Briefing note

Establishment of Skills Development Fund in Indonesia: Status of the discussion and possible way forward

This briefing note captures the current status of discussions and outlines a practical, four-phased approach for establishing the ISDF. It offers insights into how Indonesia can create an outcome-oriented skills financing model that empowers learners, supports industry needs and ensures long-term impact.

Indonesia is exploring a bold step toward transforming its workforce development system. Skills Development Funds (SDFs) are innovative financing mechanism, typically operating outside traditional government budgets and designed to channel resources into targeted skills training. In 2025, a consultative process with government and key stakeholders revealed a shared vision: the Indonesian Skills Development Fund (ISDF) as a strategic, sustainable instrument that pools multiple funding sources to drive demand-driven vocational training reform and strengthen the nation’s competitiveness.