Ministry of Commerce And Supplies - Enhanced Integrated ...
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N T I S201017) Education ServicesBackgroundNepal is not widely regarded as an exporter of education services, but rather as an importer: much moreNepalese students are studying abroad than foreigners studying in Nepal. However, exports in educationservices do take place and the question whether Nepal has a significant potential to become a well-recognized“education exporter” has already been raised in a study undertaken by SAWTEE (2008).Exports in education services mainly take place as “mode 2” trade: foreign students come to Nepal to receiveeducation. However, “mode 3” (commercial presence) also plays a major role, though as an import. There isof course also an export in “mode 4” through temporary migration of Nepalese who might work as teachersabroad, but this will not be further evaluated here. Nepal “imports” education via mode 4 as well. 115Two main factors seem to support education export from Nepal. First of all, subsidiaries of Indian medicalschools have opened up in Nepal. They primarily cater to Indian students who seek to eventually get accessto the Indian medical system, but studying in India might be more expensive or impossible due to limitedseats for medical students. Second, Nepal offers a natural advantage in terms of its geography and climate,compared to many places in India, for instance. The hilly environment is similar to that of Darjeeling andDehradun, the traditional education service zones of India, indicating a potential to replicate such educationservicing zones in Nepal. Lower living costs are also an advantage.Index 1: Export PerformanceExport Value and Trade Balance: There is no reliable data on the export (or import) of education servicesin Nepal. However, several estimates have been made in the past. There is NRB data on trade in educationservices recorded in the BoP for the years 2000-04. It shows a wide trade deficit with imports of around US$13million per year and exports less than US$4 million per year (see SAWTEE 2008). However, these figures arenot reliable and seem underestimated. India is the main source of foreign students, and transfers with Indiaare often informal.There are estimates on the number of foreign students in Nepal based on the visas issued for FY 2008/09.Accordingly, the number of foreign students reached 1,043, up from 683 in 2001-03, but these numbers donot necessarily include all Indian students 116,117 . Numbers obtained from medical colleges during the fieldworkonly suggest that there are currently around 1,100 Indian students studying for medical degrees in Nepal, and250 students from third countries. The number of foreign students in other fields is probably rather low. Thetrend of inflow of foreign students in Nepal seems to be increasing, though there is no system of properlyrecording the number of foreign students in Nepal, implying the need of government attention in this regard.The number of Nepalese studying abroad is much higher. It is currently estimated at 18,000 (Source: GoN/MOE: Higher Education and Technical Education Department).A rough estimate of the export value can be derived from the number of foreign students (roughly estimatedat being around 1,500), their average spending per year (US$1,800 per year according to SAWTEE 2008), and115Education through “mode 1” – cross-border supply, i.e. “distance learning” – is also possible, though there seem no such exports. SomeNepalese students are studying at foreign “open universities” and others through distance learning.116The foreign students affiliated to various educational institutions are as follows: TU/ International Relation Centre: 180, TU/Rector’s Office:180, TU/ Bishwobhasa (International Language) Campus: 235, Kathmandu University: 401, CTEVT: 17 and Miscellaneous (BPKIHs/Dharan,Eastern University, Bouddha University, Mahendra Sanskrit University, Ronast, etc): 30 (Source: GoN/Ministry of Education, Kesharmahal). Inoutward students, highest numbers are found to go to Australia, followed by USA, UK, Cyprus and Japan. Cyprus appeared only in 2008.117Shrestha (2004).NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT109
N T I S2010the tuition fees. But tuition fees in particular vary widely. For example, the annual tuition fee for ManipalSchool in Pokhara is around US$13,000 for non-Nepalese students, but some students receive partial or fullscholarships. 118 The number of foreign students is currently around 320; so the overall tuition fees could bearound US$4 million. Typical fees for other medical degrees are usually around US$5,000-10,000 per year. Inthe absence of detailed data, we estimate that the total exports are above US$10 million, but an appropriatesurvey would be required to get a more accurate number.With a significant share of revenue being generated from tuition fees in Indian-owned medical colleges, it isclear that they cannot fully be counted as Nepalese export revenue. In fact, they may well count as Indianexport revenue through ‘mode 2’ (commercial presence) and ‘mode 4’ (Indian teaching staff in medicalcolleges). Therefore, the overall importance of education services exports would be overstated if one classifiesall revenue from tuition fees as ‘export’ (see also Box below).Types of Exported Services: Most foreign students in Nepal visit universities and out of those a large share isenrolled in medical or technical studies (62 per cent for Tribhuvan University, see SAWTEE 2008).Current Export Destinations: The majority of foreign students in Nepal are from India. This is confirmed bya survey done by SAWTEE (68 per cent from India) and also by the respondents in several universities. Mostother students come from the rest of the SAARC region or are non-resident Indians from the USA and othercountries.Potential Export Destinations: The main potential is most probably within the region, in particular India.Dynamism of Exports: There is no data to allow for a proper analysis of trends, but from the anecdotal evidencethat it is available, it appears that the inflow of foreign students into Nepal has only slightly increased in recentyears.Export Prospect: No quantitative assessments can be made about export prospect. Nevertheless, there ispotential for education exports in areas that are linked to Nepal’s history and culture such as religious orlanguage studies. For the remainder, the