091010_2nd International Entrepreneur & Family Business_Changing Trends on Overseas Tertiary Education Choices
1. Full Paper Submission for:
2nd International Entrepreneur & Family Business
Association World Conference 2009
Shah Alam, Selangor, Malaysia
10 October 2009
Spire Research and Consulting Sdn. Bhd. ( 779502-T )
36th Floor Menara Maxis, Kuala Lumpur City Centre,
Kuala Lumpur 50088, Malaysia
Tel : (60 3) 2615 0015
Fax : (60 3) 2615 0088
Website : www.spireresearch.com
3. Article by Spire Research and Consulting (www.spireresearch.com)
Changing Trends on Overseas Tertiary Education Choices
for Indonesian Students & Top Executives
Written by: Jeffrey Bahar, Managing Director, Southeast Asia
Spire Research and Consulting Sdn. Bhd.
Office: +60-3-2615 0015
Mobile: +60-16- 9555 884
Email: jeffrey.bahar@spireresearch.com
Abstract:
Owners of successful family-owned business would typically inherit their business to their
children. In order to prepare for the succession, their children are often sent to overseas for
their tertiary or even secondary education.
The 1997 Asian financial crisis reduced the „buying power‟ (affordability) of many Southeast
Asia families in funding their children‟s tertiary education. This is especially seen for
families in the more affected countries such as Indonesia and Malaysia. There has been
changing trend in the choices of university and country selection within ASEAN –
particularly studying in Singapore and Malaysia; Australia and New Zealand universities
gaining higher popularity due to closer distance proximity and more affordable living and
education budget required. The previously popular countries like the United States, Canada,
and UK are becoming less popular with Asian new student intakes reducing over the time.
In addition, education institutions and universities aggressively increase their marketing
effort to attract overseas students by organizing seminars in hotels or directly at elite high
schools, appointing education service agents, establishing linkage with local universities in
the targeted countries for twinning program or even opening a new local campus in the high-
promising countries.
4. Article by Spire Research and Consulting (www.spireresearch.com)
Executive MBA program are also gaining popularity among the children of family-business
owners after their completion of formal Bachelor degree. To equip themselves better in
managing their family-owned businesses, some of top executives even take further post
graduate studies. Top executives (business owners‟ children) would have the budget and time
to attend a full-time program and will elect for short or distance-learning program, due to
their busy schedules.
This paper highlights this changing trend on choices for graduate and post-graduate overseas
education programs for students and top executives in Indonesia.
5. Article by Spire Research and Consulting (www.spireresearch.com)
About Spire Research and Consulting and Our Speaker Participation Request:
Spire Research and Consulting has conducted a comprehensive survey in Indonesia‟s
overseas education sector, covering interviews with industry players comprising of
international schools & universities established in Indonesia, education agents promoting the
overseas education and potential students looking for overseas education. The survey is also
backed up with official statistics from the relevant government bodies. Examples of
interesting findings are also attached in Appendix 1, as preview.
The presentation to be made by Jeffrey Bahar as the speaker conference will highlight
interesting findings as well as his analysis on the changing trend in overseas graduate and
post graduate education choices for Indonesian and Malaysian students and top executives.
Furthermore, the speaker – Jeffrey Bahar – has previously worked in a family-owned
business for four years, The personal experience gained working in that family-owned
company in the wood industry and with headquarter in Singapore (with multi-country
operations in Indonesia, Malaysia, China and USA) will add the interesting facts to the
materials to be presented by the speaker.
We seek the committee consideration for granting the request for Jeffrey Bahar, representing
Spire Research and Consulting Sdn Bhd, to be one of the speakers in this exciting event.
6. Article by Spire Research and Consulting (www.spireresearch.com)
Presenter & Writer Bio-data:
BIODATA
Jeffrey Bahar
Managing Director, Southeast Asia
Spire Research and Consulting Snd Bhd
Jeffrey Bahar, currently Southeast Asia Managing Director of Spire Research and Consulting
(www.spireresearch.com), joined Spire Research and Consulting in Singapore in October
2000 as a Research Manager in the Singapore office. He was promoted to Senior Research
Manager in 2002 and subsequently started Spire Research‟s Indonesian office in 2003,
Malaysia and Vietnam office in 2007 to 2008.
Besides building up the business in Indonesia, he has also been tasked with heading a 50-
member research team across three offices (Indonesia, Vietnam and Malaysia) offering a high
level of needs-tailored research services to a high-caliber portfolio of clients consisting of
leading companies in the telecommunication, automotive, agribusiness, banking,
pharmaceutical and fast moving consumer goods industry.
With nine years industrial experience in market research, Bahar brings to his clients valuable
primary research and secondary research services using both internal corporate data and
publicly available data sources to derive relevant and actionable information to support
strategic planning and business development. His valuable technical background in
engineering and the IT industry, has endeared him to many clients in related fields.
Bahar began his career with Chartered Semiconductor Manufacturing (CSM), as a Production
Control Engineer in 1996. He subsequently joined Pacific Plywood in 1997, a leading Asia-
Pacific timber company listed in Hong Kong yet also a family-owned business with multi
country operation in Asia namely Indonesia, Malaysia, China and USA, where, as a Senior
7. Article by Spire Research and Consulting (www.spireresearch.com)
Specialist, he was in charge of regional business development and related research before
joining Spire Research in Singapore.
