World Bank Group Symposium Public

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Positive Regulatory Environments. . . a private
sector perspective
World Bank Group Symposium
Public Private Partnerships In Education Kuala
Lumpur, Malaysia
13 to 15 July 2004
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Some food for thought . . .
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Tertiary Education in Developing 40
OECD 7,712 2001
618
Sources World Bank Development Indicators World
Bank Edstats UNESCO Global Education Digest
OECD Education at a Glance IFC
calculations Developing 40 includes Angola,
Argentina, Bangladesh, Bolivia, Brazil, Bulgaria,
Cambodia, Chile, China,Colombia,
Dominican Republic, Ecuador, Egypt, Ghana,
Guatemala, Hungary, India, Indonesia, Jamaica,
Jordan, Kenya, Madagascar, Malaysia,
Mauritius, Mexico, Mozambique, Pakistan, Peru,
Philippines, Poland, Romania, Russia, Senegal,
South Africa, Thailand, Trinidad
Tobago, Turkey, Uganda, Uruguay, and Vietnam
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Primary and Secondary Education in Developing 40
195
OECD 7,109 2001
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Spending Per Student Tertiary Sector
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Enrollment in Private Higher Education (as a of
total)

Latest Internal ADB est YR 2001
Sources IBRD/IFC UNESCO 2000 OECD 2001 Levy
Research on Private Higher Education April
2002
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Does a thriving private education sector mainly
service the elite?
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US For-Profits Successful Serving
Disproportionate Share of Minority and Low Income
Students
Achieving Better Results With Rigorous Regulatory
Standards
of Associate Degree-Seeking Students Earning
Degree or Still Enrolled Within 3 years(1998)
Public
For Profit
Target Group
Private Non-Profit
100
80
66
67
60
Still Working on Degree
of Students
Still Working on Degree
40
20
Completed
Completed
0
Private For-Profit
Public less than 4-year
Source NCES NPSAS2000 Undergraduate Students
05/12/03 The Futures Project 2002 Note
Percentage distribution of 1995-96 beginning
postsecondary students who began in private,
for-profit and in public less-than-4-year
institutions, by enrolment status and attainment
at the first institution attended after three
years
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Higher Education is a 300B Market That Blends
Both Public and Private Not-For-Profit HEIs
Total Expenditures by Institution Type
Real CAGR (98-02)
350B
3.7
302B
300B
8.0
Private, For Profit
236B
250B
Private,
3.1
Private, For Profit
Non-Profit
200B
Private,
Non-Profit
150B
100B
3.6
Public
Public
50B
0B
1997/98
2001/02
Source National Center for Education Statistics,
Projection of Education Statistics, Eduventures
Learning Markets Opportunities 2003, Real CAGRs
based on CPI US City Average
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How do we engage the private sector to help fill
the funding gaps?
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What attracts private sector investment?

• Positive regulatory environments that provide
  accreditation and
  quality standards - level the playing field
  
  commercial independence to set market-based fees
  ability to
  differentiate based on market demand
  ability to create reserves for reinvestment
• Financial incentives
  equal treatment and choice, let the
  market decide (vouchers student loans)
  tax relief for specified investment
  no
  restrictions on equity ownership (national
  foreign)

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Current Trends Drivers
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How does the private sector typically view the
education market?
How effective are the legal and regulatory
frameworks?
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Local Market Private Sector
16
Local Market Private Sector
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Private Sector Perspective
Local Market Private Sector
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Local Market Private Sector
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Private Sector Perspective
Local Market Private Sector
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Local Market Private Sector
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An Effective Legal Regulatory Framework
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Public Sector Role
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Total Public Current Private Expenditure
Education Global Estimates - All Countries
Sources OECD 2000 UNESCO 1999 IFC staff
estimates 2002 conservative
estimate. Trends in Private Investment
Current Financing Only Total Private Financing
(including capital) in developing countries
is thought to exceed 33 of total expenditures
(IFC staff estimates country data not available)
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Trends in Private and Public Investment In
Developing Countries 19702000
16
14.65
12
Private investment
of GDP
8
Public investment
7.05
4
0
1970
1974
1978
1982
1986
1990
1994
1998
1999
2000
Source IFC 2000 Trends in Private Investment
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How do we mobilize untapped resources?
Sources OECD 2000 UNESCO 1999 IFC staff
estimates 2002 conservative
estimate. Trends in Private Investment
Current Financing Only Total Private Financing
(including capital) in developing countries
is thought to exceed 33 of total expenditures
(IFC staff estimates country data not available)
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Companies Banks Will Avoid . . .

• Smothering regulations that create commercial
  uncertainty
• Political instability
• Revenue controls / capping tuition fees
  can
  heighten commercial risk where marginal returns
  exist can jeopardize commercial
  objectives, including capability to invest in
  higher quality inputs
  can cause insufficient financial returns
  for servicing debt, or to provide fair returns
  to shareholders
• Regulations limiting equity ownership (foreign)
• Uneven playing fields
• Inefficient / inconsistent approval processes
  where private investors are disadvantaged

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Two Questions For Discussion . . .
1. What are the main impediments (or barriers)
restricting increased private investment in your
region? (give one example) 2. What actions
can we recommend for overcoming these barriers
to entry?