Press Release
February 20, 2024

Allowing foreign ownership is only a first step in promoting internationalization in education - EDCOM 2 Executive Director

The Second Congressional Commission on Education (EDCOM 2) underlined that amending the 1987 Constitution to allow foreign ownership of higher education institutions (HEIs) is only the first step to promote internationalization in the Philippine education system.

In a hearing of the Committee on Constitutional Amendments and Revision of Codes (Subcommittee on Senate Resolution of Both Houses No. 6) on February 20, EDCOM 2 Executive Director Dr. Karol Mark Yee presented a comparative study of foreign ownership policies of educational institutions in ASEAN, and considerations that the government must take into account.

Strictest policies in foreign ownership of schools in ASEAN

Initial analysis of policies in ASEAN shows that the Philippines is one the strictest among in terms of foreign ownership of educational institutions, both basic and higher education.

Currently, the 1987 Constitution allows the establishment of international schools permitted that they are: 1) established by religious groups and mission boards, 2) established for foreign diplomatic personnel and their dependents, and/or 3) established for foreign temporary residents.

"Based on our research, within ASEAN, only the Philippines has foreign ownership, establishment, and enrollment restrictions stipulated in the Constitution, whereas other countries only indicate this via legislation", EDCOM 2 Executive Director Dr. Karol Mark Yee said.

Dr. Yee also noted during the hearing that, "Allowing foreign ownership is just the first step. Even in Singapore and Malaysia, they rolled out government incentives to encourage the establishment of international institutions", he said. He likewise noted that this will require a review of immigration and visa requirements, labor laws, professional regulatory restrictions

In Malaysia, international non-profit schools enjoy 100% income tax exemption, whereas private schools, although less, still enjoy income tax relief at 70%. In Vietnam, international schools have corporate income tax exemption for 4 years and 50% reduction of tax payable for the next 5 years. International schools are also exempted from non-agricultural land use tax. Additionally, a VAT exemption exists for selected goods used for education (e.g. textbooks). These are similar to Myanmar and Cambodia, which also give tax breaks and incentives to encourage the establishment of international schools.

"We will also need to review government regulations in a way that enables quality institutions to thrive. Challenges of overregulation and complementarity should also be considered as we proceed in our discussion on internationalization, specific to higher education", Yee said.

Dr. Yee explained that the presentation was an initial analysis of EDCOM 2's findings and did not reflect the position of the Commission.

Internationalization of higher education and improving research productivity is part of the EDCOM priorities under higher education for Year 2, and will conduct its consultations this year on these two issues.

Challenge of regulating diploma mills

EDCOM 2 Advisory Council Member, Dr. Cynthia Bautista, highlighted the government's shortcomings and its implications to internationalization in higher education: "What we must guard against is opening up to lower-tier HEIs...We have to guard against that, which will further erode the reputation of the Philippines...Because or reputation is not as good as we imagined [compared to] the 1970s...Our reputation for diploma mills is very high", she emphasized.

"While safeguards may be put in place through legislation and executive orders, we also have to be mindful of our implementation track record: a culture tolerant of circumventions of regulations, lack of capacity of regulatory bodies to regulate substandard HEIs, even among Philippine HEIs...are among the considerations [of internationalization of HEIs]", Dr. Bautista continued.

Basic education to still be Filipino-owned

EDCOM 2 Commissioner Senator Sonny Angara also clarified that, under Resolution No. 6, there is no intent to amend basic education. "The intention is to keep basic education in the hands of Filipinos...I think we want to maintain that societal or public goal", he said.

On the other hand, Angara noted that foreign limitations on ownership of HEIs may be considered for amendment to facilitate internationalization. "We're considering the possibility of amending the Constitutional provision, which currently allows a 60-40 arrangement, and in fact there is the Transnational Higher Education Law...", Angara continued.

Senator Angara further elaborated on the need for precision in crafting targeted legislation to improve the education system in terms of internationalization. "One thing clear from all the resource persons and that we are the only ones who have these restrictions in our Constitution...An emerging theme is the need for targeting. That, to me, seems to be an argument to take it out of the Constitution and into legislation to have greater precision in order to achieve our aims", he said.

Angara is the Chair of the Committee on Constitutional Amendments and Revision of Codes hearing the Subcommittee on Senate Resolution of Both Houses No. 6, and is also a Commissioner of the Second Congressional Commission on Education.

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