, the development

budget for the Directorate-General for Higher Education will rise by 40% while

the routine budget will increase by only 4% between 1981/82 and 1982/83. The

capital expenditures in 1981/82, however, would require that the increase in

the routine budget between 1981/82 and 1982/83 be 18%. Thus the facilities

now being completed, not to mention those that are being contemplated, will

put a tremendous burden on the future recurrent budgets.

In spite of the worsening financial situation, the government

nevertheless would like to show some growth, for example 8%, in the

development budget as a whole. The result will be a squeeze on the routine

1/ John Smyth, Op. cit. pp. 8 and 18.

2/ This goes mostly to secondary education. Primary education is theresponsibility of the Department of Home Affairs.

- 16 -

budget, for the present as well as the future, both from the recurrent

expenditures associated with past capital expenditures and from the

contemplated allocation to the development budget. Indeed, all departments

have been instructed by the Ministry of Finance to hold their routine

expenditures for 1983/84 at the 1982/83 level, even though the size of the

development budgets for the Directorates-General for Primary and Secondary

Education and for Higher Education suggest that the routine budget would have

to increase by 27%. Under the present circumstances, the question can be

raised of whether some slowing down in the rate of expansion in facilities

might not be advisable in order that existing facilities can be maintained and

the quality of schooling already being provided can be upheld.

The allocation of funds between the capital and recurrent budgets

and, within each budget, among different levels of education also has

implications on equity. As will be seen later, different socioeconomic

classes use schooling facilities to different extents. Secondary and

university education tend to serve primarily the relatively well-to-do, while

primary education is more equitably enjoyed. Whether the government gives

priority to the improvement in quality of primary schools or to the expansion

of secondary schools and, if the latter, how it finances that expansion are

therefore decisions which affect different population groups to different

extents.

Finally, the inefficiencies in the system imply great cost to the

government. For example, repetition and drop-out in primary schools mean that

resources such as classrooms, teachers and teaching materials do not serve as

many children as they should be able to. Yet the worsening resource position

of the government makes it more crucial than ever for existing resources to be

used as efficiently as possible.

- 17 -

Financing

The education sector is by and large financed out of the budget of

the central government and private expenditures. However, we should

distinguish between private and public sector activities.

The private sector is a significant provider of services in

education. Private secondary schools and universities now account for nearly

half of all the students; private primary schools are relatively less

significant, and account for roughly 15% of total enrollment. Private schools

and universities are run by foundations (jajasan) which raise funds, through

fees and other means, and manage the finances of the schools or

universities. Although some of them receive assistance from the government,

in the form of government teachers and so on, this is quite small, accounting

for less than 1% of the routine budget of the Department of Education and

Culture in 1982/83. 1/ Thus, except in those cases where the foundations have

other sources of funds, students finance their education entirely through

school or university fees and hardly any of them receive scholarships or any

other kind of assistance from the schools or universities. School fees in

private schools are high compared with those collected in comparable public

schools. For example, a private senior secondary school in Nusatenggara Timur

collects Rp 2,500 per month compared with Rp 500 in a public senior secondary

school in the same district. A secretarial academy in Jakarta charges fees of

Rp 250,000 for the whole year although it does not collect entrance fees or

1/ Directorate of Private Education, Directorate-General for Primary andSecondary Education, Department of Education and Culture.

- 18 -

other levies. Private university entrance fees can amount to millions of

rupiah, while annual fees could be Rp 150,000-200,000.

Public primary schools are the responsibility of the Department of

Home Affairs, while public secondary schools and universities come under the

Department of Education and Culture. The teachers' salaries are paid for by

the central government and fees (SPP or Sumbangan Pembinaan Pendidikan) are

collected from secondary school and university students by the schools and

deposited directly into branches of the state bank (kas negara). 1/ In the

public primary schools, school fees were abolished in 1977 for grades I to III

and in 1978 for grades IV to VI. Primary schools receive SPP compensation

allocations (DPP) which are a subsidy provided by the central government to

make up for the school fees that schools would have collected under the old

system. Although there is a provision for exempting students from fees, only

2% of all secondary school and university students benefit from this. 2/ In

theory a child may be exempted from paying fees, but in practice they have to

1/ There are ten categories of SPP fees for each of the junior secondary and

senior secondary levels. The school principal and the provincial Office ofEducation decide jointly on which category a school belongs to; a change in

the category has to be approved by both the Ministry of Finance and the

Department of Education and Culture.

2/ Bureau of Planning, Department of Education and Culture.

- 19 -

provide a certificate of indigence from village authorities (the lurah). 1/

The central government retains 7% of the fee income and returns the remaining

93% to the provincial offices of the Department of Education and Culture (in

the form of DPP allocations). 2/ Public students thus receive government

subsidies which are at least equal to the per student recurrent expenditure

less fees. It has been estimated that, in 1970, public primary and junior

secondary schools depended on fees for 17% of their recurrent expenditures,

while public senior secondary schools depended on fees for 30% of these.

Aside from the fees, the level of which is set for each school, there

are a number of other fees paid directly to the schools, such as entrance

fees 3/, examination fees, and other contributions. In addition, each public

school has associated with it a BP3 (Badan Pembantu Penyelenggaraan Pendidikan

or Educational Aid Association); its job is to help raise funds to supplement

the income of the school, and specifically to cover the shortfall in school

needs when compared with DPP funds received from the central government,

especially since these often arrive late. Parents have no say on how DPP

funds are used, while they do participate in the decisions concerning the

collection and use of BP3 fees through their membership in the BP3.

In addition to the direct costs which students pay to schools and

universities, there are a number of indirect costs which are incurred by all

students whether they attend private or public schools: the cost of books and

1/ Daroesman, "Finance of Education, Part I", p. 82.

2/ Data from Bureau of Planning, Department of Education and Culture.

3/ Entrance fees can be very large. It has been estimated at 5-10 times themonthly fee (Daroesman, "Finance of Education, Part I", p. 78).

- 20 -

other supplies, the cost of uniforms, transportation to and from school, and

pocket money. In a survey of students it was found that, for junior and

senior secondary education respectively, school fees accounted for 13% and 15%

of all expenses (excluding foregone earnings); BP3 fees for 5% and 7%; books

and supplies for 21% and 14%; cost of uniforms for 14% and 11%; transportation

for 13% and 18%; and pocket money for 26% in both cases. 1/ Moreover, there

are boarding fees for those students who have to live away from home in order

to attend school. For example, for a certain senior secondary school in

Nusatenggara Timur, the fees for the boarding house are Rp 12,000 per month

plus 10 kg of rice. This compares with a tuition fee of Rp 2,500 per

month. 2/ Boarding fees in Jakarta for students in a secretarial academy who

come from other provinces are around Rp 50,000 per month.

Who Gets What?

In this section we are concerned only with government expenditures on

education and payments to the government by parents on behalf of their

children. This reflects the strategic implications of government provision of

social services on the budgetary capacity and on the allocation of government

subsidies to different socioeconomic groups. We first examine the existing

situation and then explore in the next section the budgetary and equity

1/ Waskito Tjiptosasmito and William K. Cummings, The Status of Deployment of

Teachers in Indonesia, report prepared for World Bank Education Project No. 5,

August 28, 1981, Table 3.15.

2/ Gould, Nusatenggara Timur p. 8.

- 21 -

implications of a number of policy options which may come under consideration

by the government.

School enrollment rates vary by income class and geographical

location. The reasons are the differences in socioeconomic background, which

explain variations in the demand for and ability to pay the private costs of

schooling, and supply considerations like the availability, price, distance

and quality of the facilities. School enrollment rates do not vary much at

the primary level; most children of primary-school age attend school, although

the ones who stay out are also the ones from poor families whose parents are

themselves uneducated. Primary education is largely provided by the

government; so in general primary school subsidies are expected to be

reasonably equally distributed.

At higher levels of schooling, matters are quite different. Since

only about 50% of an age cohort graduate from primary schools, secondary and

university education are totally irrelevant for the remaining 50%. If

students in secondary schools and universities are not paying their own way

completely, then the 35% who enter secondary schools and the roughly 3% who

attend universities become the only potential direct beneficiaries of the

subsidies that the government provides at these levels.

In 1982/83, fully three-quarters of the budget of the Department ofEducation and Culture were going to the Directorate-General for Primary and

Secondary Education and the Directorate-General for Higher Education. The net

costs per student to the government, both capital and recurrent, are greater

at higher levels of schooling, even though the fee incomes collected are alsogreater in absolute terms and as proportions of government recurrent

- 22 -

expenditures. Table 2 gives the recurrent expenditures and fee incomes

collected from students for different levels of education.

Appendix Tables 8, 9 and 10 represent an attempt to answer the

question of which groups in Indonesian society are benefiting from the

government provision of education. Households have been classified by

economic class, urban/rural area of residence and whether they are in Java or

the Outer Islands. The classification of economic class into the poorest 40%,

middle 30% and richest 30% of households is based on their level of per capita

expenditures. The distribution of the households according to this

classification scheme can be seen in the first panel of Appendix Table 8.

Appendix Table 8 also gives the shares of school-age children

corresponding to different levels of schooling, namely primary, junior

secondary, senior secondary and university, based on the offical age groups

(7-12; 13-15; 16-18 and 19-25). At all levels there are under-age and over-

age students, especially the latter, but the shares by household group at

least takes into account variations in household sizes, and the numbers and

age distribution of school-age children. That the size and composition of

households make a difference to the shares of school-age children in different

household groups can be seen by comparing the different panels in Appendix

Table 8.

Variations in enrollment rates and in the proportions of students in

public schools across household groups mean that the distribution of

government subsidies in education across household groups will be different

from the distribution of school-age children. The first panel of Appendix

Table 9 gives the distribution of all students across household groups by

level of schooling. This can be compared with the distribution of school-age

- 23 -

Table 2: RECURRENT EXPENDITURE AND FEE INCOME PER PUBLIC STUDENT, BYEDUCATIONAL LEVEL, INDONESIA, 1980/81

Educational Level Recurrent Fee Income 2/ Subsidy through % of RecurrentExpenditure 1/ Recurrent Expenditure

Expenditure 3/ Recovered 4/(Rupiah per public student per year)

Primary 40,490 0 40,490 0

Junior Secondary 96,751 5,465 91,286 6

Senior Secondary 107,791 11,176 96,615 10

University 276,655 36,292 240,363 13

1/ From John Smyth, "Central Government Education Expenditure Projections,T980/81-1990/91", mimeo, November 1981, pp. 13 and 15.

