Malaysia government policy driving rapid growth of private and international school enrollment

September 13, 2016


Malaysia’s growth of private school enrollment in the past decade is striking. It grew from less than 1% in 2002 to 15% in 2013, and is expected to continue rising. This rapid growth is driven by the soaring demand for private and international schools catering to the needs of urban middle classes. 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 rise of international schools in Malaysia is being driven by government efforts to reform education. Since the government considers international schools an engine of economic transformation, it removed the limits on foreign ownership of international schools, introduced tax incentives, and removed the 40% enrollment cap for Malaysian students. Furthermore, in order to transform Malaysia into an educational hub, the government has invested in large-scale projects such as The New Kuala Lumpur Education City. Prestigious international schools have been invited to open locations, which will likely raise the number of Malaysian students enrolling in international schools. As a result, the speed at which international schools have opened new schools has more than doubled since 2010. The country added 4.6 schools per year on average between 2000 and 2009 (26 schools in 2000 to 67 schools in 2009). But between 2009 and 2016, it has added 10.7 schools per year (for a total of 142 schools in 2016). Local students are becoming the majority at international schools in Malaysia for the first time.



Source: UNESCO Institute of Statistics, Emerging Strategy Analysis

Another factor contributing to the growth of Malaysia’s private education sector is the strong traction that private religious schools have achieved in recent years. In 2005 there were 20 private religious primary schools and 15 such secondary schools. Within a decade the numbers grew to 43 primary schools and 74 secondary schools. Many such schools offer instruction in English, and some offer international curricula such as Cambridge International Examinations (CIE), in addition to religious teaching. While tuition varies within each school category, private religious schools tend to charge lower tuition than international schools, which attracts parents who are concerned about poor quality and a lack of moral education found in public schools. Malaysia’s low score in the 2012 PISA cycle further motivated middle class families to send their children to private religious schools.

It is expected that the privatization of K-12 schools in Malaysia will further deepen and the number of private schools offering extra international programs, particularly in large cities such as Kuala Lumpur, is likely to rise. Enrollment of local Malaysian students in down market private K-12 schools is also expected to rise, as the dip in oil & gas prices has prompted a significant drop in enrollment at high end international schools among expatriate families who are pulling up roots in response to layoffs in the energy sector.

The growth of private schooling in emerging markets is a direct response from rising middle classes to their governments’ failure to provide quality education for the 21st century economy, and this trend is likely to continue. Malaysia has supported international schools in order to propel economic growth, and many operators have already gone down market to enroll a substantial number of local children in low-cost schools. A careful consideration of curricula offerings is important for schools hoping to expand in Malaysia. For instance, programs that offer both international programs and subjects matching local preferences such as religious instruction may be necessary to attract new students. For international schools looking for growth opportunities, Malaysia’s rapidly growing local private K-12 education space warrants a closer look.

This article is an excerpt from Emerging Strategy’s report Opportunities in Private Education: China, India, Indonesia, Malaysia and the UAE


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