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142 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA low literacy level – 42% among those over 15 years. The Institute of Engineering under the State-funded Tribhuvan University is recognised as a centre of excellence by the Asian Institute of Technology (AIT) in Bangkok. In addition to university courses, various skill-development courses are run by a number of private and public institutions under the council for technical education and vocational training (CTEVT) in different fields. There is, however, a serious problem of brain drain, as highly qualified people do not find enough opportunities in a small and sluggish economy. This seems to be largely because of the mismatch in the kind of requirement of qualified people and what the education system produces because the most common concern of potential foreign investors in the Nepali information technology (IT) and telecom sector has been the lack of skilled manpower (UNCTAD-ICC 2003:52). The surprising reality is that about 4,000 IT workers are trained every year in Kathmandu alone. This number is attributed to the presence of training institutes which include such brands as Informatics, NIIT, STG, SSi, Pentasoft and APTECH, operating through branches or franchises. The Government’s Employment Promotion Council has also started a programme in cooperation with the private sector to train 8,500 semi-skilled and skilled, and 500 highlyskilled, IT workers. In addition, four universities in Nepal offer bachelor’s degree courses in IT. Their total annual intake of students is above 3,000 persons (UNCTAD-ICC 2003). Two universities are also running master’s degree courses in IT. The Institute of Engineering under Tribhuvan University offers a twoyear MSc in Information and Communication Engineering and has an annual intake of 20 students, while Kathmandu University has two such courses: MSc in Communication Engineering (20 students per year) and ME in information technology (20 students per year). In addition, the faculty of sciences of Tribhuvan University offers an MSc in Computer Science and IT and has an annual intake of 20 students. The IT worker is available at low cost. Overall it could be suggested that Nepal should further remove restrictions in the sector at least at the regional level. It has strong import interest in education and South Asian countries could be significant providers of education services. For import of education all modes are relevant in the case of Nepal. While via Mode 1 Nepal can have access to affordable education, via Mode 2 it can send students to South Asian countries. Likewise, opening of the educational institutions will have far reaching implications on Nepal’s educational and economic progress. Indian educational institutions are already successfully operating in Nepal, the prime example being a medical college run by the Manipal University in Pokhara since 1994. The Manipal college of medical sciences (MCOMS) claims being ranked as the best college in Nepal. 4 Apart from Nepalese students there are students from India and many third countries who are studying in this college. Finally, via Mode 4 Nepal will be able to attract better qualified teachers from the region. Summary of Restriction in the Sector • Foreign equity ceiling of 51% and after April 2009 of 80% • No sectoral Mode 4 commitments • Horizontal Mode 4 commitments limited to ICTs • No national treatment with respect to foreign exchange provided to foreigners to pay for any cross-border services. • A foreign investor reinvesting earnings is required to obtain the permission of the Department of Industry • All foreign investments except financial services require approval of the Department of Industry • Incentives and subsidies are available only to enterprises wholly owned by Nepalese nationals. Sri Lanka Sri Lanka has not undertaken any sectoral commitments in education services. However, its commitments under Mode 3 in the horizontal section do cover education services which provide that foreign investment of up to 40% of equity in a company providing education services will be automatically approved by BOISL and foreign investment in excess of 40% (and up to 100%) will be approved by the BOISL on a case-by-case basis in consultation with the relevant State Agencies. Allowing 100% FDI in education services that too during the Uruguay Round assumes special significance as it was a rare kind of liberalisation particularly for a South Asian country. Nevertheless, as the commitments are in the horizontal section they raise a number of questions. Whether the Sri Lankan commitments apply to all five sub-sectors of the education sector as given in the 4 http://www.manipal.edu/mcoms/aboutus/overview.htm
H IGHER EDUCATION SERVICES 143 W/120? This is not clear since the horizontal commitments do not refer to any CPC number giving rise to serious ambiguity regarding the coverage of the sector. Since FDI is allowed in education, that commercial presence is permitted. However, nothing can be said about other modes. In fact, no commitments made under other modes imply that Modes 1, 2, and 4 are unbound. Hence in the absence of detailed commitments in the sector nothing can be made out of the Sri Lankan schedule of commitments. Although Sri Lanka provides a promising market for other South Asian countries, lack of commitments may prevent them from supplying education services. In this regard, commitments under all modes would be relevant. According to the World Bank, Sri Lanka devotes the lowest share of the public budget to education of all South Asian countries (World Bank 2005). The Bank suggests that private sector investment and participation in the Sri Lankan education should increase. Further, it suggests that relaxing legal obstacles and introducing strategic initiatives to counter the adverse political economy environment to private sector participation in education could produce several benefits. First, it would increase the overall volume of resources invested in the education sector. Second, since the students attending private institutions are likely to be drawn from upper income families, it would release more public resources, on a per student basis, for students from poorer families. Third, it would stimulate economic activity in a sector where investment has been