2/ Total fee income from Bureau of Planning, Department of Education andCulture. Number of public students at each level from John Smyth, "CentralGovernment Education Expenditure Projections, 1980/81-1990/91", mimeo,November 1981, Annexes 1, 2, 3 and 4.

3/ Difference between recurrent expenditure and fee income per publicstudent.

4/ Fee income as percentage of recurrent expenditure.

- 24 -

children in Appendix Table 8; the differences between them reflect variations

in school enrollment rates across household economic classes, area and region

of residence. The second panel of Appendix Table 9 gives the distribution of

public students across household groups by level of schooling. The SUSENAS

data do not actually give any information on whether a child is enrolled in a

public or private school. The assumption that has been made here is that

children from the poorest 40% of households all go to public schools. Using

the proportion of all students at each level in public schools, we can then

calculate the proportion in the middle and richest classes of households who

go to public schools; this is lower at each level of schooling than the

overall figure for Indonesia since all the private students have been put into

these classes. 1/

Since we use in the calculation of the distribution of subsidies the

average subsidy per public student at each level of schooling across all

household economic classes, areas and regions, the distribution of subsidies

1/ The percentages of students who are assumed to be in public schoolsare given below.

Household Economic Class Level of SchoolPrimary Junior Senior University

Secondary Secondary

Lower 40% 100 100 100 100Middle 30% 78 36 48 52Upper 30% 78 36 48 52

TOTAL 88 51 54 54

These assumptions can be refined to give different proportions ofpublic students in different economic classes, as well as area and region ofresidence.

- 25 5

at each level of schooling across household groups is the same as the

distribution of public students. However, when we sum across schooling

levels, the distribution of subsidies for all levels of schooling combined

takes into account differences in the average sudsidies per public student

across schooling levels. The distributions of subsidies across household

groups for each level of education and for all levels combined are given in

Appendix Table 10.

The crude allocation of subsidies presented in Appendix Table 10

shows that primary-school subsidies are more or less equitably distributed:

their shares correspond closely to the shares of primary school-age children

in the different household groups. This is not surprising, given the high

overall enrollment rates in primary schools and the fact that the vast

majority of the children attend public schools.

At higher levels of schooling, the shares of subsidies become more

and more biased towards the better-off households. Under the assumptions

being made, children in the upper income classes account for 28% and 33% of

the junior and senior secondary school-age groups but would receive 33% and

55% of the subsidies at these levels. Similarly, urban children account for

20% and 23% of the junior and senior secondary school-age groups while

receiving 29% and 50% of the subsidies. University subsidies are heavily

biased towards rich urban households. The upper classes in urban areas

receive 71% of university subsidies; they only account for 14% of the relevant

age group. And this is after we have taken into account the fact that roughly

half of them attend private institutions.

To conclude, if the assumptions given are valid, primary school

subsidies are more or less equally distributed, with the poorest classes

- 26 -

receiving slightly more than their share of the total based on the number of

primary school-age children. At the secondary level, urban children are able

to take advantage of the government subsidies while at the university level

nearly all the benefits accrue to the urban upper classes, even though we have

made the assumption that all the children from the poorest households attend

public institutions and hence receive the government subsidies.

In general, urban households receive shares of subsidies greater than

what would be expected given their shares of school-age children, while rural

households receive smaller shares. Similarly, children in the Outer Islands

receive greater shares of subsidies than children in Java compared with their

shares of school-age children, reflecting the generally higher enrollment

rates there, the exception being at the university level. The fact that urban

Java, which accounts for 14% of university-age students, receives 57% of

university subsidies gives Java as a whole a slightly larger share of

university subsidies than would be expected from its share of university-age

students.

Policy Options

The tightening overall financial situation is a matter of pressing

concern to the government, given that a strong case can be made for continuing

to allocate a large share of government revenues to education. The present

level of facilities is still inadequate. Primary education is not yet

universal in the upper grades, and enrollments at the secondary and university

levels are still low by international standards. Physical access to schools

is far from equal across different geographical regions and the poor generally

- 27 -

receive less schooling. There is need for further expansion in educational

facilities for many years to come. Moreover, the existing facilities are not

being adequately maintained since insufficient resources are allocated for

this purpose. Finally, the quality of service is low and ways need to be

found for quality improvement.

Three issues confront the education planners at this juncture.

First, what resources should be available to the sector and how they should be

financed. Second, what the equity trade-off is between further expansion and

the upkeep of, as well as improvement in, existing facilities, especially at

higher levels. Third, how to find ways of using the available resources more

efficiently.

With regard to the financing of education, one option available to

the government is to foster further growth in private sector activities. The

justification for providing government assistance to private schools is the

same as that for giving subsidies to students in public schools: when the

private demand for schooling is lower than the social demand, then subsidies

are used to achieve the socially optimal level of schooling. The private

sector is already very active in the provision of secondary and university

education but so far the government has had a relatively passive, rather than

an active, role in promoting its growth. In this connection, it becomes

important for the government to define its role clearly in order to cooperate

with or complement rather than compete with the private sector. Does the

government see its role as providing basic school facilities to all children

or is it to fill the gaps left by the private sector? In primary education,

it has definitely opted for the former. Has it decided to do the same with

secondary education and, if so, is it appropriate? Might not the government

- 28 -

encourage the growth of private secondary schools in all areas, for example,

while itself concentrating just on rural areas? Should it provide tax

incentives to private schools? Should the government consider its role to be

one of setting standards for the quality of schooling and not concern itself

with regulating the profitability of private schools? The present very low

rate of cost recovery in the provision of public education (Table 2) suggests

that giving incentives to the private sector to build schools and spending

resources on supervising them may be a way of expanding the system which puts

less strain on the fiscal system and gets a higher return on investment.

Another financing option is to consider whether there are

possibilities of raising revenues from within the education sector itself.

This is a critical issue and will be explored here in some detail, since

consideration must also be given to the issue of equity.

At present only 3% of the recurrent expenditures going to the

provision of public education are recovered through fee collection. 1/ What

would be the implications on the budget and on distributional equity of

changes in the fee structure? The fee income is now collected only at the

secondary and university levels but passed to the Treasury for holding. For

the secondary schools, it is returned as a fund (DPP) to the provinces for

each school to apply for on the basis of an agreed "use plan". For the

universities the funds are returned directly to the universities for use

1/ This is the total fee income at the junior secondary, senior secondary anduniversity levels as a percentage of the sum of total fee income and totalgovernment subsidies for all four levels. See Table 3.

- 29 -

according to an agreed plan. 1/ DPP allocations are also made for primary

education even though fees have been abolished. In 1980/81. the DPP

allocation at the primary level came to more than half of the total DPP

allocation, while junior secondary, senior secondary and university education

took nearly equal shares of the remainder. The weight of primary education in

the total DPP allocation is due to sheer numbers; primary education accounted

for 87% of all public school students in 1980/81, even though the DPP

allocation per student is far smaller than those for the higher levels (see

Table 3).

The abolition of fees at the primary level accounts for something

like 3% of the routine expenditures for education which are no longer

recovered. 2/ What must be weighed against this apparent drain on the budget

are the following factors. First, because primary school enrollment is high

and relatively equitably distributed and those enrolled in private schools are

likely to be children of the well-to-do, the subsidies to public primary

school students are such that the poor get slightly more than their share

based on the numbers of primary school-age children. Second, parents are

already contributing to the total cost of primary education through informal

fees paid to the schools, BP3 fees, uniforms, books and supplies,

transportation and so on. These can be quite a burden for poor households.

1/ The DPP allocation for secondary and university education was 103% of SPPincome over the period 1975 to 1980/81. (Bureau of Planning, Department ofEducation and Culture).

2/ This is estimated as the DPP allocation to primary education as apercentage of the sum of total fee income and total government subsidies forall schooling levels. See Table 3.

Table 3: FEE INCOME AND GOVERNMENT SUBSIDIES TO EDUCATION, BY LEVEL,INDONESIA, 1980/81

Level of Public School Fee Income Government Subsidy 6/Education Students 1/ Total Per Student Total Per Student

Number (thousand) % (Rp million) 2/ % (Rp) 3/ (Rp million) % (Rp)

Primary 20,165 87 (35,870) 4/ (55) 4/ (1,779) 4/ 816,481 72 40,490

Junior Secondary 1,869 8 10,213 16 5,465 170,614 15 91,286

Senior Secondary 884 4 9,879 15 11,176 85,408 8 96,615

University 246 1 8,928 14 36,292 59,129 5 240,363

Total 23,164 100 (64,890) 5/ 100 5/ (2,801) 5/ 1,131,632 100 48,853

1/ From John Smyth, "Central Government Education Expenditure Projections, 1980/81-1990/91", mimeo,November 1981, Annexes 1,2,3 and 4.

2/ Bureau of Planning, Department of Education and Culture.

3/ Calculated as total fee income per public school student.

4/ This is the DPP allocation.

5/ Including the DPP allocation for primary schools.

6/ Calculated as the difference between recurrent expenditure (Table 2) and fee income.

- 31 -

Third, enrollment rates, even at the primary level, are related to the

socioeconomic background of the children. Those children with poor and/or

uneducated parents have a lower chance of enrolling and fees are likely to

reduce enrollment among them further. Fourth, a child who is deprived of

primary education is also automatically barred from secondary and university

education. Thus it can be argued that what has been lost through the

abolition of the fees at the primary level has been gained in terms of greater

equity. Indeed, if equity and efficiency alike at the primary level are

important objectives, then the case can be made for even greater subsidies

which would be used to increase further the enrollment and continuation rates

of children from poorer families in the upper grades of primary schools.

An increase in fees at the secondary and university levels, however,

has the potential to improve equity by reducing subsidies to upper income

students while also raising revenues. To consider first the question of

revenues, Table 4 gives the degree of cost recovery through fees projected

through 1990/91 based on assumptions of constant, as well as increasing, per

student recurrent expenditures. Fees for secondary schools and universities

are assumed to be kept at existing levels, or to be gradually increased such

that the levels are doubled or quadrupled by 1990/91. (Details of the

calculations are given in Appendix Table 11).

Because of the change in the distribution of students over time

towards the higher levels of education (see Appendix Table 11), where a

greater proportion of the costs are recovered, the overall degree of cost

recovery will increase from 2.5% to 4.6% of recurrent expenditures if both the

per student recurrent expenditure and fee at each level remain unchanged in

real terms (see Table 4). If fees are doubled or quadrupled by 1990/91, the

degree of cost recovery will increase to 9% and 19% respectively by 1990/91.

