This article first appeared in The Edge Malaysia Weekly on September 16, 2024 - September 22, 2024

AT a sprawling 80-acre school grounds, summer camp is in session. The lively chatter of students in Mandarin can be heard as the facilitators usher groups of campers on to the next activity.

At the school’s golf academy, a young Korean camper hesitantly converses with his instructor in English. “The restroom? It’s over there,” says the instructor, directing him towards the main building.

While one may mistake this to be a scene from a school overseas, it is in fact Epsom College Malaysia in Bandar Enstek, Negeri Sembilan — about 90 minutes away from the bustling city of Kuala Lumpur, but close enough to the international airport for its intended target market: parents of students from Asia and beyond.

The three-week summer camp programme is one of the ways in which the school introduces prospective students and parents to the idea of schooling in Malaysia. The conversion rate from these camps to full-time students is 15% to 20%.

The British-based boarding school — catering for students from the early years (aged three) to A-Levels (aged 18), where boarding is available for those aged 11 and above — receives many international students from countries where English is not their first language. It is particularly popular among the Japanese and South Koreans, but has also seen growing interest among the Chinese.

“They come here on the basis that it’s about improving their English proficiency, but we broaden their outlook beyond academics. Many make friends that become their network for life,” says Epsom College Malaysia CEO Mark Lankester, who himself is an alumnus of Epsom College in the UK.

“Hong Kongers are another bright spot for us. Generally speaking, we have around 30 nationalities here. It is very diverse, which is important for us. About 65% of our students are international students.”

Epsom College is just one example of how the private education sector in Malaysia is gaining popularity among the international crowd. International schools in the Klang Valley are experiencing the same phenomenon.

The International School of Kuala Lumpur (ISKL), which has been around since 1965 and calls itself a private, not-for-profit school, says it has continued to see strong interest from families around the world, particularly within the region.

“Our more than 1,750 students represent over 70 nationalities, with 87% of our student population being international. To maintain a diverse and inclusive environment, we ensure that no single nationality exceeds 25% of our student body,” says an ISKL spokesperson in an email reply to The Edge.

Those in the private education sector have also noticed a change in student enrolment in the K-12 (kindergarten to 12th grade) space.

“If we go back about 10 years ago, most of the children, who are non-Malaysians, would come to international schools here because their parents are working with a company in Malaysia. Generally, the companies would be paying for their fees,” says Association of International Malaysian Schools (AIMS) chairman David Griffiths. He is also the principal of Nexus International School, a private boarding school in Cyberjaya that is part of the Taylor’s International School network.

“But since 2022 — after the Covid-19 pandemic — there has been a noticeable surge in both Malaysian and non-Malaysian students from North Asia. We’ve had a number of people coming from China, South Korea and Japan. These international students are not here with companies [paying their fees] and they tend to be self-paying.”

It was reported in parliament recently that there were 88,951 students in international schools as at May 2024, where 33%, or about 29,000, were non-Malaysians. 

This number varies, however, depending on how “international school” is defined. According to ISC Research, a research body that tracks the global international schools market, the number of students in international schools in Malaysia had risen 67% in the last decade, to 111,185 as at July 2024, from 66,762 students. 

“Kuala Lumpur and Penang are becoming increasingly attractive to expatriates, with new international schools being established in response to increasing demand. This demand is supported by Malaysia’s growing economy and foreign investments,” ISC Research says in an email reply to queries from The Edge. 

The organisation defines an international school as a privately operated one for students aged three to 18 that delivers a curriculum wholly or partly in English in a country where English is not an official language or a curriculum other than the host country’s national curriculum wholly or partly in English in a country where English is an official language.

“Anecdotally and from speaking with the other principals, the majority of the non-Malaysian students are from North Asia,” says Griffiths.

The Malaysia My Second Home (MM2H) programme has been credited as a contributing factor to the rising number of international students in the country, with China nationals topping the list of participants for the programme.

MM2H Consultants Association (MM2HCA) president Anthony Liew says: “We do get many applicants these days who apply for MM2H for their children’s education. It could be because of a change in the education system in China, where those older than 15 who do not get good academic results will have to go to a vocational school.

“So, those who are from the wealthier families would choose to send their children here to Malaysia to complete their academic learning and, at the same time, they also get to improve their English proficiency.”

For a country whose quality of public education has been a topic of heated debate for many decades, it appears that the private education sector exists in a parallel universe in Malaysia, given the growing number of international students enrolling here.

Parents see Malaysia as an affordable destination that provides quality education for their children.

“In the past, they may have sent their children, especially for boarding, to the UK or Australia. Malaysia is a really good alternative to that now. The quality of international schools in Malaysia is good and the cheaper ringgit helps,” says Griffiths.

Tier-1 and Tier-2 international schools, categorised by their fee structure, are popular among international students. These schools invest substantially in their facilities and have a high number of expatriate teachers, justifying the higher fees they charge compared to other international schools.

Nevertheless, what is deemed “affordable” is relative. To the average Malaysian, the tuition fees of a Tier-1 international school is eye-watering, coming in the range of RM80,000 to RM100,000 annually.

That would mean that parents looking to give their seven-year-old child private education in a Tier-1 international school would have spent at least RM1 million by the time their child graduates from the school at the age of 18.

Lankester offers another perspective, saying that parents who enrol their children in such schools usually see it as an investment.

“Our fees are very good value,” he says in relation to Epsom College Malaysia.

The fees in Malaysia work out to be up to half the price of Epsom College in the UK, Lankester points out, adding that the education that students receive in Epsom College in Malaysia is similar to what they would receive in the school in the UK.

He says that when the UK imposes a 20% value-added tax on private education from Jan 1, 2025, Malaysia stands to benefit, potentially attracting even the British students, given how the additional tax will make it unaffordable for many families thinking of sending their children to UK boarding schools.

