Skill Development Centers
Skill Development Centers
Business Model Description
Invest in specialized education centers or TVET in sectors such as Information Technology (IT), Agriculture, Financial Services and Infrastructure, in addition to language training (specifically English), in order to increase employability of workforce and make them globally competitive
IT Step Academy Cambodia, founded in 1999, operates as a branch of the international training center IT Academy STEP, operating in 22 countries and provides qualitative IT education. It offers affordable quality training programs, along with placement support and certification from Cisco, Microsoft and Autodesk with majors in Software Development and Computer Graphics and Design.
Data U Academy, founded in 2019, is an educational business of Mekong Big Data, Cambodia, specializing in data science, IT in data and digital marketing. With the support of various organizations, they provide scholarships for provincial area trainees, ensuring gender diversity. 30% of their curriculum is dedicated to soft skills.
The Australian Centre for Education (ACE), founded in 1992 by IDP Education, is a leader in English Language Teaching services in Cambodia. In 30 years of operation, it has served 700,000 students, and offered its courses through a fully functioning Learning Management System (LMS) during the pandemic.
Expected Impact
Reduce the existing skill gap and equip the workforce with modern specialized skills needed to compete in the global job market.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Cambodia: Phnom Penh
Sector Classification
Education
Challenges in education sector include inclusive access to education, transition from primary to lower-secondary, high drop-out rates at the lower secondary levels and inculcating the importance of life-long learning. (1) In 2019, its net primary enrolment rate was 90.65 (decreased from 95.65 in 2015), lower than the East and South Asia regional average of 96.96. (2)
Ministry of Education, Youth and Sport (MoEYS) developed the Education 2030 Roadmap (the “Roadmap”) which affirms Cambodia’s commitment to achieving SDG 4 targets to address the country’s development priorities, providing an overarching framework for a long-term holistic sector-wide approach for the development and delivery of education services. (3)
Cambodia achieved gender parity in education sector and is beginning to tilt in the favour of girls in recent years. The gender parity index of gross enrolment rate at both lower secondary education and upper secondary education increased from 1.1 in 2015 to 1.2 in 2018.
Ratio of female-to-male mean years of education received was 72.41 in 2019 (compared to East and South Asia regional average of 87.48). (2)
Even though, the rate at which boys and girls start primary education is similar, but the dropout rate for female students increases with each grade. Although the gender gap is continuing to narrow, the gross enrolment rate decreases for female students in both the lower and upper secondary levels. This is primarily due to poverty, systemic hurdles, cultural norms and lack of schools in rural areas in Cambodia.
According to the Asian Development Bank, ~72% of Cambodia’s population lives on Education is a top priority for Royal Government of Cambodia (RGC) to increase competitiveness and ensure delivery of inclusive development. Government expenditure on education has increased over years to 11.83% in 2019 (5), from 9.385% of total government expenditure in 2018 (6). Due to low internet penetration rate (78.8% of population in 2020) (7), especially in rural areas (79% of population), (4) adoption of technology based virtual learning is low. Regional disparities exist in the level of education due to low availability of schools and quality educators, especially outside Phnom Penh.
Formal Education
Cambodia ranks 144/189 (2019) in Human Capital Development Index (8). The country aims to augment its skilled workforce needed to transform its economy from being labor-intensive to knowledge based. The country is not prepared for competing in the 4th industrial revolution and digital economy as skill training and technical education currently offered do not meet the labor market requirement.
Education Policy 2030 - recent education reforms focus on investment in human capital and promote technical and vocational education and training (TVET) especially in STEM subjects such as math, chemistry, and physics. At the tertiary level, ~7.7% Cambodians enrolled in IT courses and ~25.5% enrolled in STEM in 2019.
Of the students enrolled in tertiary institutions (~5% of >4,300,000 youth aged 15 to 29), ~39% are women. ~14% women enrolled in STEM (science, technology, engineering and mathematics) disciplines in tertiary institutions, compared to 86% men. This disparity is one of the greatest in Southeast Asia when compared with 52% female representation in neighbouring Thailand and 48% in Malaysia. (9) Availability of specialized educators (for subjects such as, STEM, ICT, and foreign languages) is limited in Cambodia, especially in provincial towns and rural areas.
TVET and STEM skills are in high demand from the perspective of employment. Similarly, language training (particularly English) and professional training courses (finance and accounting) can also equip workers with the requisite skills for gainful employment.