- 32 -

Table 4: PERCENTAGE OF EDUCATION RECURRENT EXPENDITURES RECOVERED THROUGH

FEES UNDER ALTERNATIVE ASSUMPTIONS CONCERNING PER STUDENT RECURRENT

EXPENDITURES AND FEES, INDONESIA, 1980/81 AND PROJECTED THROUGH 1990/91

1980/81 1985/86 1990/91

A. Based on Existing Per Student Recurrent Expenditure

a) Fees are kept at present levels 2.5 3.6 4.6

b) Fees are doubled by 1990/91 2.5 5.4 9.3

c) Fees are quadrupled by 1990/91 2.5 7.1 18.5

B. Based on Per Student Recurrent Expenditure Increasing at 5.5% Per Year

a) Fees are kept at present levels 2.5 2.7 2.7

b) Fees are doubled by 1990/91 2.5 4.1 5.4

c) Fees are quadrupled by 1990/91 2.5 5.5 10.8

Source: Appendix Table 11.

- 33 -

However, if per student recurrent expenditures are increased at

approximately 5.5% per year, for example in order to increase teachers'

salaries or to provide more teaching materials, then the increase in per

student recurrent expenditures offsets the shift in the distribution of

students towards the categories with greater cost recovery in such a way that

the overall degree of cost recovery remains more or less constant. However,

doubling or quadrupling fees will result in increasing cost recovery to 5.4%

or 10.8% by 1990/91.

The case can be made for increasing secondary and university fees

simply because, between 1975/76 and 1980/81, fee income per student increased

by only 26% for junior secondary and university students and by 3% for senior

secondary students in nominal terms (see Table 1). Consequently, it fell in

real terms by roughly one-third for junior secondary and university students

and by nearly one-half for senior secondary students. To give an example of

the orders of magnitude involved in fee increases, an immediate doubling of

fees, without taking into account any decline in enrollment, would increase

resources by 2% in the education budget as a whole, or 3% in the recurrent

budget. This figure has to be seen in relation to the routine budget of the

Department of Education and Culture. In 1980/81, nonsalary expenditures

amounted to a mere 15% of the routine budget excluding fees, or Rp 46

billion 1/; total fee income from secondary and university education came to

1/ Analisa Perkembangan dan Perbandingan ABN Rutin dan Pembangunan,Table 13.

- 34 -

Rp 29 billion and thus could potentially augment the nonsalary expenditures by

63%. 1/

The DPP allocation out of fee income is important precisely because

it constitutes a major part of the nonsalary expenditures in education. For

example, for the secondary school DPP allocation between 1975 and 1980/81,

only 26% went to honoraria for school staff, while 35% went to teaching

materials. In 1981/82, Rp 4 billion were allocated to maintenance in the

budget of the Directorate-General for Primary and Secondary Education which

excluded SPP fees at that time. This was matched by the allocation out of DPP

funds to maintenance and utilities (Rp 4 billion in 1980/81), most of which

went to the schools (83% in 1980/81). 2/

In terms of the government's concern that an increase in fees would

exclude children from poor households and hence reduce enrollments, it is

important to recognize the extent to which they are already excluded at the

secondary and university levels. Children from the richest 30% of households

in urban areas account for 71% of all university students, while representing

only 14% of university-age (19 to 25) children. They also make up 37% of all

senior secondary school students and only 15% of the children in this age

group (16-18). (See Appendix Tables 8 and 9). Thus the increase in fee would

have its biggest impact on the urban upper classes. Moreover, on average fees

1/ Bureau of Planning, Department of Education and Culture.

2/ Bureau of Planning, Department of Education and Culture.

- 35 -

account for only 13% and 15% of all schooling expenses at the junior and

senior secondary levels. 1/

This is not to say that an increase in fees would not adversely

affect enrollment of poor children. Using data from SUSENAS 1978, we have

estimated the fee burden on different household groups of sending their

children to school. The results are shown in Appendix Table 12. In the top

panel, the school tuition fees reportedly paid by households in different

economic classes, areas and regions are given as percentages of the household

discretionary budget, defined as total household expenditure less expenditures

on essentials, namely food, housing and clothing. It can be seen that

households in different economic classes in rural areas do not differ a great

deal in terms of the proportions of the discretionary budget spent on tuition

fees; however, among urban households the burden is clearly greater for the

poorer households. This is true in the Outer Islands as well as Java.

The second panel gives as percentages of the discretionary budget the

total fees that would be required in order to enroll all children between ages

7 and 18 in school at the levels corresponding to the official age groups.

Except for the urban upper classes, these estimated fees are greater than what

households are actually paying. The gap is greater for poorer households,

especially in rural areas. For example, poor households in rural areas of the

Outer Islands currently spend 4% of their discretionary budgets on school

fees. To enroll all their children between ages 7 and 18 in school they would

need to spend 41% of their discretionary budgets. Households, especially poor

1/ Waskito Tjiptosasmito and William K. Cummings, The Status of Deployment ofTeachers in Indonesia, Table 3.15.

- 36 -

ones, have already adjusted their demand for schooling down to what they are

able to pay by sending fewer of their children to school. It can be expected

that an increase in school fees would adversely affect enrollment rates among

them.

To ease the burden on poorer households, consideration should be

given to an expansion in the provision of student loans and scholarships, as

well as greater use of school fee reduction or rescission than is now done.

However, loan schemes are complex and some argue that they are not cost

effective because of the high administrative costs and loan defaults. At

present, the scholarship program is very small and benefits roughly one in a

thousand students. University student loans are only granted for continuation

in the university and so do not help students who cannot afford to enter in

the first place. If fees were to be doubled, then one in a hundred senior

secondary and university students could be given full scholarships and still

leave 88% of the fee increase for other purposes. The government could also

give more dormitory subsidies since boarding expenses are a major part of the

cost of schooling for students who have to live away from home.

Given the equity objectives of the government and the limited

resources which are available to the education sector, it is important to give

due consideration to the trade-off between, for example, a greater

concentration of efforts in improving enrollment rates at the primary level

among the poor and the expansion of secondary education.

The problems discussed above concerning the obstacles to universal

primary education suggest that something more than providing school places

will be required in order to achieve this objective. The government is well

aware of this and already has a number of programs which are designed to

- 37 -

tackle this problem. Consideration will be given to compulsory primary

education in Repelita IV; a pilot project for this has been instituted in onekecamatan per kabupaten. The academic calendar will be rearranged where

necessary so as not to conflict with harvest time. Flexible school hours arebeing considered. The "small school" program has remote areas in mind and

there is a special program to enroll primary-school drop-outs, as well as

those over the primary-school age.

Grade repetition at the primary level represents a waste in

government resources; thus it is encouraging that there has been a significant

decline in repetition rates in primary schools over the last few years. It

would be worthwhile to consider what improvements in the quality of teaching

would enable a greater proportion of entrants into the first grade to complete

six years of schooling: using teachers who are more qualified and with more

years of teaching, ensuring longer hours of instruction, and providing the

necessary teaching materials.

To the extent that the quality of education is in large part related

to the qualifications of the teachers and the number of teaching hours, it

would be desirable to examine if the present levels of compensation for

teachers should be increased. Although this will have the effect of

increasing the routine budget considerably, the benefits in terms of

improvement in quality and reduction in repetition and drop-out rates may wellbe worth the cost.

In any case, greater incentives for teachers working in remote areasare probably necessary. At present the government is already trying to

provide housing for teachers working in such locations. In Irian Jaya andEast Timor, monetary incentives are also given in addition to cost-of-living

adjustments which apply to all areas.

- 38 -

III. Health

The Record

The government's objectives in the health sector are articulated in

its Long-Term Health Development Plan. 1/ All activities in health

development are for the purpose of achieving a higher standard of health so

that everyone may live productively. More extensive, uniform and accessible

health facilities are being sought, especially for the low-income population,

whether in rural or urban areas. More extensive participation in health

activities is also being pursued.

Consistent with the goal of "Health for All by the Year 2000",

specific quantitative targets have been set in the Long-Term Health

Development Plan. By the year 2000, life expectation at birth is expected to

reach 60 years; the infant mortality rate is expected to be 45 per thousand

live births and the mortality rate for children under age 5 is expected to

decline from 40 per thousand in 1980 to 15 per thousand. 2/

As in the education sector, the government has made remarkable

progress in the provision of facilities in the health sector. For example,

the number of public health centers (PUSKESMAS) more than doubled between the

period 1973/74 and 1980/81, while the numbers of doctors and nurses increased

by 68% and 109% respectively between 1973/74 and 1978/79. The government's

concern for distributional aspects in the provision of facilities has been

1/ Departemen Kesehatan, Sistem Kesehatan Nasional, Jakarta, March 1982.

2/ Departemen Kesehatan, Sistem Kesehatan Nasional, Jakarta, March 1982,p. 39.

- 39 -

reflected in the rule governing the construction of public health centers that

every subdistrict should eventually have a public health center; at the end of

Repelita II, about 80% of the subdistricts already had public health centers

and 800 more centers are planned for Repelita III. In 1977, the government

also lowered the public health center fee, which previously had been set by

the local authorities and showed great regional variations, to Rp 150 for all

areas of the country. In this regard, the government again showed its concern

for an equitable provision of services by attempting to ensure that the poor

would be able to afford to use the services provided by the public health

centers.

Although private health centers exist, most of the health centers

belong to the government; private hospitals, however, are a significant

proportion of the total, accounting for 48% of all hospitals and 28% of

hospital beds in 1980.

However, a great deal remains to be done in the health sector.

Although indicators of the health status for the population have shown big

improvements, the present levels are still low. The infant mortality rate

(for ages below one year) has dropped from 137 per thousand live births in

1961-1971 to 100 per thousand live births in 1980 which is still high, with

50% of infant deaths occurring during the first month. 1/ Life expectation at

birth is expected to have risen from 46.5 years for males and 49.4 years for

1/ Sistem Kesehatan Nasional, p. 29.

- 40 -

females in 1976-1981 to 48.9 years for males and 51.9 years for females in

1981-1985. 1/ This compares with 60 years for all middle-income countries.

