Empowering Southeast Asia: The Impact of Transnational Higher Education on Regional Development

If ASEAN were a country, it would be the fifth largest economy in the world. In 2021, ASEAN citizens in the middle class comprised 24 per cent of the region’s population and this is set to grow to 51 per cent by 2030. In 2020, more than 12 million students were enrolled in 7,000 higher education institutes throughout ASEAN, with the largest number attending UK-founded institutes, followed by Australian ones. This economic trajectory positions Southeast Asia as an increasingly appealing hub for international universities seeking to provide higher education opportunities to cultivate the next wave of ASEAN’s skilled professionals.

Since the opening of Monash University Malaysia in 1998, the region has witnessed a rise in the establishment of foreign university campuses, known as international branch campuses (IBCs). These campuses may either be wholly owned or established through joint ventures with local universities and institutions, representing a form of transnational education (TNE). TNE is where students in their home country receive education from an institution founded and based overseas. With the rise in ASEAN’s middle-income families, higher education attainment is seen as a ticket to secure better-paying jobs for young Southeast Asians.

This was the case in Malaysia when demand for higher education swelled during the 1990s, as Malaysia transitioned to an upper-middle income country. However, the number of higher education spaces was limited, compounded by the government’s implementation of a 55:45 Bumiputera quota, which reserved a higher proportion of slots for indigenous Malaysians. To cope with the shortfall, the government liberalised higher education, including enacting the Private Higher Educational Institutions Act (1996) to allow foreign universities to set up IBCs in Malaysia. Monash University was the pioneer in Malaysia and has now become one of the nation’s premier private universities.

Presently, the higher education market in Malaysia is one of the most developed in Southeast Asia. Nine other universities, including the University of Nottingham and University of Southampton, have set up IBCs in Malaysia. This expansion can help to ease the rising aspirations of young Malaysians seeking access to university education. However, not all Malaysians have the money nor a sponsor to finance their education at IBCs should they fail to make it to local universities. In this author’s view, affirmative policies should not come at the expense of minority applicants who are denied entry to local universities despite receiving higher test scores than protected groups.

Demand for higher education is projected to increase in other significant Southeast Asian markets such as Indonesia, whose higher education enrolment is forecast to be among the world’s top ten by 2035. Some higher education providers in the UK view Indonesia as a market with one of the highest growth potentials for TNE. The number of top-tier universities in Indonesia is not keeping pace with the projected increase in demand and enrolment. Indonesia lacks top-quality universities and has precious few IBCs; its permanent teaching positions in state universities were opened up to foreigners only in 2018. Just five of Indonesia’s domestic campuses placed in the Quacquarelli Symonds (QS) World University Rankings 2024. They are Universitas Indonesia (237^th), Gadjah Mada University (263^rd), Bandung Institute of Technology (ITB) (281^st), Airlangga University (345^th), and Institut Pertanian Bogor (IPB) (489^th).

The Indonesian government has taken measures to improve the quality of higher education to ensure that its youth are better prepared for the future workforce. In 2018, lawmakers passed a law allowing foreign universities to operate within Indonesia, where previously, these institutions could operate only by collaborating with local institutions. This law targets highly ranked overseas universities. The government hoped to spur competition and push local universities to improve by inviting reputable foreign universities to set up IBCs in Indonesia.

However, liberalising higher education in Indonesia may not be able to solve the country’s higher education challenges. One issue is a lack of qualified lecturers and professors. According to the World Bank, only 16 per cent of Indonesian lecturers have a doctorate. This is half the percentage of tertiary teaching staff with equivalent qualifications compared to other regional countries like Malaysia. In addition, rote learning is still widely used in Indonesia even at the tertiary level. This could be a reason for Indonesia’s graduates remaining unemployed four to eight months after graduation or being under-employed, as they may lack critical thinking, analysis, and problem solving skills, which are desired by companies.     

The Benefits and Drawbacks of IBCs

IBCs may help their home countries extend their soft power, such as by supporting the development goals of the host country. The donor country can leverage the research capabilities and know-how of their university to transfer knowledge and expertise, to the host country of the IBC.

This was arguably the case for RMIT Vietnam, an IBC operated by RMIT Australia, which hosted Australian Prime Minister (PM) Anthony Albanese in June 2023. During his visit, PM Albanese pledged a AU$250 million strategic investment fund to contribute to Vietnam’s development. Part of the funds would go to creating the Hanoi Industry and Innovation Hub to facilitate collaboration between the public and private sectors on projects such as smart cities and social innovation.

While the presence of IBCs in the region may be beneficial, their detractors are critical of inequality and access issues, among others. Most students enrolled in IBCs come from middle to upper-middle class backgrounds and can afford the tuition fees, which can be five times more expensive compared to those for local universities (for courses like engineering). Individuals from lower-income groups, who might be unable to secure placements in local institutions, might find themselves doubly denied further education and consequently miss out on social mobility opportunities. To address this issue, some IBCs like RMIT Vietnam have a scholarship fund for disadvantaged students.

Critics in Indonesia have also expressed reservations about the proliferation of IBCs, viewing education as crucial for developing and preserving the nation’s culture and values. They have raised concerns regarding the alleged absence of government regulation and oversight, potentially leading to curricula in IBCs that neglect Indonesian values. As a compromise, the Indonesian government mandated that 15 per cent of IBCs’ curriculum must include religious studies and instruction on the national ideology, Pancasila. While this may extend students’ candidature periods at such IBCs, it addresses officials’ concerns about Indonesian students’ insufficient knowledge of national values. Similar concerns have been raised by officials in Malaysia and Vietnam, prompting their governments to introduce compulsory courses in their TNE programmes.

The role of IBCs extends beyond youth education; they also contribute to fostering development in host countries through capacity-building. While the globalisation of education in Southeast Asia has expanded some citizens’ access to tertiary schooling, it is imperative to balance this against broader opportunities for social equality, mobility, and preservation of cultural and national identities.

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Editor’s Note:
ASEANFocus+ articles are timely critical insight pieces published by the ASEAN Studies Centre.