Mar 26, 2014

International schools bet on Myanmar’s transition

Leading international schools have launched a flurry of ventures in Myanmar in a bet that the political risks of the fast-opening country’s transition will be outweighed by an economic boom and surging foreign arrivals.

Harrow International Management Services and Dulwich College International have teamed up with a company chaired by one of Myanmar’s richest men, while the British International School plans to open a near $20,000 a year institution in August.

The expansion ahead of elections due next year reflects the draw of this frontier market and a chronic lack of services that is deterring some wealthy returnee Myanmar business people and foreign executives and their families.

Ola Natvig, a director of the British Schools Foundation, which is setting up the British International School in Yangon, said he foresaw a “huge demand” in a market where there is a small number of educational institutions catering to the Myanmar and expatriate elite.

“When I talked to companies they all said the same thing: ‘We have a real problem bringing people over to staff our operations here, and a key challenge is schools,’” Mr Natvig said. “Because Myanmar has been so closed and so suddenly opened, what is going to be special here is the rapid growth.”

The British International School plans to start in August with 100-150 pupils. It will have a purpose-built campus in two years and expects to expand to more than 1,000 students a few years after that. As well as the $19,300 annual fees, parents will pay a $5,000 enrolment charge, of which $1,500 is refundable if they give three months’ notice of their departure.

Dulwich College International and Harrow International Management Services have chosen a different, and more cautious, route by partnering Yoma Strategic Holdings, a Singapore-listed conglomerate whose largest shareholder is Serge Pun, the high-profile Myanmar entrepreneur.

The bulk of the funding for Harrow’s early years venture and the $40m Dulwich College school – neither of which will initially be branded with the British institutions’ names – will come from Yoma and other Serge Pun-linked companies.

Dulwich, whose alumni include Tin Tut, deputy to the 1940s prime minister, Aung San, Aung San Suu Kyi’s father, said the target market was not just westerners, but also wealthy Myanmar nationals and expatriates from countries that have moved in more quickly commercially than some of their US and European counterparts.

“We see in particular Japanese, Korean and Chinese massively coming into Myanmar,” said Christian Guertler, chief executive officer of Dulwich College International, which is due to open its seventh school in Asia in Singapore in August. “Myanmar is one of the rising stars in Asia – and it’s certainly one of the countries that fits our longstanding strategic goals.”

Harrow did not respond to a request for comment.

While big western multinationals, including Coca-Cola, Unilever and British American Tobacco, have launched or restarted operations in Myanmar after western sanctions were eased, others have held back, to the frustration of some government officials in the capital Naypyidaw.

Foreign businesses complain of property shortages and soaring rental prices, while the lack of high-quality hospitals means many expatriates fly to Bangkok for emergencies, complex operations and maternity care.

Some companies are nervous about the political situation, with internal conflicts continuing in parts of the country and questions remaining about the intentions of the quasi-civilian government that took power three years ago after decades of military dictatorship.

Andrew Rickards, Yoma’s chief executive officer, said he was comfortable with the expected $36m investment the company is making in the international schools and a private local school, even though Myanmar was “probably on the cusp” politically and “could go either way” once next year’s deadline for elections passed.

“If there is a military government that might not look so good,” he said. “We don’t think there will be.”

Source: Financial Times