The utilization rates for health services are low in Indonesia; the

average number of visits to any type of health facility is 2.1 per capita per

year, of which 0.3 are to private doctors, 0.4 are to hospitals, and 0.5 are

to public health centers. Although there are now more than three times as

many physicians relative to the size of the population compared with 1960,

each physician serves on average 14,000 people and each nursing person 9,000

people compared with 5,800 and 2,500 for middle-income countries taken as a

whole. 2/

Whereas in the education sector, students can only avail themselves

of higher levels of schooling if they have successfully graduated from the

next lower level, there is no similar qualifying barrier in health, even

though public health services are based on a referral system. Rather, any

reluctance to use the higher levels of service, such as hospitals, is due to

the relative direct and indirect costs of visits and to lack of access to the

facilities. Government hospitals have 75% of their beds in classes II, III

and IV and private hospitals are required to put aside 25% of their in-patient

capacity in classes III and IV for poorer patients. In spite of these

provisions, the poor, especially those in rural areas, rarely use the higher-

level health facilities.

1/ Sistem Kesehatan Nasional, p. 28.

2/ World Bank, Ibid: Table 22.

- 41 -

Even though the nominal fee for a visit to a public health center is

low (Rp 150), in practice there are other charges such as drug

prescriptions. In a study in Karanganyar district in Central Java, the

average cost of a visit to a rural public health center in 1980 was found to

be Rp 209; the daily per capita income in the district was Rp 202 in

1979/80. 1/ The 1980 Household Health Survey 2/ found the average direct cost

to the patient of a visit to a public health center to be Rp 418, the figure

for rural areas of Central Java being Rp 251 which is quite comparable to the

Karanganyar study. Additional costs related to the visit are incurred, such

as transportation and loss of income in making the visits. These costs are

more critical to the poor. In a study of hospital costs, the associated costs

which included transportation, extra food for the patient, and lodging for

accompanying relatives amounted to 19% of the direct costs. 3/

While the availability of health facilities has definitely increased,

as witnessed by the fact that geographical access was cited as a reason for

not seeking treatment less frequently in 1980 compared with 1972 4/, it is

nevertheless estimated that less than 50% of the population is reached by

1/ Ascobat Gani, Demand for Health Services in Rural Area of KaranganyarRegency, Central Java, Indonesia, Ph.D. dissertation, The Johns HopkinsUniversity, Baltimore, Maryland, December 1981.

2/ Departemen Kesehatan, Survai Kesehatan Rumah Tangga, Jakarta, 1980.

3/ Departemen Kesehatan, Survai Biaya Pasien Rawat di Rumah Sakit Tipe A,Jakarta, 1980.

4/ Survai Kesehatan Rumah Tangga, 1972 and 1980.

- 42 -

government or private health services. 1/ It is also the case that the

average number of visits to public health centers is related to the average

area served by them; the latter would be linked to the average distance of

households to a center. In provinces of Java and Bali, where each center

serves on average an area smaller than 100 sq. km., the average number of

visits is 55 per day; in ten other provinces, where each serves an area

between 100 and 500 sq. km. in size, the figure is 29 per day; and in the

remaining provinces it is only 23 per day. 2/ Thus lack of access to public

health centers is a bigger problem in the Outer Islands than in Java.

Finally, the quality of service in the public health centers is

discouragingly low: health personnel is inadequate and lacks supervision; the

public health centers are not always open; drug supplies are often inadequate

and so on. 3/

The Problem

In the health sector, the government faces a similar problem as it

does in education of how to expand hospitals and other facilities, maintain

and operate the public health centers and hospitals, and improve the quality

of services at all levels. The share of health in the government budget is

1/ Sistem Kesehatan Nasional, p. 31.

2/ Departemen Kesehatan data.

3/ Estimates of how long the government annual supply of drugs in the publichealth centers lasts ranges from 3 months to 8 months.

- 43 -

already low at 2% and the prospects for an increase are probably not good at

this time.

How to allocate the resources available to the health sector between

the capital and recurrent budgets is a serious problem for the government. As

pointed out earlier in the section on education, the level of recurrent

expenditures for a given size of past investment implies certain standards of

maintenance and quality. Once capital expenditures have been made, the

attempt to hold down the routine budget therefore probably means a sacrifice

in terms of the quality of service provided. Moreover, the manner in which

funds are allocated among competing objectives will have implications for

equity, given the differential uses of different types and levels of services

by different population groups.

Financing

In the health sector, private services are provided by private

doctors, both modern and traditional, private hospitals and clinics, a large

number of private maternity centers, and a small number of private health

centers. The government provides services through the government hospitals,

public health centers and subcenters, and community health volunteers. As in

the case of education, government assistance to private hospitals is

negligible, amounting to less than 1% of the total Ministry of Health budget,

so that private patients taken as a whole pay in full for hospital services.

For each public health center visit there is a fee of Rp 150 which is supposed

to cover the medical examination and drugs. In a few places the fee is less

than Rp 150 and in Irian Jaya the service is provided free of charge.

- 44 -

Hospital in-patients pay according to the class of hospital room and the

treatment received. For public services considerable additional private costs

are still incurred: drugs prescribed by the doctor, transportation and so

on. Finally, some 10% of the population, consisting of civil servants and

pensioners, their spouses and children, are covered by health insurance

(ASKES) which is financed out of a withholding of 2% of their salaries or

pensions.

Regulation requires that revenues from public health center and

government hospital fees be sent to the appropriate level of government. In

some places, the local government allows the public health centers to retain a

certain proportion of the total fees collected.

There are three levels of financing operating costs for government

health services: national, provincial and local (kabupaten/kotamadya). Very

roughly speaking, the APBN (national) budget finances central (i.e. Ministry

of Health) hospitals; the APBD I (provincial) budget finances provincial

hospitals; while the APBD II (kabupaten/kotamadya) budget finances kabupaten

hospitals and the public health centers. In a study of health service

finance 1/, it was found that at least 93%, and probably as much as 97%, of

the total health allocations in 1980/81 came from the central government

budget and fees, with the remainder being attributable to the regional

development budgets. The breakdown in Appendix Table 13 shows that at least

83% of total health allocations come from the central government through the

1/ Mark Wheeler and J.B. Volpatti, Health Service Finance, mimeo, September1980.

- 45 -

central budgets or salaries of health workers paid through the Ministry of

Finance. Fees from ASKES and general patients amount to 10% of the total.

Roughly 60% (Rp 171.4 billion) of the total allocation of Rp 286.3

billion is estimated to be in the routine budget, with the development budget

accounting for the remaining 40% (Rp 114.9 billion). The breakdown of the

routine budget and fees by level of government is shown in Table 5.

Approximately 38% of the health budget go to hospitals while 28% go to public

health centers. 1/ Making the assumption that two-thirds of the routine

budget at each level is allocated to health care, we have estimated the total

subsidies to be of the order of Rp 96 billion, with the proportion of total

health care expenditures recovered through user fees being 23%. What is

particularly interesting and makes the issue in health different from that in

education is that the degree of cost recovery at the local level which

provides the lower level of services (public health centers and kabupaten

hospitals) is far greater (36%) than that for the higher levels of services

involving primarily Ministry of Health and provincial hospitals (12%).

Who Gets What?

We compare in Appendix Table 14 the shares of people in different

household groups who were sick at any time during a period of one week with

the shares of these who visited a public health center, a hospital or a doctor

1/ Sistem Kesehatan Nasional, p. 57.

Table 5: BREAKDOWN OF ROUTINE BUDGET AND FEES RECEIVED FOR GOVERNMENT HEALTHSERVICES, BY LEVEL OF GOVERNMENT, INDONESIA, 1980/81

% of Health CareEstimated Expenditure

Level of Government Routine Budget (Rp billion) Fees Subsidies RecoveredTotal For Health Care 1/ (Rp billion) (Rp billion) through Fees

National: APBN Routine 51.958 34.639 4.011 30.628 12

Provincial: APBD I Routine 42.584 28.389 3.262 25.127 11

Local: 76.758 61.758 22.000 39.758 36

APBD II Routine 45.000 30.000 12.000Inpres drugs 21.758 21.758ASKES 10.000 10.000 10.000

TOTAL 171.400 124.786 29.273 95.513 23

1/ Assuming that two-thirds of the routine budget at each level is allocated to health care.

Source: Mark Wheeler and J.B. Volpatti, Health Service Finance mimeo, September 1980.

- 47 -

in private practice. 1/ The middle income classes in rural areas are the mainusers of public health centers; hospital visits are made by the upper income

classes in both urban and rural areas, as are visits to private doctors.

Unfortunately, we are unable to obtain a breakdown of hospital visits into

out-patient and in-patient visits. Thus we cannot take into account the fact

that higher-income patients are more likely to use hospitals for out-patient

visits while the poor would use public health centers for this purpose.

In order to get very crude estimates of the subsidies going to the

different household groups, we divide the routine budget allocated to health

care between hospitals (Rp 71.846 billion) and public health centers

(Rp 52.940 billion). For hospitals it is assumed that 12% are recovered

through fees, based on the degree of cost recovery at the APBN and APBD I

levels. Subsidies going to hospitals are thus estimated to be approximately

Rp 63.224 billion. The rest of the subsidies, Rp 32.289 billion, are assumed

to go to public health centers, with the degree of cost recovery being 39%.

The 1980 Census contained a question on whether individuals had felt

unwell during the week preceding the census date, and whether and where they

had sought treatment. This allows us to estimate the annual numbers of visits

to hospitals and public health centers, as well as other places of

treatment. In 1980, roughly 56 million visits were made to hospitals, of

which 42 million would be to government hospitals, and 80 million visits to

1/ The results are based on 1978 SUSENAS data.

- 48 -

public health centers. 1/ The average subsidy for a government hospital visit

is thus estimated to be approximately Rp 1,500, while that for a public health

center visit is roughly Rp 400. Appendix Table 15 gives the shares of health

care subsidies going to different household groups under these assumptions

concerning the sizes of subsidies. The household groups that receive more

than their share (based on the total number reporting being sick during the

survey week) are the better-off households, namely the middle and upper

economic classes, particularly urban households. An implicit assumption made

here is that the same proportion of people who are sick report sickness

whether they are poor or rich. If instead it is the case, which is likely,

that the poor are less likely to report sickness than the rich, then the poor

get even less than their proportionate share of subsidies based on their need

for health services.

In a study of the two class A hospitals 2/, it has been observed that

patients who have greater financial resources stay longer in the hospital, as

do those whose bills are paid by a third party, such as an insurance company

or employers. This would suggest that actual inequalities in the distribution

of subsidies in health care by household groups are likely to be even greater

than the table indicates. However, the study also finds that the lowest

1/ Ministry of Health data on public health centers imply roughly 60 millionvisits a year in 1980. However, information was only available for 25% of thecenters. Moreover, estimates based on numbers of visits reported by thecenters themselves are likely to be biased downwards since a correspondence isexpected between visits and fees sent to the kabupaten government.

