The report also outlines the policy landscape of China, India, and Indonesia, warning investors to assess the red tape before expanding into these markets. Compared to Malaysia and the UAE, regulations in these three countries “pose greater challenges to operators” the report says.
The UAE is “a heaven for international schools” because of the government’s view that they are drivers of economic growth. However, with 548 international schools enrolling over half a million students, the market is competitive.
“I do not think the oil price fluctuation has immediate impact on the international school growth in Dubai”
The market also caters to mostly expat communities making it dependent on the region’s biggest industry and commodity prices. “A majority of the international schools in the UAE are located in Dubai and to the extent that Dubai is less dependent on oil, I do not think the oil price fluctuation has as immediate impact on the international school growth as other cities such as Abu Dhabi,” observed the report’s author Satoko Okamoto.
She added, however, that spending cuts by the government due to the current oil price slump are slowing down Dubai’s economy. “Given that Dubai’s international school market is nearing the saturation point, we will have to continue to monitor the inflow of expats into the country.”
Malaysia also views international schools as boosts for the economy and facilitated their growth by removing limits on foreign ownership, introducing tax incentives and removing enrolment caps on local students. Schools growth has increased from less than 1% in 2002 to 15% in 2013.
“With one million students enrolling in private K-12 schools and only 142 international schools present, there appears to be a significant down market opportunity for international schools, particularly for those that have the capability to offer international curricula and programs that meet the needs of local families, such as additional religious instruction,” the report notes.
In Indonesia, China and India, the desire for international school education is great, but there isn’t enough policy framework supporting foreign providers to meet the demand, the report argues.
In Indonesia, for example, there is large private school enrolment, 15 million students, and a substantial number of international schools, 149. However in recent years, international schools have begun to see push back from the government, while it provides operational funding for local private religious schools, the report observes.
And, under the current law in Indonesia, international schools cannot be wholly owned by foreign stakeholders. “While many international schools continue to operate in a challenging environment, those wishing to enter Indonesia are currently taking a wait-and-see attitude until this uncertainty settles,” the report notes.
Government policy affects different segments in Chinese education, according to the report. While growth in international schools for expats has been “phenomenal”, it is expected to plateau, giving way to private international schools that cater to local students.
“As competition from the public school-affiliated international programs dwindles and the reputation of private K-12 schools improves, more and more parents who might otherwise send their children to public schools may send children to private international schools for locals,” the report states.
“More and more parents who might otherwise send their children to public schools may send children to private international schools for locals”
In India, meanwhile, the demand for private education is huge with private providers totalling around 330,000 and enrolling around half of all secondary students. At the same time the number of international schools has increased significantly in the last 25 years, growing from 20 schools in 1990 to 400 today.
However, the report asserts that the regulatory environment in India is fragmented and burdensome while its profit potential is low.
“Those which wish to enter India’s market for private education need careful branding to attract target segments and access to information on the complex regulatory regimes in the country.”
The report concludes that while private school provision in the five markets may pose competition for international schools, they can also create opportunities and both can help fill the gap created by low-quality public provision.
“While international schools enroll an increasing number of local students, they can combine curriculum that is offered by those local private schools to capture these aspirational middle class families,” advises Okamoto.
“Global international schools can adapt their programmes to local needs and increase enrollment.”