Cambodia lacks specialized teachers in subjects such as STEM, ICT, and foreign languages. Skill training offered in schools and technical education do not meet the requirement of labor market.
Pipeline Opportunity
Skill Development Centers
Invest in specialized education centers or TVET in sectors such as Information Technology (IT), Agriculture, Financial Services and Infrastructure, in addition to language training (specifically English), in order to increase employability of workforce and make them globally competitive
IT Step Academy Cambodia, founded in 1999, operates as a branch of the international training center IT Academy STEP, operating in 22 countries and provides qualitative IT education. It offers affordable quality training programs, along with placement support and certification from Cisco, Microsoft and Autodesk with majors in Software Development and Computer Graphics and Design.
Data U Academy, founded in 2019, is an educational business of Mekong Big Data, Cambodia, specializing in data science, IT in data and digital marketing. With the support of various organizations, they provide scholarships for provincial area trainees, ensuring gender diversity. 30% of their curriculum is dedicated to soft skills.
The Australian Centre for Education (ACE), founded in 1992 by IDP Education, is a leader in English Language Teaching services in Cambodia. In 30 years of operation, it has served 700,000 students, and offered its courses through a fully functioning Learning Management System (LMS) during the pandemic.
Business Case
Market Size and Environment
USD 50 million - USD 100 million
~200,000 people added to labor force each year. (10)
Total working age population - 10,316.000 (11) offering opportunities for growth and expansion for businesses in this space.
The World Economic Forum’s Global Human Capital Report 2017 gave Cambodia a low score in ASEAN for educating and training its citizens to develop a competitive workforce and put their skills to productive use. Cambodia ranked 92nd out of 130 countries in terms of human capital development. (12)
Cambodia is in need of more skilled workers in order for the economy to grow and move beyond basic manufacturing jobs. (13) There is a growing demand for specialized education as the country suffers from a skill gap. National vocational training centers have not been effective in providing the skills and techniques required to meet the growth targets of Cambodia.
In 2019, Asian Development Bank (ADB) issued a loan of USD 60 mn to Cambodia to boost the skills and competitiveness of its growing labor force as the country’s economy undergoes a key transition from being a lower middle-income economy since 2015 to attaining upper middle-income status by 2030. (10)
Indicative Return
15% - 20%
Private education sector is relatively profitable but returns can vary depending on the type of support infrastructure or job aids are needed (laboratories or computers) and the presence of locally available qualified instructors.
Although, most training centers can generate returns of average 15%-20%, some centers can generate higher returns depending on the audience and the type of training provided (for example, Finance schools vs. TVET)
Investment Timeframe
Short Term (0–5 years)
Unless large equipment (which involves higher capex) is required for imparting training, investment can be recovered in <5 years.
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Skill gap (skill that the workforce has vs. what the market needs) was identified as a major bottleneck in transforming Cambodia's economy from labor-intensive to one that is knowledge based. ADB found that more than 4 out of 10 young workers lacked sufficient education or skills to perform well at their jobs.
To achieve economic growth and to spur investments, globally competitive workforce is required with not only digital literacy or tech-knowledge, but also one that is equipped with soft skills, such as problem solving and team work.
There is a need to reduce language barriers that limit workers from becoming globally competitive. High dropout rates and low standard of English taught in public schools restrict students from gaining fluency in English. (15)
Gender & Marginalisation
Women should be encouraged to pursue technology based education. Although, participation of women in the labor force has been increasing, institutional and cultural constraints prevent young women from pursuing higher education and career-advancing opportunities in technology or engineering fields.
Women should be able to gain employment across all sectors. The Skills for Competitiveness Project will help train 18,000 qualified technicians (28% women) with higher employability and technical skills in four priority sectors: manufacturing, construction, electricity, and electronics.(10)
Expected Development Outcome
Investments in this opportunity has the potential to reduce the existing skill gap and contribute to the economic transformation of Cambodia by enhancing global competitiveness of the workforce.
Investments in this opportunity can promote more support opportunities for meaningful mentorship, networking and leadership through skill-based training centers to ensure holistic development and improved employability of the workforce. (16)
Investments in this opportunity can improve the quality of skilled trainers to impart training modules and inspire a new generation of workers / students. Inadequately trained teachers will not be able to handle advanced training methods to imbibe tech-based knowledge in students.