2/ These are the highest class of hospitals in Indonesia; one is in Jakartaand the other in Surabaya. See Survai Biaya Pasien Rawat di Rumah SakitTipe A 1980.

- 4 9 -

classes of hospital care (classes III and IV) are used more by the lower andmiddle socioeconomic groups. Since these classes of hospital care are more

heavily subsidized, this fact would imply less inequality in the distribution

of subsidies. It is not clear what the net effect of these different forces

is on the distribution of subsidies.

Policy Options

In health, the policy options available to the government for

increasing resources are similar to those in education. The government has totake responsibility for undertaking various activities with positive

externalities which otherwise may not be carried out by the private sector, inparticular preventive health care such as immunizations, pre-natal and post-

natal care, sanitation and nutrition, as well as providing service in the

emergency sections of hospitals which tend to be an unprofitable

undertaking. The private sector could then take a relatively greater role incurative care. To the extent that the poor use the PUSKESMAS and the lower

classes of hospitals, it would be desirable to improve the quality of service

in these facilities. The private sector should be encouraged to step in whereit can. There are in fact many requests for setting up private hospitals andmaternity clinics.

Greater private sector participation would reduce the pressure on thegovernment itself to expand; government expansion can then become more

selective, while available resources are freed to operate and maintain theexisting facilities and to improve the quality of service. It would bedesirable if physical facilities are properly maintained and all the inputs

- 52 -

to increase this to 30% by the year 2000. 1/ There is a need for better

quality control in drug production by the private sector and also of educating

the public. The cost of packaging and advertising greatly increases the cost

of drugs but many patients are not satisfied unless the doctor prescribes

drugs with familiar brand names.

Most doctors in government hospitals also have private practice. In

a large number of instances they spend only a few hours a day working in the

hospital. Further study is required to determine whether government salaries

for them are too low and, if so, how this fact affects their supply. In any

case, greater incentives for working in remote areas are probably necessary.

Graduates from medical schools are required to work as either INPRES doctors

in INPRES public health centers, in which case they would get housing and

transportation facilities, as well as an honorarium given to heads of INPRES

public health centers, or non-INPRES doctors assigned to government hospitals

of types C and D, in which case they would not get housing and transportation

facilities or honoraria. While working for the government, they can work in

private practice after office hours. The length of government service is five

years in Java and three years in the Outer Islands. 2/ After satisfying this

requirement, the doctors are free to look for another assignment or to enter

specialization.

1/ Sistem Kesehatan Nasional, p. 34.

2/ For East Timor it is one year and for Irian Jaya it is two years. Since

government hospitals cannot always absorb all new graduates, some of them may

be assigned to a private hospital by the government.

- 53 -

Finally, it would be desirable to set up accounting systems which

would enable unit costs of different types or levels of services to be

calculated. At present, fees in the PUSKESMAS and government hospitals are

set by the regional or central government. Once collected, they are remitted

to the government. The facilities, however, are run out of a budget and the

job is considered done so long as all expenditures are accounted for according

to the rules and regulations. How much of the cost is covered by fees is not

a consideration. In contrast, private health centers and hospitals have to be

mindful of these issues. The purpose of calculating unit costs is not in

order to know how much to charge, but rather to be able to make decisions on

how much, if any, to subsidize a certain service and to see clearly which

activities are being taxed and which are being subsidized in order to be able

to see the impact of the fee structure on different population groups.

It would also be worthwhile to consider allowing greater local

autonomy, for example at the PUSKESMAS level, and permitting a certain

proportion of fees collected to be retained by the facilities for operating

purposes. This is already the practice for a number of PUSKESMAS in certain

localities where there are incidentally fewer complaints of insufficient drug

supplies since the PUSKESMAS can use retained fees to purchase additional

drugs for sale to the patients.

- 54 -

IV. Conclusion

The less than ideal financial situation and anticipation of resource

shortfall underlie our search for new solutions.

In summary, one option considered is the encouragement of a greater

role of the private sector. This would seem to be feasible and desirable in

both the education and health sectors. A second option, not exclusive of the

first, is the increase in the recovery of costs of providing services. This

paper examines user charges with particular attention to its equity

implications. It concludes that the present distribution of government

subsidies in education and health is skewed towards the rich, especially in

urban areas, since the rich are more likely to use the higher levels of

service where the subsidies are greater. An overall increase in user fees

which incorporates a more progressive fee structure would have the effect of

reducing the fiscal burden while making for greater equity in the distribution

of benefits.

While the options considered in this paper vary in their degree of

administrative complexity and apparent palatability, they are guided

throughout by the government's objective of equity in the provision of social

services. In that spirit, efficacy alone should not be the sole criterion in

the final judgment of their relative merit.

Lastly, it remains to be said that an expeditious commencement of the

remedial process may go a long way towards lessening the risks of a disruptive

overhaul at a later date.

- 55 -

Appendix Table 1: PROPORTIONS OF CHILDREN IN DIFFERENT SOCIOECONOMIC GROUPS ATTENDINGSCHOOL, BY AGE GROUP AND SEX, INDONESIA, 1978

(Z)

Socioeconomic Characteristics Ages 7-12 Ages 13-15 Ages 16-18 Ages 19-25Male Female Male Feuale Male Female Male Female

All ChildrenIndonesia 84 82 59 47 34 22 8 2Region of Residence

Java 83 80 57 41 30 19 6 2Outer Islands 86 84 62 57 40 26 10 4Location of ResidenceUrban 92 88 81 67 60 40 18 7Rural 82 80 54 41 27 16 5 1Household Per Capita Expenditure ClassLower 40X 81 78 48 37 20 9 2 0Middle 30X 84 82 60 47 30 26 7 2Upper 30X 91 90 77 59 57 36 14 6

Children of Household ReadEducation of Household Head

No schooling 72 72 41 31 20 10 3 1Not completed primary school 86 80 60 41 27 23 8 2Primary School 90 90 76 65 57 50 27 13Junior Secondary School 97 95 84 93 72 70 37 27Senior Secondary School 99 96 100 79 92 76 47 27Academy/University 98 100 100 100 100 99 70 73Occupation of Household HeadProfessional 93 85 76 65 59 40 14 12Clerical 94 97 98 77 76 73 31 23Sales 100 92 93 76 76 46 48 13Services 86 77 66 64 36 45 18 8Agricultural 80 81 52 38 24 19 7 3Production worker 90 84 63 39 45 22 11 1

Other Children 85 78 53 39 31 8 4 1

Source: Data tapes of SUSENAS 1978, Biro Pusat Statistik.

- 56 -

Appendix Table 2: REGRESSIONS OF WHETHER OR NOT A CHILD IS ATTENDING SCHOOLBY DIFFERENT AGE GROUPS, INDONESIA, 1978

Age GroupIndependent Variable 13-15 16-18 19-25

Constant -0.2620 -0.9736 -0.4396

Child's CharacteristicsChild's sex (male = 1, female = 0) 0.1429 0.1307 0.0513

(6.47) (6.41) (6.44)

Household Characteristicsloge (household expenditure) 0.0562 0.0956 0.0352

(2.84) (5.65) (5.32)

Household size 0.0065 0.0122 0.0110(1.14) (2.54) (5.92)

Years of schooling of 0.0186 0.0129 0.0083household head (3.95) (2.95) (4.90)

Years of schooling of 0.0163 0.0200 0.0010spouse of household head (3.19) (4.06) (0.50)

Schooling FacilitiesJunior Secondary School 0.1049 0.0694

(4.44) (2.64)

Senior Secondary School 0.1250 0.0488(3.91) (4.61)

Adjusted R2 0.1116 0.2050 0.1103

N 1774 1673 2934

Note: (i) The coefficients in this table give the probability that achild attends school, given his and the household's characteristics. Forexample, for a child between ages 13 and 15, the probability that he is inschool can be calculated as:

-.2620 + .0562 (loge (household expenditure)) + .0186 (number ofyears of education of father) + .0163 (number of years of educationof mother) + .0065 (size of household)) + .1429 (if child is male;not if child is female) + .1049 (if household lives in a villagewhich has a junior secondary school; not otherwise)(ii) t-statistics are given in parentheses. The proportion oS the

variance of the dependent variable explained is given by the adjusted R andthe number of observations used in the regression is given by N.

Source: Data tapes of SUSENAS 1978 (May round) and Village Social FacilitiesSurvey, 1976/77, Biro Pusat Statistik, Jakarta.

- 57 -

Appendix Table 3: REGRESSIONS OF YEARS OF SCHOOLING COMPLETED BYCHILDREN IN DIFFERENT AGE GROUPS, INDONESIA, 1978

Age GroupIndependent Variable 10-12 13-15 16-18 19-25

Constant -7.9744 -4.5306 -1.7577 -3.5424

Child's CharacteristicsChild's sex (male = 1, female = 0) 0.0182 -0.0439 0.4333 1.3945

(0.34) (-0.54) (3.96) (14.19)

Child's age 0.7337 0.4976 0.0942 -0.0732(23.35) (10.23) (1.41) (-3.33)

Household Characteristicsloge (household expenditure) 0.2667 0.2331 0.5261 0.8225

(5.37) (3.24) (5.79) (10.07)

Household size -0.0459 -0.0542 -0.0200 0.0778(-3.20) (-2.61) (-0.76) (3.40)

Years of schooling of 0.0463 0.0975 0.1085 0.2141household head (3.86) (5.68) (4.63) (10.21)

Years of schooling of 0.0287 0.0688 0.1107 0.2760spouse of household head (2.14) (3.70) (4.18) (11.64)

Schooling FacilitiesPrimary School 0.0794

(0.58)

Junior Secondary School 0.1471 0.3528 0.4683 0.3112(2.47) (4.10) (3.32) (2.57)

Senior Secondary School 0.0988 0.3746(0.57) (2.46)

Adjusted R2 0.2840 0.1651 0.1800 0.3584

N 1850 1774 1673 2934

Note: t-statistics are given in parentheses.

Source: Data tapes of SUSENAS 1978 (May round) and Village Social FacilitiesSurvey, 1976/1977, Biro Pusat Statistik, Jakarta.

