Low-cost private schools – an option

THE poor quality of schools is a concern in Indonesia. The country has not performed satisfactorily on international ranking scores and this has prompted debate on the issue. The focus of the debate has been on what can be done to address this problem.

The Centre for Indonesian Policy Studies (CIPS) has looked at the issue and offers some interesting solutions.

At the core of the suggestions is the one to open more low-cost private schools.

Public schools are seen to have failed in their mandate to offer good quality education. This is not unique to Indonesia. Many developing countries suffer from the same malaise, among them government-run schools in Africa, Pakistan, Bangladesh and India.

Public schools in developing countries are haunted by problems ranging from politically-linked teachers' unions that are quick to go on strike, teacher absenteeism to poor infrastructure. Schools in rural areas are particularly prone to these problems and some states/districts more than others.

Thus one ends up with a dualistic supply of education. There are the better and more elite schools that attract the better-off population; and there are the schools of poorer quality that are typically run by the government.

The richer section of the population in these countries do not have any difficulty; the private schools cater to their needs. It is the less-advantaged sections of the population that have to contend with the poorer quality government schools.

This is where low-cost private schools enter the picture.

Since good quality education is a matter of concern in government-run schools, the private sector has an opportunity to supply the same service. But because the demand comes from the less-well-to-do, the service has to be priced at the lower end of the scale; it has to be priced so as to be affordable to the section that it could serve.

This model reminds one of Harvard University professor C.K. Prahalad's book, The Fortune at the Bottom of the Pyramid. In this book Prahalad argues that there is a huge market that the private sector can tap on by appealing to the disadvantaged. What is lost in terms of high prices can be compensated for by the gain from the huge volume of demand that is inherent in this market segment.

Low-cost air travel is a good example of this model.

The same model can be applied to education. It will require innovative thinking on the part of NGOs, edupreneurs (ie educational entrepreneurs) and the private sector.

The presence of government failure, presents an opportunity for private enterprise.

One wonders if the research and discussion that has been initiated by CIPS has any relevance to Malaysia. There are accusations that the education system in Malaysia is faltering, with evidence being produced from international ranking systems to support that claim. Notable individuals (academics, public policy practitioners, ex-diplomats among others) have voiced similar concern.

The government has opened the education market to private enterprise. A large number of private schools have come up. However, they cater to the top 10% of the population. The madrasas and religious schools are more egalitarian in their approach.

Two questions need to be asked. One, will the government get in the way of greater private enterprise participation of the supply of primary and secondary school education?

Two, will private enterprise take up the challenge of providing good quality education at low cost?

Having answered these questions, others will have to be discussed. They include standards, how they will be set, monitored and enforced. No less important will be mechanisms to encourage private participation in the supply of education (for example, vouchers could be used as an instrument).

There are positive spillovers that the privatisation will deliver, most important among them being better quality education. But one can also expect a reduction in the number of employees depending on the government for their jobs. This will mean a decrease in the government's operating expenditure.

The prime function of the government is to deliver public goods such as security, education and healthcare. In the event of failure, one is forced to look for solutions elsewhere. Grudgingly, one may have to turn to private enterprise for a way out.

Dr Shankaran Nambiar is author of Malaysia in Troubled Times. The views expressed in this article are his own. Comments: letters@thesundaily.com