Overview

The 1945 Constitution of the Republic of Indonesia mandates that at least twenty percent of the State Budget (APBN) is allocated for education functions. Issuing Law Number 2 of 2010 on 2010 Revised State Budget (APBN-P) in 2010, the Indonesian government and the House of Representatives (DPR) agreed that some of the funds allocated for the education functions in the APBN-P are used as the National Education Development Funds (DPPN). The funds are managed in the form of endowment funds by a Public Service Agency (BLU).

In 2011, the Minister of Finance with the Minister of Education and Culture agreed that the management of DPPN and the utilization of the proceeds from the management of the funds should be carried out by the Ministry of Finance. Institution will be supported by the management and employees of the two ministries.

The Regulation of the Minister of Finance (PMK) Number 252/PMK.01/2011 dated December 28, 2011 stipulates the Organization and Governance of the Indonesia Endowment Funds for Education as a non-echelon institution directly responsible to the Minister of Finance and governed by the policies stipulated by the LPDP Board of Trustees (Minister of Education and Culture, Minister of Finance, and Minister of Religious Affairs). The Decree of the Minister of Finance (KMK) No. 18/KMK.05/2012 dated January 30, 2012 designates LPDP as a government agency that puts the financial pattern of a Public Service Agency into actual practice.

To increase accountability and transparency of the education endowment fund management, the Government has issued Presidential Decree Number 12 of 2019 concerning the Education Endowment Fund. The strategic policy and direction of the education endowment is determined by the LPDP Board of Trustees, which consists of nine ministers.

At the end of 2021, LPDP is mandated to manage endowments other than DPPN, namely the Research Endowment Fund, Culture Endowment Fund and Higher Education Endowment Fund with the issuance of Presidential Decree Number 111 of 2021 concerning Endowment Funds in the Education Sector. Endowment funds in the education sector are carried out by LPDP in collaboration with (1) the Ministry of Education, Culture, Research and Technology, (2) the Ministry of Religion, and (3) the National Research and Innovation Agency (BRIN)