Gender & Marginalisation
This Investment Opportunity Area has the potential to reduce the gender digital divide and increase the participation of women in technology-based sectors by improving access to affordable training courses and facilitating more inclusive and empowering learning opportunities. As of 2016, ~8.5% of total female students in Cambodia were enrolled in Information Technology-related programs at university level. (16)
This Investment Opportunity Area has the potential to improve the proportion of women in vocational jobs. As per UNESCO 2020 data, 46.9% females were enrolled in technical and vocational education programs in 2008. (17)
Reduction in regional disparities which exist due to inadequate internet connectivity and technology-infrastructure in remote areas is expected as an outcome. Due to low internet penetration rate (78.8% population in 2020) (6), especially in rural areas (79% population), (7) adoption of technology based learning is low.
Primary SDGs addressed
4.3.1 Participation rate of youth and adults in formal and non-formal education and training in the previous 12 months, by sex
GER for tertiary education in 2019 - 14.739 (18) Female GER for tertiary education in 2019 - 14.305 (19) Male GER for tertiary education in 2019 - 15.164 (20)
GER for tertiary education (18-21 years old) - 50 GER for technical-vocational education programmes (15-24 years old) - 35 (1)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Outcome Risks
Some specialized education courses require costly equipment and foreign trainers, thereby making the course unaffordable for low and middle-income households.
Financial assistance in the form of scholarships, subsidies or tax exemptions would be required to encourage student participation in such high-priced courses.
Transformation of Cambodia from a low-skilled, labor-intensive market to a skill/knowledge-driven economy may discourage businesses that enter Cambodia to lower their labor/production costs. (10)
Respect and credibility of certification provided needs to be established. Testing procedures, grading systems must be standardized to ensure global acceptability.
Gender inequality and/or marginalization risk: Some courses offered may require robust technology infrastructure, and thus would be limited to developed regions, resulting in unequal opportunities.
Impact Risks
Natural calamities or pandemics can cause various disruptions, hindering the operations, resulting in losses to centers which are unable to move operations online, especially the ones which require on-the-job technical training.
Untrained teaching staff may not be able to impart the skill-set required for workers to become globally competitive.
Many students who lack foundation level technical skills may not be able to adapt to higher technical skills, widening the existing skill-gap and impacting uptake of such courses.
Module costs would need to be justified through recognizing the benefits which students derive in the form of improved placement opportunities and thereby their earning capacity.
Gender inequality and/or marginalization risk: Uneven distribution of resources would result in concentration of operations in more developed regions, increasing regional disparities.
Impact Classification
What
Reducing the skill-gap (skills that the workforce possesses vs. skills required for employability) and enable Cambodia's transition to a knowledge based economy.
Risk
Both learners' aptitude and willingness to pay on the demand side and ability of the training centers to offer placements is required for the success of this model.
Contribution
In 2021, Ministry of Labor and Vocational Training projected to spend ~USD 500 mn in a 5-year master plan for improving Technical and Vocational Education and Training (2021-2025). (21)
Impact Thesis
Reduce the existing skill gap and equip the workforce with modern specialized skills needed to compete in the global job market.