- 58 -

Appendix Table 4: PROPORTIONS (TOTAL AND RANGES ACROSS PROVINCES) OF VILLAGES

WITH EDUCATION AND HEALTH FACILITIES, BY AREA, INDONESIA, 1976/77

Facilities Urban Rural% of Villages Range Across % of Villages Range Across

Having Facility Provinces Having Facility Provinces

EducationPrimary School 87 62 to 100 74 26 to 100

Junior Secondary School 47 27 to 77 11 2 to 48

Senior Secondary School 33 16 to 68 3 0 to 19

HealthHospital 42 20 to 70 15 3 to 47

Public Health Center 22 7 to 73 7 2 to 18Maternity Hospital 36 15 to 64 8 1 to 42Physician Service 45 19 to 77 4 1 to 21

Nurse/Other HealthPersonnel 74 44 to 96 49 4 to 85

Source: Computed from Statistik Sosial, Fasilitas Sosial Desa, 1976 (RS78-01

and RS79-03), Biro Pusat Statistik, Jakarta, 1978 and 1979; and 1977

(RS80-04), Biro Pusat Statistik, Jakarta, 1980.

Appendix Table 5: ACTIVITIES OF SCHOOL-AGE CHILDREN, BY AGE GROUP AND SEX, INDONESIA, 1978(% reporting activity)

Male Female10-12 13-15 16-18 19-25 10-12 13-15 16-18 19-25

Attending SchoolEmployed 5 7 11 16 3 5 4 11Working 5 7 11 13 3 5 4 11Working or away from

work only 3 5 8 9 2 3 3 4Looking for work 0 0 0 1 0 0 0 0 1Taking care of house 56 55 56 41 77 78 76 71 %AOther nonmarket activities 31 29 30 41 14 14 16 24 0Not Attending School

Employed 48 72 78 87 43 44 46 41Working 46 70 75 86 39 41 43 39Working or away fromwork only 48 64 73 79 34 29 31 21Looking for work 8 7 9 9 2 2 3 2Taking care of house 17 22 11 9 62 66 65 76Other nonmarket activities 26 9 8 6 2 4 3 2

Source: Data tapes of SUSENAS 1978.

- 60 -

Appendix Table 6: IDEAL AND MEAN ACTUAL YEAR IN SCHOOL, BY AGE AND SEX,INDONESIA, 1978

Mean of Actual Year in SchoolAge Ideal Year Male Female Total

6 1.04 (.25) 1/ 1.01 (.10) 1.02 (.19)

7 1 1.16 (.38) 1.24 (.50) 1.20 (.45)

8 2 1.63 (.59) 1.78 (.65) 1.70 (.63)

9 3 2.48 (.87) 2.65 (.78) 2.56 (.84)

10 4 3.07 (1.16) 3.20 (.91) 3.13 (1.05)

11 5 3.93 (1.10) 3.91 (1.12) 3.92 (1.11)

12 6 4.58 (1.39) 4.75 (1.20) 4.05 (1.31)

13 7 5.53 (1.55) 5.70 (1.50 5.61 (1.53)

14 8 6.29 (1.52) 6.56 (1.51) 6.40 (1.52)

15 9 7.19 (1.82) 7.89 (1.83) 7.38 (1.72)

16 10 8.02 (1.71) 8.58 (1.58) 8.26 (1.88)

17 11 9.10 (1.90) 9.34 (1.40) 9.20 (1.72)

18 12 10.03 (1.76) 10.05 (2.19) 10.04 (1.92)

19 13 10.89 (1.58) 10.84 (1.88) 10.87 (1.67)

20 14 11.65 (1.71) 10.38 (3.80) 11.21 (2.70)

1/ Standard deviations are given in parentheses.

Source: Data tapes of SUSENAS 1978.

- 61 -

Appendix Table 7: REGRESSION OF DEVIATION OF YEAR IN SCHOOL FROM EXPECTEDVALUE, BY AGE GROUP, INDONESIA, 1978

Ages 7-12 Ages 13-15 Ages 16-18 Ages 7-18Independent Variable

Constant -1.8199 -4.1075 -5.3587 -2.8561

Child's Characteristics

Child's sex (male = 1, female = 0)-0.0986 -0.0878 -0.3379 -0.1151(-3.39) (-1.05) (-2.94) (-4.00)

Household Characteristicsloge (household expenditure) 0.1675 0.3810 0.4667 0.2593

(6.13) (5.33) (4.65) (9.88)

Father's education (years) 0.0187 0.0553 0.0501 0.0285(2.90) (3.22) (2.26) (4.59)

Mother's education (years) 0.0186 0.0653 0.0584 0.0349(2.59) (3.59) (2.48) (5.13)

Household size -0.0190 -0.0632 0.0123 -0.0215(-2.40) (-3.02) (0.50) (-2.86)

Schooling Facilities

Primary school -0.0251 0.0217(-0.31) (0.28)

Junior secondaryschool 0.0909 0.4997 -0.2103 0.2016

(2.80) (5.77) (1.50) (5.47)Senior secondaryschool

0.0807 -0.0592(0.55) (-1.31)

Adjusted R' 0.0444 0.1597 0.1766 0.0871

N 4150 1284 777 6228

Note: t-statistics are given in parentheses.

Source: Data tapes of SUSENAS 1978 (May round) and Village Social Facilities Survey,1976/1977, Biro Pusat Statistik, Jakarta.

Appendix Table 8: SHARES OF HOUSEHOLDS AND OF SCHOOL-AGE CHILDREN IN DIFFERENT AGE GROUPS, PY HOUSEHOLD ECONOMIC CLASS,AREA AND REGION, INDONESIA, 1978

(M)

JAVA OUTER ISLANDS INDONESIAHousehold Economic Class 1/ Urban Rural Total Urban Rural Total Urban Rural Total

Shares of Households

Lower 4OZ 2 30 32 1 7 8 3 37 40Middle 30% 2 17 19 2 9 11 4 26 30Upper 3OZ 6 8 15 3 12 15 10 20 30TOTAL 11 55 66 6 28 34 17 83 100

Shares of School-Age Children

Ages 7-12(Primary) Lower 40X 2 34 37 1 10 11 3 44 47

Middle 30X 2 14 16 2 12 14 4 26 30 1Upper 30Z 5 5 10 3 9 12 8 14 22 CbTOTAL 9 53 63 7 31 37 16 84 100

Ages 13-15(Junior Secondary) Lower 40X 2 29 32 1 8 9 3 37 41

Middle 3O0 3 15 17 2 12 14 5 26 32Upper 3OZ 8 7 15 4 9 13 12 16 28TOTAL 13 51 64 7 29 36 20 80 100

Ages 16-18(Senior Secondary) Lower 402 2 26 29 1 9 10 3 35 38

Middle 30X 3 13 16 3 10 12 6 23 29Upper 30% 9 8 17 5 11 16 15 18 33TOTAL 15 47 62 9 29 38 23 76 100

Ages 19-25(University) Lower 40% 2 29 31 1 7 8 3 36 39

Middle 30X 3 14 17 2 8 11 5 22 27Upper 30Z 9 8 17 5 11 16 14 19 34TOTAL 14 51 65 8 27 35 22 78 100

1/ Based on the level of per capita expenditure of the household.

Source: Data tapes of SUSENAS 1978, Biro Pusat Statistik, Jakarta.

Appendix Table 9: SNiARES OF STUDENTS ANI) OF PIIBLIG snl1l)ENTS ATr ni) -FERENT LEVELS OF Sb.IIOOLI?U:, BY IIOIJl;p.HoLD FCI)MICCLASS, ARgA AND RECION, INDONESIA, 1978(2)

Java Outer Island IndonestaIlousehold Economic Class 1/ Urhan Rural Total Urban Rural Total Urhan Rural ToralShares of StudentsPrimary: Lower 40X 2 32 35 1 9 10 4 42 45Middle 30X 2 14 16 3 12 15 5 25 30Upper 302 6 5 11 3 10 14 9 15 24Total 10 51 61 7 31 39 18 82 100Junior Secondery: Lowr 40X 3 12 15 1 7 8 4 19 23Itddle 30X 4 13 17 3 10 13 7 23 30Upper 30X 14 11 25 9 13 22 23 24 47Total 21 36 57 13 30 43 34 66 100Senior Secondary: Lower 40X 3 3 6 1 5 6 4 9 12Hiddle 30X 3 a 11 5 10 15 8 18 26Upper 30% 27 10 37 15 10 25 42 20 62Total 32 22 54 21 25 46 53 47 100University: Lauer 40X 1 0 1 1 2 2 2 2 4 0'middle 302 1 1 2 3 5 8 4 6 10Upper 302 55 7 61 19 6 25 73 13 86Total 51 8 65 22 12 35 80 20 100All Levels: Lower 402 2 28 30 1 9 10 4 36 40Middle 30X 2 13 16 3 11 14 5 24 29Upper 3OZ 9 6 15 5 11 15 14 17 31Total 14 47 60 9 31 40 23 77 100Shares of Public StudentsPrimary: Loer 402 3 37 40 1 10 12 4 47 51Middle 30X 2 12 14 2 10 13 4 23 27Upper 302 5 4 9 3 9 12 8 13 23Total 10 53 63 7 30 37 17 83 100Junior Secondary: Lover 40X 5 24 29 2 14 16 7 38 45Middle 30X 3 9 12 2 7 9 5 16 21Upper 305 10 8 18 6 9 16 17 17 31Total 18 41 59 11 30 41 29 71 100Senior Secondary: Lover 402 5 6 12 1 9 10 6 16 22Middle 302 3 7 10 4 9 13 7 16 23Upper 30X 24 9 32 13 9 22 37 18 55Total 32 23 54 19 27 46 50 50 100University: Lower 40f 3 0 3 2 3 5 4 3 7Middle 302 1 1 2 3 5 7 4 6 10Upper 30X 53 6 59 18 6 24 71 12 83Total 57 7 64 22 13 36 79 21 100All Level: Lover 402 3 34 37 1 11 12 4 45 49Middle 302 2 12 14 2 10 13 5 22 26Upper 30X 7 5 11 4 9 13 10 14 24Total 12 51 63 8 30 37 19 81 100

I/ Based on th, level of per cspita expenditure of the household.

Source: Data tepee of SUSEUAS 1978, Uiro Pusat Statistik, Jakarta.

