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Universal Education Forbes Indonesia

*Excerpts from the November 2019 edition of Forbes Indonesia Magazine.

Private school SIS Group has already made quality education more affordable and plans to make it even more so. - Marella Putri

Indonesia will hit a demographic bonus by 2030, a period when the country's population will be made up mostly of people of productive age. At the same time, Indonesia is also facing the global Forth Industrial Revolution, where the application of technology such as Artificial Intelligence (AI) and big data is changing the way people live and work. According to the 2019 OECD Employment Outlook report released in April, in the next 10-20 years, 14% of jobs are at high risk of being fully automated, and 32% are at risk of significant changes. If today's younger generation is not equipped with skills that answer the challenges in the coming era, the demographic bonus will transform into a burden.

Therefore, appropriate education that can compete internally and externally is important for Indonesian students, but a gap remains in the country. For instance, international schools with certified international curriculum and teachers, are often not affordable by those on lower-to-middle income, thus maintaining the significant social gap that exists in the country. This is the problem that Singapore Intercultural School (SIS), a group of private schools based in Indonesia, is solving.

Jaspal Sidhu, founder and chairman of SIS, is a Singaporean who has lived in Indonesia for 30 years, previously working as an engineer in the mining sector from Aceh to Kalimantan. He quit his career in mining because his father thought he should be working where he could have more of an impact on people. Reflecting on his life, Jaspal realized that it was a quality education that had brought him success. That was also why his father who worked as a security officer tried his best to give his children the best education he could afford.

"Given what I have seen in Indonesia, given my background, what drives me is this: quality education must be accessible to as many income levels as possible," says Jaspal. "My model must have three things: it must be impactful and it has to be measured, it has to be financially sustainable and scalable, and it has to provide meaningful employment to Indonesian teachers."

Quality education usually comes with a high price tag. He said his children went to an international school in Jakarta that cost $25,000 annually, way out of the reach of most families. He felt that the price could be significantly reduced without sacrificing the quality, while at the same time being profitable and growing. Jaspal opened his first school, SIS South Jakarta in Lebak Bulus, South Jakarta, in 1997. The annual school fee was set at $15,000, which is almost half the price tag of an average international school in the city. The model he implemented worked, he received a good response from the market, and thus he aimed to continue slashing the fees by half. When he opened two more schools in Jakarta, the fees for both were down to $7,500. SIS also expanded outside Jakarta, opening in Medan, Semarang, and Palembang. The schools in Medan and Semarang cost $3,000 - $4,000. However, the one in Palembang, which is the newest, opening in 2011, costs $2,000 annually. And all SIS schools offer K-12 education with international curricula such as the Singapore Curriculum, Cambridge, and International Baccalaureate.

How does he do it? Jaspal has a strategy to maintain quality while keeping costs to a minimum. For example, the schools might not have facilities such as a swimming pool or auditorium. He also feels that the capability of local teachers is equal to that of foreigners as long as they receive training and are exposed to the right knowledge and mindset. Therefore, teachers at SIS schools are mixed, so that locals can learn from foreign teachers. The school works with universities to take intern teachers who have the chance of being hired right after graduation. To reduce the cost of building new schools, SIS also works with real estate players to provide the land. In return the presence of a good school raises property values in the area.

To finance the investment, Jaspal has turned to impact lenders and investors. In 2004, he approached the International Financial Corporation (IFC) at it was hard to convince local banks about the concept. The IFC spent two years consulting and making sure that SIS indeed made an impact and had the best practices, before agreeing to fund the schools, which it does to this day.

The partnership with the IFC has led Jaspal to connect not only with people across the globe who ask for SIS to help them run schools, but also impact investors interested in SIS and Indonesia.

Research by Global Impact Investing Network (GIIN) in 2018 found that only 4% of impact investment funds the education sector. Jaspal believes that this is because of the complex stakeholders involved, the long-term return, and the perception that education should be the government's job rather than the private sector's. However, Jaspal is convinced that Indonesia is the right place to invest, particularly in education, given its current situation: the country has a demographic advantage, a stable economy and GDP growth, with President Joko Widodo focusing on education and infrastructure to tackle the lack of skilled labor. Moreover, McKinsey reported in 2012 that the private education market in Indonesia will be valued at $40 billion by 2030.

In June, SIS' concept won the Transformational Business Award in the education category, a joint project by the Financial Times and the IFC.

The award recognizes companies across the world that work to achieve the United Nations Sustainable Development Goals and know what impact they are making. In the case of SIS, it was about how the schools managed to reduce prices and maintain quality.

Jaspal is still not satisfied. He says his late father would want a quality school that was affordable enough for the child of a security officer, just like him. "Ours is still the most expensive school in Palembang. It tells you that outside Jakarta and Surabaya, the people's purchasing power for education drops. So I cannot put an expensive school in the region, it doesn't make sense because people can't afford it. I have to find a new model to bring prices down." explains Jaspal.

Jaspal's vision for affordable education continues: a new school brand called Inspirasi is in the pipeline. Unlike SIS, Inspirasi schools will use the local curriculum mixed with international programs and employ only Indonesian teachers. He aims to build 30 Inspirasi schools across Indonesia within the next 10 years, the first one targeted to operate in Surabaya in 2021. "Inspirasi fees will be $2,000. In fact, it is my dream to bring it down to $1,000, and one day to $500, and that's the day when children of security officers can go to school."

Jaspal is also looking forward to seeing SIS operating in all major cities, and collaborating with each other. He also wants the schools to be involved in more public-private partnerships, from working with the government for public school teacher training to increasing the number of teacher interns.

"On a side point, this is a good time for Indonesia, for education. We have a president who's pushing education from his heart, 20% of the [state] budget. We have a president pushing for infrastructure. So, this is all going to provide jobs, right? But there's a shortage. That's where the investment needs to go into: education. And, SIS will be ready," he says.