Enabling Environment
Policy Environment
Cambodia's 2030 education roadmap focuses on providing quality services, equity, inclusive early for childhood, primary and secondary education, including technical and vocational education, esp life-long learning, for economic and social prosperity. (22)
National Employment Policy (2015-25) aims at increasing decent employment opportunities for Cambodian people and labor productivity, to promote skills and human resource development, and to enhance labor market governance. (23)
National Technical Vocational Education and Training Policy (2017-2025) aims at contributing to the development of industrial sector creating decent work and ensuring quality and high productivity of the workforce that is able to better compete with reginal countries. (24)
Cambodia’s National TVET Policy 2017–2025: aims to help close the skill gap by promoting a regular flow of information between private firms and TVET institutions. (25)
Financial Environment
Investment Law: Under article 24, education is among the sectors and activities which are entitled to investment incentives described under article 26 such as income tax exemption for 3 to 9 years, prepayment tax exemption and minimum tax exemption. (29)
Investment Law: Under article 27, besides the basic incentives above, QIP will receive additional incentives such as VAT exemption for the purchase of locally made inputs, deduction of 150 % from tax base for activities such as research development and innovation. (29)
Prakas 209 extends various tax incentives for education establishments, providing incentives on withholding tax, VAT, minimum tax and prepayment of tax on income. Educational establishments include kindergartens, TVET schools, primary schools, and higher education institutions. (30)
Regulatory Environment
Constitution 1994, revised 2008: The State shall protect and promote citizens' rights to quality education at all levels and shall take all measures, step by step, to make quality education available to all citizens. Citizens shall receive education for at least 9 years. (26)
Sub-degree Organization and Functioning of MOEYS: MOEYS has mission to lead/ administration and develop Education Sector, Youth and Sport of Cambodia in order to response to the needing of development economy, social/culture of Cambodia and improving in region and universal. (27)
Law on Education 2007: The state shall open the participation of the relevant stakeholders such as public and private sector, in the process of development, draft, monitoring and assessing the implementation, the review and the amendment of national education policies, plans and strategies. (28)
Law on Education 2007: The State shall strongly encourage and support private institutions in the establishment of partnerships providing all kinds of educational services at all levels. This law covers all educational programs, research studies, TVET at all public and private levels. (28)
Marketplace Participants
Private Sector
Corporates: IT Step Academy Cambodia, Data U Academy, ACE (Australian Centre of Education), Northbridge International School Cambodia, Raffles International College (Cambodia) Limited, NTC Training Centre Investors: Nord Anglia Education, Inc., Raffles Education Corp
Government
MoEYS (Ministry of Education, youth and Sport), MOLVT (Ministry of Labour and Vocational Training), CADT (Cambodia Academy of Digital Technology)
Multilaterals
All multilaterals have programs linked to education and vocational training, but also in Digital literacy (Asian Development Bank (ADB), World Bank, European Union, International Labor Organization), ADB Skills for Competitiveness Project
Non-Profit
Don Bosco Vocational Training Centre, Kirirom University, STEMAOC Project, Cambodian Youth's Future Organization Vocational Training Center, Swisscontact
Public-Private Partnership
E2STEM (Techno New Generation School), Don Bosco Technical Schools with their C1 pilot project, Swisscontact with their Skills Development Program, Korea International Cooperation Agency (KOICA)
Target Locations
Cambodia: Phnom Penh
References
- (1) Royal Government of Cambodia. (2018). Cambodia Sustainable Development Goals Framework (2016-2030). https://data.opendevelopmentmekong.net/dataset/3aacd312-3b1e-429c-ac1e-33b90949607d/resource/d340c835-e705-40a4-8fb3-66f957670072/download/csdg_framework_2016-2030_english_last_final-1.pdf
- (2) Sachs et al. (2021). Sustainable Development Report 2021. Cambridge: Cambridge University Press. https://s3.amazonaws.com/sustainabledevelopment.report/2021/2021-sustainable-development-report.pdf
- (3) Ministry of Education, Youth and Sport. (2019). Cambodia’s Education 2030 Roadmap. https://drive.google.com/file/d/11j976Lya14KKgJ5ia73eFsm4GwUPGBo7/view
- (4) Gillispie, A. (2018). The Borgen Project. Girls’ Education in Cambodia Fights Inequality and Rural Isolation website: https://borgenproject.org/girls-education-in-cambodia/#:~:text=Gender%20Disparities%20Still%20an%20Obstacle%20in%20Cambodia&text=Data%20collected%20by%20various%20international,students%20increases%20with%20each%20grade.