Malaysia’s attractive currency exchange rate is also a “double-edged sword” for the schools in the country, says AIMS’ Griffiths.

“Getting our teachers over here from the UK can be a challenge because the salary here becomes less because of the ringgit, when there are options such as Singapore, where your money might go a bit further there compared to Malaysia,” he adds.

Having said that, expatriate teachers, especially those known in the international private education circuit, are very well compensated. A main cost in running such schools boils down to staff remuneration and benefits.

Statistics show that the number of international students in private education (consisting of international, private and expatriate schools) in Malaysia has increased since 2021, when the number totalled 27,698. As at May 2024, according to the parliamentary reply, this number had risen to 29,353 persons, up 6% from 2021.

This coincides with the increase in the total number of students enrolled in international schools in Malaysia. In 2021, the total number of students enrolled in international schools was 58,300 and had increased to 88,951 persons, according to the parliamentary reply, as at May 2024.

This means that the number of Malaysian students in international schools has also climbed over the years.

Notably, the private education sector, like many others, took a hit during the pandemic years, when enrolment numbers declined as students returned to their home country.

It seems, however, that the sector has now recovered from the shock of the pandemic and is seeing enrolment numbers that are, depending on school type, similar to or higher than before the pandemic.

As a sector, private education services contribute 0.8% of the country’s gross domestic product, a figure that has been constant over the last decade. In absolute numbers, the sector contributed RM12.27 billion in 2023, and includes all private education services, from pre-school to tertiary education as well as tuition centres, driving schools and other education services.

The contribution from private education services grew within the 7% range in 2022, 2023 and the first half of 2024. This growth rate is higher than the pre-Covid-19 years, when it was within the 6% range.

At RM12.27 billion, the private education sector is also the same size as private healthcare services in 2023.

“Private education is a fast-growing business in Malaysia. While the direct contribution to the overall economy may be small, I believe the indirect effects are far larger,” says UOB Malaysia Global Economics and Market Research senior economist Julia Goh.

“First, it helps fill the gaps in the education system and address concerns over shortage of talent. Second, it provides job opportunities, given the mushrooming of private education facilities, which has increased demand for trained teachers and education facilitators.

“Third, it supports the overall infrastructure to attract investments and skilled talent, which helps improve Malaysia’s competitiveness. To attract foreign direct investment and skilled expatriates, there is a need to provide adequate private education facilities.”

The economic spillover from the growing sector is difficult to quantify, but many believe it is positive for the country.

Take, for example, participants of the MM2H programme who have their children’s education in mind. Those who choose to reside in Kuala Lumpur for its proximity to international schools would be forking out at least RM1 million when they purchase a property.

“Often, we have this situation in which one parent would relocate to Malaysia while their children attend the international school. They would usually rent a property for a one-year period until the school applications are all sorted out before purchasing a property,” says MM2HCA’s Liew.

Meanwhile, parents — especially those from the region — who enrol their children in boarding schools find themselves making more trips to Malaysia because of the proximity to home, as opposed to the distance to a boarding school in the UK.

“Many would spend a few weeks in Malaysia while their children settle into boarding school life or they visit every three months during the school break. They often take this time to travel and visit Malaysia,” notes a person in the private education business.

However, Malaysia’s attraction as a private education destination for this international crowd who would pay RM1 million for their children’s education is only to the extent of the K-12 years.

Beyond the K-12 years, the pursuit of an international curriculum in an international school would mean the vast majority of international school students will move out of Malaysia for their tertiary education.

The number of international schools in Malaysia is ever growing. This year, there are already more than 200 in the country, with about half in the Klang Valley.

“It is incredibly crowded at the moment, and there are lots of options for learners — and teachers — to choose from,” says AIMS’ Griffiths.

“We do need to have a conversation with the ministry [of education] about perhaps limiting the number of brand-new international schools in Malaysia because it is becoming too saturated. There has to be a limit to the supply.”

The crowded space of the K-12 landscape in the country led to listed property developer Paramount Corp Bhd (KL:PARAMON) divesting its stake in this segment of the education business several years ago. The group used to own the Sri KDU schools, which operate as an international school and a private school, where the national curriculum is taught.

The group had highlighted in 2019 that it foresaw price wars in terms of fees likely to persist while demand declines as lower birth rates over the past two decades became apparent.

In an interview with The Edge in June, Paramount group CEO Jeffrey Chew said wealth creation in Malaysia had slowed down in the last 10 years whereas the supply of private schools had continued to rise.

“The captive segment, people who could afford private education [in Malaysia], has not grown exponentially. When we started out in this sector in 2003, there was hardly anyone else in this space, but more schools came in over the years,” he said.

“In 2015 or 2016, we took the view that we were near saturation point. As society’s level of income increases, you will get a new cohort of parents who can afford private education, but it [running a school and making good profits] is not as easy as it was in the past because of the increasing supply.”

Griffiths believes international schools are good at “future-proofing” themselves, with many schools now riding the North Asian student wave, but he says this cannot be relied on as the only strategy.

Still, he believes the sector will continue to grow.

“I can see education for the K-12 sector in Malaysia growing for a number of years yet. We are increasing Malaysian families’ enrolment as well as those from North Asia. Many schools are now also trying to concentrate on Malaysians, in case the enrolment from China, South Korea or Japan slows,” he says.

If private sector schools are successful in drawing an increased number of Malaysian students into their system in the near future, it should cast a spotlight on the public education system.

“The response to the increase in the number of international schools can be attributed partly to the state of public schools in Malaysia,” notes an industry observer. “If the public schools were good, perhaps there would be less of a need for so many international or private schools in the country.” 

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