Appendix Table 10: SHARES OF GOVERNMENT SUBSIDIES (THROUGH RECURRENT EXPENDITURES) TO STUDENTS AT DIFFERENT LEVELS OFSCHOOLING, BY HOUSEHOLD ECONOMIC CLASS, AREA AND REGION, INDONESIA, 1978

(X)

JAVA OUTER ISLANDS TNDONESIALevel of Schooling Household Economic Class 1/ Urban Rural Total Urban Rural Total Urban Rural Total

PrimaryLower 40% 3 37 40 1 10 12 4 47 51Hiddle 302 2 12 14 2 10 13 4 23 27Upper 30X 5 4 10 3 9 12 8 13 22TOTAL 10 53 63 7 30 37 17 83 100

Junior SecondaryLower 4O0 5 24 29 2 14 16 7 38 45Hiddle 30X 3 9 12 2 7 9 5 16 21 1Upper 30X 10 8 18 6 9 16 17 17 33TOTAL 18 41 59 11 30 41 29 71 100 °

Senior SecondaryLower 40X 5 6 12 1 9 10 6 16 22Middle 30% 3 7 10 4 9 13 7 16 23Upper 30X 24 9 32 13 9 22 37 18 55TOTAL 32 23 54 19 27 46 50 50 100

UniversityLower 40X 3 0 3 2 3 5 4 3 7Middle 30X 1 1 2 3 5 7 4 6 10Upper 30X 53 6 59 18 6 24 71 12 83TOTAL 57 7 64 22 14 36 79 21 100

All LevelsLower 40% 3 31 34 1 11 12 5 41 46Middle 30% 2 11 13 3 9 12 5 20 25Upper 30X 10 5 15 5 9 14 15 14 24TOTAL 15 47 62 9 29 38 24 76 100

1/ Based on the level of per capita expenditure of the household.

Note: It is assumed that all students in the lowest economic class go to public schools; the proportions of public school studentsfor the middle and upper economic classes are assumed to be the same.

Source: Data tapes of SUSENAS 1978, Biro Pusat Statistik, Jakarta.

- 65 -

Appendix Table 11: PUBLIC SCHOOL ENROLLMENT, RECURRENT EXPENDITURES FOR EDUCATION, SCHOOL FEES AND PROPORTIONS OF COSTS RECOVERED,INDONESIA, 1980/81 AND PROJECTED THROUGH 1990/91

Annual Growth Rate (2)1980/81 1985/86 1990/91 1980/81-1985/86 1985/86-1990/91Public School Enrollment (million) 1/

Primary 20.165 21.242 20.692 1.0 -0.5Junior Secondary 1.869 3.692 3.670 14.6 -0.1Senior Secondary .884 1.978 3.417 17.5 11.6University .246 .332 .596 6.2 12.4Total 23.164 27.244 28.375 3.3 0.8

Total Recurrent Expenditures (Rp billion In 1980/81 prices)A. Based on Existing Per Student Recurrent Expenditure 2/

Primary 816.683 860.301 838.026Junior Secondary 180.919 357.386 355.256Senior Secondary 95.295 213.228 368.353University 68.044 91.831 164.854Total 1,160.941 1,522.746 1,726.489

B. Based on Per Student Recurrent Expenditure Increasin8 at 5.52 per year 3/Primary 16. 63 1,1123.7OZ 1,431.886Junior Secondary 180.919 467.038 607.018Senior Secondary 95.295 278.305 628.728University 68.044 120.084 281.670Total 1,160.941 1,989.129 2,949.302

Fee Income (Rp billion in 1980/81 prices) 4/a) Fees are kept at present levels 29.022 54.332 79.875Primary 0.000 0.000 0.0 0Junior Secondary 10.214 20.177 20.057Senior Secondary 9.880 22.106 38.188University 8.928 12.049 21.630

b) Fees are doubled by 1990/91 29.022 81.498 159.750c) Fees are quadrnpled by 1990'91 29.022 108.664 319.500

% of Recurrent Expenditures ?ecovered Through FeesA. Based on Existing Per Student Recurrent Expenditures

a) Fees are kept at present levels 2.5 3.6 4.6b) Fees are doubled by 1990/91 2.5 5.4 9.3c) Fees are quadrupled by 1990/91 2.5 7.1 18.5

B. Based on Per Student Recurrent Expenditure Increasing at 5.52 pr yeara) Fees are kept at present levels 2n5 2 7 2.7b) Fees are doubled by 1990/91 2.5 4.1 5.4c) Fees are quadrupled by 1990/91 2.5 5.5 10.8

1/ John Smyth, GCentral Government Education Expenditure Projections, 1980/81-1990/91', mimeo, November 1981,Annexes 1, 2, 3, and 4 for 1980/81 figures. Numbers of university students for 1985/86 and 1990/91 are taken as 75% of Smyth'sprojections. World Bank projections for all other educational levels for 1985/86 and 1990/91.

2/ Ibid, pp. 13 and 15, with the exception that the per student routine recurrent expenditure is adjusted so thatonly public students are included In the calculation, not all students.

3/ Ibid. pp. 14 and 15. Smyth assumed that both routine recurrent and development recurrent expenditure perstudent grew annually at the same rate as GDP per capita, which was assumed to grow at 5.5% per year. The rationale forthis expenditure increase was to reduce the turnover of teachers and specialists.

4/ Based on the per student fees reported in Table 1.

Appendix Table 12: ACTUAL TUITION FEES PAID AND FEES REQUIRED TO ENROLL ALL CHILDREN AGES 7 TO 18 IN SCHOOL AS PERCENTAGES OF

HOUSEHOLD DISCRETIONARY BUDGET, BY HOUSEHOLD ECONOMIC CLASS, REGION AND AREA OF RESIDENCE, INDONESIA, 1978

Java Outer Islands Indonesia

As X of Discretionary Budget 1/ Urban Rural Total Urban Rural Total Urban Rural Total

Actual Tuition Fees PaidLower 40S 19.08 3.43 4.95 16.35 3.60 5.07 18.38 3.51 4.98

Middle 30X 16.84 3.25 5.21 11.90 4.76 6.07 14.67 3.81 5.54

Upper 30S 8.53 2.74 5.65 7.12 2.68 4.18 8.19 2.71 5.17

TOTAL 9.38 2.98 5.44 8.02 3.27 4.64 9.02 3.08 5.18

Fees Required to Enroll all Children Ages 7-18 in SchoolLower 40X 29.35 35.33 34.75 33.13 41.02 40.16 30.30 36.56 35.94

Middle 301 18.61 14.73 15.29 20.40 18.95 19.22 19.40 16.28 16.78

Upper 30! 3.92 3.31 3.61 6.46 7.00 6.81 4.54 4.74 4.65

TOTAL 5.66 12.16 9.62 9.18 13.20 12.04 6.57 12.53 10.40

1/ The discretionary budget refers to total household expenditure less expenditures on food, housing and clothing.

Source: Date tapes of SUSENAS 1978, Biro Pusat Statistik, Jakarta.

- 67 -

Appendix Table 13: DISTRIBUTION OF HEALTH ALLOCATIONS BY ULTIMATE SOURCE OFFUNDS, INDONESIA, 1980/81

Rp billion x

Central Government 236.8 82.7through: Central Budgets 171.6 59.9

SDO 1/ 65.2 22.8

Fees 29.3 10.2from: ASKES patients 18.7 6.5

general patients 10.6 3.7

Net Contributions from Regional Governments 20.2 7.1APBD I Routine 7.1 2.5APBD I Development 9.1 2/ 3.2 2/APBD II Routine - -APBD II Development 4.0 2/ 1.4 2/

TOTAL 286.3 100.0

1/ Subsidi Daerah Otonom which meets the basic salary costs of all appointedhealth workers.

2/ A high proportion of all regional government expenditures, especially fordevelopment, is derived from central government transfers.

Source: Mark Wheeler and J.B. Volpatti, Health Service Finance, mimeo,September 1980, Table 2, p. 6.

Appendix Table 14: SHARES OF SICK PEOPLE USING DIFFERENT HEALTH SERVICES, BY HOUSEHOLD ECONOMIC CLASS,

AREA AND REGION, INDONESIA, 1978

(%)

JAVA OUTER ISLANDS INDONESIA

Household Economic Class 1/ Urban Rural Total Urban Rural Total Urban Rural Total

All People Reporting SickLower 40% 2 27 29 0 5 5 2 32 34

Middle 30% 2 17 19 2 7 9 4 25 29

Upper 30% 8 14 23 4 10 14 12 25 37

TOTAL 13 59 71 6 22 29 19 81 100

Sick People who Visited a I

Public Health Center 0

Lower 40% 2 18 19 0 2 2 2 19 21 00

Middle 30% 1 32 33 1 12 13 2 44 46

Upper 30% 6 12 19 2 11 14 9 24 33

TOTAL 9 62 71 4 25 29 13 87 100

Sick People who Visited aHospital

Lower 40% 0 9 9 0 6 7 0 15 16

Middle 30% 6 6 13 3 6 9 10 12 22

Upper 30% 20 18 38 7 18 7 26 36 63

TOTAL 26 34 60 10 30 40 36 63 100

Sick People who Visited aPrivate DoctorLower 40% 2 24 26 0 4 4 2 28 30

Middle 30% 4 10 15 3 2 5 7 12 20

Upper 30% 18 14 32 8 10 18 26 24 50

TOTAL 24 48 73 11 16 27 36 64 100

1/ Based on the level of per capita expenditure of the household.

Source: Data tapes of SUSENAS, 1978, Biro Pusat Statistik, Jakarta.

Appendix Table 15: SHARES OF GOVERNMENT SUBSIDIES (THROUGH RECURRENT EXPENDITURES) TO PATIENTSOF PUBLIC HEALTH CENTERS AND GOVERNMENT HOSPITALS, BY HOUSEHOLD ECONOMIC CLASS, AREA ANDREGION, INDONESIA, 1978

(%)

Household JAVA OUTER ISLANDS INDONESIAEconomic Class 1/ Urban Rural Total Urban Rural Total Urban Rural Total

Lower 40% 1 14 15 0 4 4 1 18 19

Middle 30% 3 21 25 2 9 11 5 31 36Upper 30% 12 15 27 4 14 18 16 29 45 1

01.TOTAL 16 50 67 6 27 33 23 77 100 <

1/ Based on the level of per capita expenditure of the household.

Source: Data tapes of SUSENAS 1978, Biro Pusat Statistik, Jakarta.