artificially restricted and contribute to higher growth. Fourth, it would provide alternative mode of service delivery, with considerable power and responsibility at the level of individual education institutions. These private education institutions would be compelled to offer high quality services to remain viable in an economic context where they are in competition with free public education institutions. However, experience does not always support the World Bank viewpoint and what is, in fact, needed is a strong and efficient regulatory system that can ensure private institutions to offer quality education. Since the establishment of private universities has been an extremely contentious issue, the World Bank suggests that it is highly unlikely that private universities can be established in Sri Lanka in the medium term (World Bank 2005). Others also suggest that a major impediment in the existing university system is that there has been a lack of reforms that would facilitate the growth of accredited private institutions (Taneja et al. 2004). However, the World Bank suggests, the government of Sri Lanka has responded to the opposition to private universities by encouraging the private sector to participate in non-contentious areas. These have mainly been the establishment of private degree awarding institutions, usually linked to foreign universities, and investment in tertiary level programmes such as professional and technical courses (World Bank 2005). Taneja et al. suggest that the private sector is mainly engaged in the provision of professional education particularly in the areas of accountancy, management and information technology (Taneja et al. 2004). Although there are provisions in the existing Universities Act to recognise degree courses conducted by private institutions, the process is sill not clear (Ibid). Some private institutions conduct courses leading to degrees in collaboration with foreign universities. The Bank argues that Sri Lanka needs to explore options to expand private participation in tertiary level nonuniversity education in professional and technical fields where the demand for labour, both within and outside the country, is strong (World Bank 2005). Taneja et al. have done a detailed study on the Sri Lankan education system (Taneja et al. 2004). They suggest that in Sri Lanka, government is the main provider of primary education, with only one percent of the schools owned and run privately and it is the sole operator of accredited universities in the country. Due to limited opportunities available at the universities, they suggest, there exists an excess demand for university education. For instance, in 2003, only 14% of eligible students were granted admission to national universities. Due to a dearth of opportunities for higher education, a large number of Sri Lankan students who can afford foreign university education leave Sri Lanka annually. The preferred destinations to obtain degrees in higher education are the US, the UK, and Australia. Although India is not a preferred destination, several students opt for it because of lower costs, geographical proximity and cultural affinity. They further inform that the number of students coming to India increased from 1000 in 2002 to 1600 in 2003. Most of the students come to Bangalore, Chennai, Trichy, Madurai and Delhi. Students come to India to study professional degree courses such as engineering, medicine, management and communication. In addition, a large number of students pursue undergraduate and postgraduate degree courses in various disciplines. Most of the institutions have quota for foreign students ranging between 5% and 30% of the total seats. However, there is no special quota for Sri Lankan students. The fee charged from foreign
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QUANTIFICATION OF BENEFITS FROM ECO
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QUANTIFICATION OF BENEFITS FROM ECO
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Preface Our consultations with seni
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viii CONTENTS 7. Revenue and Welfar
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Executive Summary OBJECTIVE This st
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EXECUTIVE SUMMARY xiii Table 1 EAMA
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EXECUTIVE SUMMARY xv India A full S
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EXECUTIVE SUMMARY xvii indicates th
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EXECUTIVE SUMMARY xix ments on basi
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Part I BENEFITS FROM TRADE, INVESTM
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4 QUANTIFICATION OF BENEFITS FROM E
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10 QUANTIFICATION OF BENEFITS FROM
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2 Literature Review and Rationale f
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4 Effective Additional Market Acces
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6 Impact of SAFTA on Member Countri
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7 Revenue and Welfare Implications
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8 Impact of SAFTA on Inward and Out
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9 Quantification of Benefits from T
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APPENDICES
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Appendix 8 Intra SAARC FDI Collabor
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Appendix 11 Table A11.1 On an Emplo
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Appendix 12 Original Commitments/In
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Appendix 14 Table A14.1 Telecommuni
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Appendix 15 REFERENCE PAPER Scope T
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Bibliography Abelson, P. (1996),
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BIBLIOGRAPHY 241 Cuba (2002), Negot
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BIBLIOGRAPHY 243 (2004), Impacts of
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BIBLIOGRAPHY 245 Silva, Patricia an
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BIBLIOGRAPHY 247 (1998), Tourism Se
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