potential depends a lot on the Indian market and how Nepaleseschools compare with those in India in terms of access, costs, quality and whether the degrees are recognizedin India. If Nepal becomes competitive in all of these areas, which is currently not assured, in particularregarding the recognition of degrees, then there could be a large potential for Indian students (and colleges)to move to Nepal, which is then in fact a mixture of ‘mode 3’ import and ‘mode 2’ export.Index 2: World Market ConditionsGlobal Market for Education Services: Globally, exporters of higher education services are predominantlydeveloped countries (EU, USA, Australia, and Japan). These countries host the majority of students studyingabroad, whereas the number of foreign students in developing countries, and in South Asia in particular, isvery small. Source countries are both developed and developing countries. China is leading, followed byIndia, with shares of 15 per cent and 6 per cent respectively. However, only 1 per cent of India’s tertiary-levelstudents are studying abroad. Nepal, in contrast, has a much higher share of 5 per cent and a total number ofstudents abroad of 14,575 (UNESCO, 2009).Globally, 2.7 million students are studying abroad (UNESCO, data from 2007), and this number has grown by 4per cent annually since 1995. BoP statistics show part of the expenditure of trade in education (242 - Personaltravel - Educational expenditures). Measured by this, global exports of education services were US$40 billion.However, there is a range of difficulties in defining and measuring global trade in education; so this number118Source: http://www.educationworldonline.net/index.php/page-article-choice-more-id-2022110NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT
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N T I S201017) Education ServicesBackgroundNepal is not widely regarded as an exporter <strong>of</strong> education services, but rather as an importer: much moreNepalese students are studying abroad than foreigners studying in Nepal. However, exports in educationservices do take place and the question whether Nepal has a significant potential to become a well-recognized“education exporter” has already been raised in a study undertaken by SAWTEE (2008).Exports in education services mainly take place as “mode 2” trade: foreign students come to Nepal to receiveeducation. However, “mode 3” (commercial presence) also plays a major role, though as an import. There is<strong>of</strong> course also an export in “mode 4” through temporary migration <strong>of</strong> Nepalese who might work as teachersabroad, but this will not be further evaluated here. Nepal “imports” education via mode 4 as well. 115Two main factors seem to support education export from Nepal. First <strong>of</strong> all, subsidiaries <strong>of</strong> Indian medicalschools have opened up in Nepal. They primarily cater to Indian students who seek to eventually get accessto the Indian medical system, but studying in India might be more expensive or impossible due to limitedseats for medical students. Second, Nepal <strong>of</strong>fers a natural advantage in terms <strong>of</strong> its geography and climate,compared to many places in India, for instance. The hilly environment is similar to that <strong>of</strong> Darjeeling andDehradun, the traditional education service zones <strong>of</strong> India, indicating a potential to replicate such educationservicing zones in Nepal. Lower living costs are also an advantage.Index 1: Export PerformanceExport Value and Trade Balance: There is no reliable data on the export (or import) <strong>of</strong> education servicesin Nepal. However, several estimates have been made in the past. There is NRB data on trade in educationservices recorded in the BoP for the years 2000-04. It shows a wide trade deficit with imports <strong>of</strong> around US$13million per year and exports less than US$4 million per year (see SAWTEE 2008). However, these figures arenot reliable and seem underestimated. India is the main source <strong>of</strong> foreign students, and transfers with Indiaare <strong>of</strong>ten informal.There are estimates on the number <strong>of</strong> foreign students in Nepal based on the visas issued for FY 2008/09.Accordingly, the number <strong>of</strong> foreign students reached 1,043, up from 683 in 2001-03, but these numbers donot necessarily include all Indian students 116,117 . Numbers obtained from medical colleges during the fieldworkonly suggest that there are currently around 1,100 Indian students studying for medical degrees in Nepal, and250 students from third countries. The number <strong>of</strong> foreign students in other fields is probably rather low. Thetrend <strong>of</strong> inflow <strong>of</strong> foreign students in Nepal seems to be increasing, though there is no system <strong>of</strong> properlyrecording the number <strong>of</strong> foreign students in Nepal, implying the need <strong>of</strong> government attention in this regard.The number <strong>of</strong> Nepalese studying abroad is much higher. It is currently estimated at 18,000 (Source: GoN/MOE: Higher Education and Technical Education Department).A rough estimate <strong>of</strong> the export value can be derived from the number <strong>of</strong> foreign students (roughly estimatedat being around 1,500), their average spending per year (US$1,800 per year according to SAWTEE 2008), and115Education through “mode 1” – cross-border supply, i.e. “distance learning” – is also possible, though there seem no such exports. SomeNepalese students are studying at foreign “open universities” and others through distance learning.116The foreign students affiliated to various educational institutions are as follows: TU/ International Relation Centre: 180, TU/Rector’s Office:180, TU/ Bishwobhasa (International Language) Campus: 235, Kathmandu University: 401, CTEVT: 17 and Miscellaneous (BPKIHs/Dharan,Eastern University, Bouddha University, Mahendra Sanskrit University, Ronast, etc): 30 (Source: GoN/<strong>Ministry</strong> <strong>of</strong> Education, Kesharmahal). Inoutward students, highest numbers are found to go to Australia, followed by USA, UK, Cyprus and Japan. Cyprus appeared only in 2008.117Shrestha (2004).NEPAL TRADE INTEGRATION STRATEGY 2010BACKGROUND REPORT109
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