Thailand’s 2007 Private School Act imposed a cap on profits at international schools. This was quietly removed in 2011, opening the way for schools to start reaping huge profits.
The past decade has seen rapid growth in both the number and size of international schools in Thailand. While this can partly be explained by strong demand from parents, a less discussed reason has been the liberalization of school regulations, opening up increased opportunities to make large profits.
As TIS Monitor recently showed in an in-depth analysis, many for-profit international schools make substantial amounts of cash for their owners. One reason behind this is the current lack of regulation limiting profits or dividends, despite education being a public good.
This wasn’t always the case. According to an investigation by TIS Monitor, previous governments pushed through changes to remove the legal limits on profits and dividends. This set in motion a decade long expansion of international schooling in Thailand, with many new entrants to the market.
School regulation in Thailand
International schools in Thailand are regulated under the Private School Act. The act regulates international schools on everything from organizational structure and governance, down to the details of the school’s name (must contain the word ”school”) and how the sign at the front of the school should be designed (”In cases where there are foreign letters attached, such foreign letters shall not be larger than Thai language letters”).
An earlier version of the Private School Act had been enacted in 1982, and remained in force until 2007, when a revised and modernized version was passed by the legislative assembly appointed after the 2006 coup. Merely four years later however, in 2011, this version was revised.
Identifying the exact nature of the changes brought in by the 2011 revision can be difficult, as the details of the 2007 act are hard to track down. When TIS Monitor calls OPEC, the section within the Ministry of Eduction overseeing international schools, to ask for the original 2007 version, an official says it is not available as ”we don’t use it anymore.”
After searching various Thai agencies, including the National Archives, TIS Monitor is able to find the 2007 act at the Office of the Council of State, an agency archiving official legal documents.
A comparison between the 2007 and 2011 versions of the Private School Act shows many revisions mainly focussed on increasing the freedom of owners to make profits from their businesses. This made owning an international school in Thailand much more profitable — and thus attractive.
Important sections simply vanished
The chief sections regulating the profits of private schools were sections 44 and 45. Section 44 stipulated the creation of a reserve fund for the school, and Section 45 made it compulsory for schools to set aside 10% of the schools profit in the fund. It also set a cap on dividend payouts to the owners at a maximum of 40% of profits, while the remaining part, up to 50%, should be moved into other reserves.
In the 2011 version, section 44 and 45 have simply been removed entirely, allowing potential dividends paid to owners to increase from 40% to 100% of profit.
Dr Anders Engvall, head of research at TIS Monitor, has led the analysis.
”It is interesting to note that the revision of the 2007 Private School Act started out as a citizens’ initiative in 2008. At this time, activists petitioned lawmakers to make changes which would benefit families. Three years later, after the proposals had gone through a parliamentary process dominated by politicians from families with substantial business interests, an entirely different set of changes were finally made by the 2011 revision,” he says.
With the amendment, some power over schools was shifted from the bureaucracy to the school owners, and not to the families of pupils, as had initially been intended.
Politicians with ties to the industry
The 2011 changes were pushed through Parliament by the Abhisit Vejajiva government without much public deliberation.
”Parliament actually pushed the law through in one of its final sessions before dissolution. By the time the revised law was published in the Royal Gazette, parliament was already dissolved,” Dr Anders Engvall says.
Several leading politicians in the then ruling Democrat party, including a member of Abhisit Vejajiva’s cabinet, belong to families which control or would later control some of Thailand’s largest and most well-known international schools. A few years later, some of these schools had profit margins hovering around 30%.
Another area of the act that was altered is section 32, which regulates the setting of fees. The second paragraph of this section in the 2007 act gave some control over the setting of fees to OPEC. This part was also simply removed in the 2011 version of the act.
While the removal of sections 44 ,45 and part of section 32 improved conditions for owners of international schools in Thailand, it wasn’t all bad for families wanting an international education for their children.
”After the market was deregulated, more schools opened and families found themselves with a broader selection of schools to choose from,” Dr Anders Engvall says.
More schools led to more options
The investigation into profits at international schools in Thailand recently published by TIS Monitor, shows that some schools are reaping huge profits.
”The 2011 revision of the Private School Act was a gift to school-owners, who were getting a much more free wheeling environment to run international schools in. This also explains the soaring profits of the following decade. While it contributed to more schools opening up in Thailand, it needs to be discussed whether families have been paying too high a price for this change. After all, schools’ profits are based on the fees families pay for their children’s education. It’s important that families know that the 2011 changes in the Private Schools Act, while having some benefits, also came at a cost,” Dr Anders Engvall says.