Bahar holds a Master‟s degree in Industrial Engineering from the University of Wisconsin in
the United States. He is well networked in Indonesia and has an excellent understanding of
the country‟s business environment.
With a good working knowledge of Malaysia, Vietnam, Thailand, China and Japan, Bahar
has honed Spire‟s regional capabilities in strategic market entry studies, in-depth competitor
analysis and distribution channel analysis, while extending its service range into financial
feasibility studies, marketing consulting, business partner evaluation and supply chain
management benchmarking.
He holds a Master of Science and Bachelor of Science in Industrial Engineering from the
University of Wisconsin, Madison.
Contacts: email jeffrey.bahar@spireresearch.com, at office + 60 – 3 – 2615 0015 or mobile
phone + 60 – 16 – 9555 884
8. Article by Spire Research and Consulting (www.spireresearch.com)
Full Paper:
Trend on Location Choice of Overseas Education
Owners of successful family-owned businesses would typically inherit their businesses to
their children. In order to prepare for the succession, their children are often sent to overseas
for their tertiary or even secondary education. These students are becoming the narrower
target segment for overseas education outside Asia.
Each year, more than 4 million new Indonesian students in pursue tertiary education program
in local and overseas universities. It is only about 30,000 students that elect for overseas
education program or about 0.75% of total. Nonetheless, this small group of students creates
a large market of estimated USD 450 million each year for the tuition fee spending to be
tapped by overseas education providers.
For Indonesian students pursuing for overseas tertiary education, more than 90% of the
students obtain their education fund from their parents. As the overseas education has cost
increased with higher exchange rate of foreign currencies like US Dollar, British Pounds and
Australia Dollar against the Asian local currencies since 1997, this gradually reduces and
limits the affordability for overseas tertiary education to children of the rich families that
mostly having a family-owned business or the upper-class families that their parents have
accumulated savings for their children education overseas. The potential international student
segment for oversea education narrows to children of these families.
The 1997 Asian financial crisis reduced the „buying power‟ (affordability) of many Southeast
Asia families in funding their children‟s tertiary education. This is especially seen for
families in the more affected countries such as Indonesia and Malaysia. There has been
changing trend in the choices of university and country selection within ASEAN –
particularly for studying in Singapore and Malaysia; Australia and New Zealand universities
gaining higher popularity due to closer distance proximity and more affordable living and
education budget required. The previously popular countries like the United States, Canada
and UK are becoming less popular to Asian new student intakes continue to decline, losing
the students from upper-middle class families that may not from family-owned business
families. Students from these families have changed their location choice for overseas
9. Article by Spire Research and Consulting (www.spireresearch.com)
education to Australia, Singapore and Malaysia that are more affordable and closer in
proximity to their home country.
Indonesia is ranked 16th in top countries sending students to the US education system, with its
total of 7,629 students in 2007-2008 academic years 1 . One the top six universities for
Indonesian students is University of Southern California, a private and high-tuition fee
university in Los Angeles that is a popular choice for the children of the rich, family-owned
business owners since the 1990‟s. Major high living cost cities in California, New York,
Massachusetts and Washington States of USA are observed as the popular destination of the
family-owned business children. While US universities still having 7,629 Indonesian students
attending their study in the US, the number seems to have declined in the past 10 years that
was earlier reported at more than 10,000 students each year before 1997.
For UK universities, Indonesia is ranked 6th among overseas students studying in the UK and
just slightly lesser students than Malaysia on the 5th rank. Total number of Indonesian
students studying in UK is less than 1,000 students2, as the average tuition fee of £9,000 as of
2007-2008 (in 1999-2000: only £6,550)3 only becomes affordable to the rich-family children
for self-funding students.
On the other hand there were 21,000 Malaysian students enrolled in Australian universities in
20084, making Malaysia on the 5th most of all international students studying in Australia. In
comparison, there were also a total of 16,000 Indonesian students registered in 20085. Both
Indonesian and Malaysian students combined contribute AU$500 millions of tuition fee, with
average tuition fee of AU$13,500 per year6.
The total number of international students attending education system in Singapore climbed
from 50,000 students in 2001 to almost 100,000 students in 2008, with Indonesian and
Malaysian students are the top in the ranking. Singapore is a natural choice due to its Asian
1
US Commercial Service Indonesia Education and Training Review, United States of America Department of
Commerce, http://www.buyusa.gov/indonesia/en/education.html
2
British Council
3
Median tuition fee of UK universities for class-room based graduate program, source: UK Council for
International Student Affairs
4
Hobson‟s International Students Guide,
5
The Australia Government, Department of Foreign Trades & Services
6
Average tuition fee in Australia university for bachelor program, Australia Education International
10. Article by Spire Research and Consulting (www.spireresearch.com)
culture and the closest proximity to Indonesia and Malaysia, with many Indonesian family-
owned businesses owners having their own residential property investment in Singapore.