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structural changes that accompany the in developing countries during the Meeting Basic Needs: Angrowth of developing countries, using post-World War 1I period. Analyzes Overviewcross-section and time-series analysis problems, successes and failures,to study the stability of observed pat- emerging trends, and lessons leamed. Mahbub ul Haq and Shahid Javedterns and the nature of time trends. Staff Working Paper No. 576. 1983. 71 PureoOxford University Press, 1975; 4th paper- pages. Presents a summary of the main find-back printing, 1984. 250 pages (including ISBN 0-8213-0303-1. Stock No. WP 0576.techncal ppendx, satistcal ppendxSB$ 0810331StcNoWP57. ordBank as part of a program fortechnical appendex, stahstical appendix, $3 reducing absolute poverty and meetingbibliography, Index). basic needs.LC 74-29172. ISBN 0-19-920075-0, hard- NEW 1980. 28 pages (including 2 annexes).cover; ISBN 0-19-920076-9, paperback.Stock Nos. OX 920075, $19.95 hardcover; Policies for Strengthening Stock Nos. BK 9015 (Arabic), BK 9016OX 920076, $8.95 paperback. Local Government in (English), BK 9017 (French), BK 9018Spanish: La estructural del crecimiento Developing Countries (Japanese), BK 9019 (Spanish). $3 paper-economico: un analisis para el periodo Glynn Cochrane Shete1950-1970. Editorial Tecnos, 1978. Y r n ShelterISBN 84-309-0741-6, Stock No. IB 0523, centralized govaeynty which highly Anthony A. Churchill$8.95. utilize and improve resources within Defines the elements that constitute

local governments. The need for shelter; discusses the difficulties en-NEW strengthening personnel performance countered in developing shelter pro-at the local level is discussed, includ- grams for the poor; estimates orders ofPioneers in Development ing an analysis of useful methodology. magnitude of shelter needs for theEdited by Gerald M. Meier and Discussion of local revenue sources next twenty years; and proposes aDudley Seers and pattems of revenue generation strategy for meeting those needs.Some of the pioneers in development provides a framework from which to 1980. 39 pages.economics-Lord Bauer, Colin Clark, examine factors affecting government Stock Nos. BK 9020 (Arabic), BK 9021Albert 0. Hirschman, Sir Arthur performance at higher levels. (English), BK 9022 (French), BK 9023Lewis, Gunnar Myrdal, Raul Prebisch, Staff Working Paper No. 582. 1983. 76 (Spanish). $3 paperback.Paul N. Rosenstein-Rodan, W.W. Ros- pages. Water Supl and Wastetow, H. W. Singer, and Jan Tinber- ISBN 0-8213-0240-X. Stock No. WP D o SPPl gen-offer a retrospective view of the 0582. $3. Dsposalformative decade after World War II Discusses the size of the problem ofwhen they made their seminal contri- Policy Interventions for meeting basic needs in water supplybutions to the subject. In individual Technological Innovation in and waste disposal and its significancepapers, the pioneers recapture the in- Developing Countries to development in the context of thetellectual excitement, expectations, and Charles Cooper International Drinking Water Supplyactivism of that period and provide and Sanitation Decade. Examines therare autobiographical detail and insight Staff Working Paper No. 441. 1980. 59 Bank's past role in improving waterinto why they said what they did and pages (including references). supply and waste disposal facilities inwhat they now think about the state of Stock No. WP 0441. $3. developing countries and draws con-development thought and policy. clusions for the future.Commentary is provided by econo- Poverty and Basic Needs Series 1980. 46 pages.mists of the succeeding generation, A series of booklets prepared by the Stock Nos. BK 9024 (Arabic), BK 9025who reappraise their ideas with the staff of the World Bank on the subject (English), BK 9026 (French), BK 9027benefit of thindsigct. Gaveeenel oer-t of basic needs. The series includes (Spanish). $3 paperback.views of the subject have been wrtten general studies that explore the con-by Gerald Meier and Paul Streeten. cept of basic needs, country case stud- Poverty and the DevelopmentOxford University Press. May 1984. is n etrlsuis oet n h eeomnAbout 400 pages. Hardcover only. of Human Resources: RegionalISBN 0-19-520452-2. Stock No. OX Brazil Perspective520452, $29.95. Peter T. Knight and Ricardo J. Willem Bussink, David Davies,Moran Roger Grawe, Basil Kavalsky, andNEW An edited and updated edition of the Guy P. Pfeffermannmore detailed publication, Brazil: Hu- Staff Working Paper No. 406. 1980. 199Planning in Developing man Resources Special Report (see de- pages (including 7 tables, 2 appedixesCountries: Lessons of scription under Country Studies list- pese(incldg tables, eing). ~~~~~~~~~~~references, footnotes).Experience Stock No. WP 0406. $5.Ramgopal Agarwala 1981. 98 pages (including statistical ap-

Reports that, in most developing pendix, map). English. Poverty and Humancountries, planning failed to live up to Stock No. BK 9028. $5. Developmentexpectations. Outlines steps to remedy Malnourished People: A Policy Paul Isenman and othersthis situation. Recommends a general View Since economic growth alone has notreorientation and emphasis on the reduced absolute poverty, it has beenmost effective areas in the initial for- Alan Berg necessary to consider other strategies.mulation of plans.Provides an in-depth Please refer to Food and Nutrition for The strategy examined in this study-review of the experience of planning information. human development-epitomizes the

idea that poor people should be LC 79-18026. ISBN 0-19-520094-2, hard- in public administration and manage-helped to help themselves. Four chap- cover; ISBN 0-19-520095-0, paperback. ment training (PAMT) in developingters provide an overview of alternative Stock Nos. OX 520094, $34.50 hardcover; countries. Highlights various aspectsstrategies; a detailed look at health, OX 520095, $12.95 paperback. of training and career developmenteducation, nutrition, and fertility; les- French: Changement des structures et poli- programs induding the impact ofsons from existing programs; and an tique de developpement. Economica, 1981. PAMT programs in developing coun-examination of broader issues in plan- ISBN 2-7178-0404-8, Stock No. IB 0540, tries during the past 30 years, the rea-ning. $12.95. son for successful programs, and some

Oxford University Press. 1982. 96 pages Spanish: Cambio estructural y politica de innovative training designs and meth-(including statistical appendix). desarrollo. Editorial Tecnos, 1980. ISBN

LC 82-2153. ISBN 0-19-520389-5. Stock 84-309-0845-5, Stock No. IB 0612, Staff Working No. 584. 1984. 127 pages.

No. OX 520389. $7.95. $12.95. ISBN 0-8213-0234-5.Stock No. WP 0584._____________ $~~~~~~5.

Reforming the New Economic NPn

Mechanism in Hungary NEW Tribal Peoples and EconomicBela Balassa Successes and Failures in Development: Human Ecologic

Staff Working Paper No. 534. 1982. 56 Meeting the Management Considerationspages. Challenge: Strategies and Their Robert Goodland

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Rashid Faruqee oping countries and outlines proven the development process as it affects

Staff Working Paper No. 495. 1981.111 pstrategies for improving management tribal peoples; outlines the requisitespgs(including bibliography, map). competence and performance. Presents for meeting the human ecologic needs

pages approaches to management develop- of tribal peoples; and presents generalStock No. WP 0495. $5. ment recently introduced by enter- principles that are designed to assist

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Some Temporal Aspects of Staff Working Paper No. 585. 1984. 120 opment.Development: A Survey pages. 1982, 118 pages (including 7 annexes, bib-

R. S. Eckaus ISBN 0-8213-0254-X. Stock No. WP 0585. liography).

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tors that lengthen project design and Tourism-Passport to $5.completion. Analyzes changes that Development? Perspectives on

that affect economic development-la- he Socil and Cultural Effes Development: A Provocativebor supply, social structures and their of Tourism in Developing Inquiry into the Poverty ofbehavior, government support func- Countriestions, market organization and effi- Emanuel de Kadt, editor Nationsciency, and capital productivity. Notes The first serious effort at dealing with xAmndesM Kmajrcaracteitcsokhthat development has proved to be a the effects of tourism development in tropical climates that are sinificast torelatively slow process. a broad sense, concentrating on social tronoica dhaevelopmarent. ifcntt

Staff Working Paper No. 626. 1983. 51 and cultural questions. PrePssnt.

pages. A joint World Bank-Unesco std. Oxod T'he Johns Hopkins University Pes 96

ISBN 0-8213-0300-7.Stock No. WP 0626. University Press, 1979. 378 pages (incud- 2nd printing, 1979. 128 pages (including

S3. ing maps, indexp (umaps, bibliography, index).$3. ing~~~~~~~~~L 79a18116 ISNde 195019).had LC 76-17242. ISBN 0-8018-1891-5, hard-

Structural Change and ok ISBN 0-19-520149 -3, pae hard-ck cover; ISBN 0-8018-1903-2, paperback.

Development Policy Stock Nos. OX19520150-, p2.9 aprdck.er Stock Nos. JH 1891, $12.50 hardcover, JH

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decades and an extension of his work NEW ciones. Editorial Tecnos, 1978. ISBN 84-

in Redistribution with Growth and Pat- 309-0740-8, Stock No. IB 0529. $5.

terms of Development. Develops a set of Training for Public Twenty-five Years of Economictechniques for analyzing structural Administration and Development, 1950 to 1975changes and applies them to some ma- ManagmentmneDeelopig5DaidoMoa9etjor problems of developing countries Management in Developing David Morawetztoday. Counties: A Review A broad assessment of developmentOxford University Press, 1979; 2nd pape Samuel Paul efforts shows that, although the devel-

back printing, 1982. 544 pages (including Analyzes the results of a survey of the oping countries have been remarkablyreferences, index). trends, developments, and problems successful in achieving growth, the

distribution of its benefits among and LC 77-17243. ISBN 0-8018-2134-7, hard- ica, 1978. ISBN 2-7178-0038-7, Stock No.within countries has been less satisfac- cover; ISBN 0-8018-2092-8, paperback. IB 0546, $7.95.tory. Stock Nos. IH 2134, $16.50 hardcover; JH Spanish: Veinticinco anos de desarrolloThe Johns Hopkins University Press, 1977; 2092, $7.95 paperback. economico: 1950 a 1975. Editorial Tecnos,3rd printing, 1981. 136 pages (including French: Vingt-cinq annees de developpe- 1978. ISBN 84-309-0792-0, Stock No. IBstatistical appendix, references). ment economique: 1950 a 1975. Econom- 0529, $7.95.

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World Development Reporti X /} /' , ~~. ~t; . - issue brings not only an overview of M anagement and-, / , -\ \ the state of development, but also a M

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