Tuesday, 7 December 2010

M’sian education sector set for next boom phase

M’sian education sector set for next boom phase
Posted on November 27, 2010, Saturday

KUALA LUMPUR: While the property sector now is in a flurry of consolidation through mergers and acquisitions, kicked off by UEM Land Bhd’s acquisition of Sunrise Bhd, followed swiftly by the just announced mergers of MRCB Bhd with IJM Land Bhd and Sunway Holdings Bhd with Sunway City Bhd, the education sector still remains ‘under the radar’.

MORE STUDENTS: The government is set to intensify its efforts to garner more students from the Middle East, China, Africa and other parts of South East Asia into Malaysia. - Photo from destination360.com
However, the fast growing private education business in Malaysia, which is currently valued to be worth some RM7.2 billion, seems to be stirring of late.

Ekuiti Nasional Bhd’s (EKUINAS) recent 51 per cent acquisition of APIIT/UCTI Education Group from Sapura Resources Bhd is seen as trailblazer for consolidation in the private education sector.

This is because of more outright acquisitions, mergers and the entry of fresh foreign players in time to come.

“There will be more mergers in the works as education entities that don’t merge may risk being left behind.

“There is urgency for smaller players to bulk up for scale and build up quality as the more renowned and established international players which have made their presence in Malaysia pose healthy competition to the growing market,” said Zakie Ahmad Shariff, chief executive of FA Securities Bhd and a former director of EduCity in Iskandar Malaysia.

This is more so as education has been identified as one of 12 National Key Economic Areas (NKEAs), with private education leading the

charge in catapulting Malaysia into the fastest growing education hub in South East Asia.

Malaysia has already become the 11th largest education exporting country with approximately 90,000 international students from more than 100 countries studying here in various international schools, colleges and universities.

Among the listed educational entities are Sapura Resources, SEG International Bhd, Help International Corp Bhd and Masterskill (M) Education Group Bhd.

Associate Professor Dr Rohaida Mohd Saat of the Faculty of Education, Universiti Malaya, lauded the move by EKUINAS and Sapura, saying, “the time has come for private colleges to merge, so as to gear themselves towards creating scale and meeting the increasing demands of foreign students flocking to Malaysia.”

Professor Dr Saifollah Abdullah from the Faculty of Applied Sciences at Universiti Technologi MARA said the Ekuinas Sapura pact was a perfect example of public-private partnership in the education sector.

The Education NKEA has been targeted to more than double the total gross national income to RM60.7 billion by 2020 from the current RM27.1 million.

Commenting on Malaysia’s attraction as an education destination, Dr Muhammad Azhar Zailani from the Faculty of Education, Universiti Malaya, said this is due to the competitive course fees, wide range of study options, many choices of universities and colleges and the existence of branch overseas university campuses.

“This allows students from different parts of the world to come to Malaysia, acquire prestigious qualifications from well-known universities from the West at an affordable price,” he said.

Aside from quality education, experts cite affordable living expenses, an economically sound and safe country and geographically safe environment as the main factors set to grow the education sector.

The government is set to intensify its efforts to garner more students from the Middle East, China, Africa and other parts of South East Asia into Malaysia.

To further build Malaysia’s participation in the global education sector, the government is also encouraging branch campuses of Malaysian educational institutes to go overseas.

Several Malaysian institutes of higher learning have branches overseas, including UCSI University and Limkokwing University in London.

Dr Muhammad Azhar said educational establishments must look towards merging with other established entities or be part of a larger educational network.

A notable example is INTI Educational Group that was acquired by Laureate International Universities from the United States.

With a presence in 21 countries globally, it has now become a leading educational establishment in the Malaysia as well.

Laureate said the reason why Malaysia was chosen as a preferred destination was its emphasis on infrastructure facilities and the government’s emphasis on developing Malaysia into an education hub.

In recent years, Kuala Lumpur, Petaling Jaya, Subang Jaya and Nilai have seen the mushrooming of many educational enclaves or precincts, attracting many foreign students in the process.

Malaysian educational players have also acquired smaller players and enlarged their base through listing their business as a way of tapping into greater capital resources as well as increasing student enrolment.

A case in point is HELP International Corporation Bhd and INTI Universal Holdings Bhd.

The listed holding companies of these educational establishments have strong collaboration with various overseas universities and attract many overseas students who want to acquire quality education at a reasonable cost.

Sapura Resources, which until recently held 100 per cent of APIT/UCTI Education, decided to divest 51 per cent of its stake to EKUINAS while holding the remaining 49 per cent along with management rights.

Now it appears both SAPURA and Ekuinas are in a better position to take advantage of the growth prospects of the fast-expanding education sector.

While some were quick to point out that Sapura was divesting from education, other observers argue that Sapura had in fact reinforced its commitment to the sector by getting a partner in order to grow its stake in the business. ­­— Bernama

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