- (5) Macrotrends. (2022). Cambodia Education Spending 1998-2022. https://www.macrotrends.net/countries/KHM/cambodia/education-spending
- (6) World Bank. (2021). Government Expenditure on Education (% of Government Expenditure)—Cambodia. https://data.worldbank.org/indicator/SE.XPD.TOTL.GB.ZS?locations=KH
- (7) World Bank. (2021). Individuals Using the Internet (% of Population)—Cambodia. https://data.worldbank.org/indicator/IT.NET.USER.ZS?end=2020&locations=KH&start=2000&view=chart
- (8) UNDP. (2020). Human Development Report 2020: Cambodia. https://hdr.undp.org/sites/default/files/Country-Profiles/KHM.pdf
- (9) Sok, C. (2020). More Females Urged to Learn Science and Technology. Khmer Times. https://www.khmertimeskh.com/50799187/more-females-urged-to-learn-science-and-technology/
- (10) Thomas, J. (2019). Cambodia’s Workforce Needs Help. The ASEAN Post. https://theaseanpost.com/article/cambodias-workforce-needs-help
- (11) National Institute of Statistics. (2020). Cambodia Total Working Age Population. https://www.ceicdata.com/en/cambodia/working-age-population-cambodia-socioeconomic-survey-cses
- (12) Open Development Cambodia. (2015). Labor. https://opendevelopmentcambodia.net/topics/labor/
- (13) Open Development Cambodia. (2012). ADB Report Says Cambodia Must Train More Skilled Workers. https://opendevelopmentcambodia.net/news/adb-report-says-cambodia-must-train-more-skilled-workers/
- (14) Neak, P. (2020). Community Learning Centers, Challenges and Ways Forward to Become Lifelong Learning Centers. ResearchGate. https://www.researchgate.net/publication/345742062_Community_Learning_Centers_challenges_and_way_forward_to_become_lifelong_learning_centers
- (15) Rhea, M.S. (2020). English Proficiency Index Shows Cambodia’s Language Skills Progress. Khmer Times. https://www.khmertimeskh.com/50785845/english-proficiency-index-shows-cambodias-language-skills-progress/#:~:text=Cambodians%20are%20increasingly%20learning%20English,up%20ten%20places%20this%20year.
- (16) Wedu Global. (2018). Advancing Women in Tech Through Leadership Development and Mentoring in Cambodia. https://www.weduglobal.org/advancing-women-in-tech-in-cambodia/
- (17) World Bank. (2020). Secondary Education, Vocational Pupils (% Female)—Cambodia. https://data.worldbank.org/indicator/SE.SEC.ENRL.VO.FE.ZS?locations=KH
- (18) World Bank. (2021). School Enrolment, Tertiary (% Gross)—Cambodia. https://data.worldbank.org/indicator/SE.TER.ENRR?locations=KH
- (19) World Bank. (2021). School Enrolment, Tertiary, Female (% Gross)—Cambodia. https://data.worldbank.org/indicator/SE.TER.ENRR.FE?locations=KH
- (20) World Bank. (2021). School Enrolment, Tertiary, Male (% Gross)—Cambodia. https://data.worldbank.org/indicator/SE.TER.ENRR.MA?locations=KH
- (21) Ministry of Labour and Vocational Training. (2021). Cambodia Ministry Invests $500M on 5-Year Vocational Master Plan. https://sea-vet.net/news/839-cambodia-ministry-invests-500m-on-a-5-year-vocational-master-plan
- (22) Ministry of Education, Youth and Sport. (2019). Cambodia’s Education 2030 Roadmap. https://drive.google.com/file/d/11j976Lya14KKgJ5ia73eFsm4GwUPGBo7/view
- (23) Royal Government of Cambodia. (2015). National Employment Policy 2015-2025. https://edmsp1.ilo.org/edmsp1/groups/public/documents/6006/cdff/mtm3/~edisp/edmsp1_137402.pdf
- (24) Royal Government of Cambodia. (2017). National Technical Vocational Education and Training Policy 2017-2025.
- (25) Royal Government of Cambodia. (2017). National Technical Vocational Education and Training Policy 2017-2025.
- (26) Royal Government of Cambodia. (1993). The Constitution of the Kingdom of Cambodia. https://cambodia.ohchr.org/~cambodiaohchr/sites/default/files/Constitution_ENG.pdf
- (27) Royal Government of Cambodia. (2009). Sub-Decree on Organization and Functioning of Ministry of Education Youth and Sport. http://www.moeys.gov.kh/images/moeys/laws-and-regulations/262/sub-decree-84-2009-moeys-organisation%20and%20Functions-en.pdf
- (28) Royal Government of Cambodia. (2007). Education Law. https://planipolis.iiep.unesco.org/sites/default/files/ressources/cambodia_education_law.pdf
- (29) Council for the Development of Cambodia. (2021). Law on Investment. https://www.cambodiainvestment.gov.kh/en/law-on-investment-2021.html
- (30) Ministry of Economy and Finance. (2016). Prakas 209 on Tax Incentive for Educational Establishment. https://www.aseanbriefing.com/news/cambodia-issues-tax-incentives-education-sector/#:~:text=On%20March%202%2C%202020%2C%20the%20Cambodian%20government%20issued,tax%2C%20and%20prepayment%20of%20tax%20on%20income%20%28PTOI%29.