Some of their children were even sent to study in Singapore as early as for their primary or
secondary education stage. More new universities, like Singapore Management University,
were opened in Singapore allowing for more student intakes and high percentage of
international students including from Indonesia. Long-established universities and institutions
like Nanyang Technology University, National University of Singapore, Singapore Institute
of Management and LaSalle International Design School are also some of the popular choices
among Indonesian students studying in Singapore. Upon completion of their bachelor
program, children of the family-owned business will either return to Indonesia to run the
family business or continue their further post-graduate education in Australia.
There are also a number of successful large Indonesian companies that was previously a
family-owned business growing to become international companies and set up their regional
head quarter in Singapore. Their children of the founding family that studied in Singapore
will continue to live in Singapore and take senior position in their Singapore regional
headquarters.
Executive Post-Graduate & MBA Program Gaining Popularity
Singapore also benefits from its close distance to Indonesia, as some top executives running
the family-owned businesses require further post-graduate study will choose to attend the
program in Singapore campuses. As they have started working or having family commitment,
these top executives are likely to elect for short-program or distance-learning Executive MBA
program where top executives are only required to take class-room based teaching or lectures
for a short-period of time only (a certain numbers of days in each month or each semester).
These programs are typically from world‟s top universities with high tuition fees, which
affordability and frequent travel expenses, even once or twice in a month, is not be an issue to
these top executives.
Twinning Program, Local Campuses and Increasing Marketing
In addition, education institutions and universities aggressively increase their marketing
effort to attract overseas students by organizing seminars in hotels or directly at elite high
schools, appointing and working with education service agents, establishing linkage with
11. Article by Spire Research and Consulting (www.spireresearch.com)
local universities as campus in the targeted countries for twinning program or even opening a
new local campus in the high-promising countries. There are more options of “3+0”, 2+2”,
“2+1” denoting the number of years required to study in local campus and overseas campus,
that need lower education fund as most of the study years are in local country, without
attracting high expenses of living abroad. From observation, tuition fee for such twinning
program typically range from US$10,000 to 20,000 for the whole program of 3 or 4 years of
study to completion.
However, the student target is typical not for children of rich, family-business owners but
more on children of upper-class families that looking for lower-cost option yet still obtaining
degrees from international universities in US, UK or Australia. Family-business owners will
tend to still send their children for overseas education in outside Indonesia.
Intangible Benefits, Emergence of New Young Entrepreneurs
Children of family-owned businesses attends „elite‟ universities and start to build their make
friendship with same country of origin as well as similar family background, that is the rich
families that own businesses. These „elites‟ top-executive-to-be at their parent‟s companies
gain intangible benefits from its school friendship network that later turns out to be a
powerful business network system, when they return to their country and starting to run the
family-owned companies.
It is often new businesses are started among them studying together in overseas, shortly in a
few years after their return to their home country. With no difficulty in raising the initial
investment capital, new businesses in the sector of retail, fashion, food franchises and
entertainment services are the most commonly selected as the new business ventures as these
business are easier to set up and having a high profile for social acknowledgement and
recognition. Some of these businesses become successful and grow into a sizable business
relatively faster in 2 to 3 years, as there is again lesser constraint of business expansion
capital.
Young entrepreneurs groups and clubs now have new members from these successful young
business people that reunite back with their old school friends and strengthening their social
and business network of this powerful group. New members of high-profile socialite classes
are now made of these young entrepreneurs and top executives.
12. Article by Spire Research and Consulting (www.spireresearch.com)
Dynamic, Gradual Changes in Family-Owned Business and Conglomerates
Many family-owned business and conglomerates in Indonesia are now run by the 2nd or even
the 3rd family generation of the company founders and owners. The sons and daughters of
these family-owned businesses and conglomerates are immediately posted in top position and
senior managements of the company. These top executives having obtained their academic
qualification from overseas education system bring new management concepts learnt from
the school and gradually change the management system from a single-authority management
to team-based or committee-based senior management decision. The senior management
team are formed with academically-qualified and professional managers, with some are from
their school friends that are from the upper-middle class family that their parents do not own
their own businesses. Their ex-school friends are trusted due to the long-established relation
built since the student days.
In Conclusion
Sending children for overseas education is a strong trend among the families of rich and
family-owned business owners. In general, the popular location choice for overseas education
changes with Australia, Singapore and Malaysia gaining more international students from
Indonesia. For children of Indonesia rich, family-owned business, United States, Australia,
Singapore and UK are the popular location choice. Universities in US and UK have narrower
student target segment that is mainly from the „elite‟ children that overseas education
becoming a compulsory. Children of the upper-middle class families would elect for lower-
cost options such as Australia, Singapore and Malaysia or the growing twinning programs
with local campus setup. High-tuition fee Executive MBA program with close proximity
campus, like in Singapore, also grows its popularity to top executives that are children of rich,
family-owned businesses owners and running the company of their parents.
The dynamic change in management of the family-owned businesses as their children take
over as the top executives, the emerging new young entrepreneurs, intangible benefits from
personal business network developed among these group and new business started among
these elites are some of the interesting trends observed and related to this topic.