2 Private Education Companies That Are Exposed To the Economy’s Disruption

In his National Day Rally speech two days ago, Prime Minister Lee Hsien Loong made the case that disruption is the ‘defining’ challenge for Singapore’s economy.

During the speech, he added that Singaporeans should embrace disruptive technologies. To help Singapore cope with disruptive technological changes, the Committee on the Future Economy (CFE), set up by the government late last year, had highlighted three important areas to focus on: the development of new capabilities, the promotion of entrepreneurship, and the building up new skills in workers.

For this article, I want to touch on the last portion of the CFE’s three-prongs, on how Singapore’s workforce needs to develop new skills to deal with the new realities on the ground.

Just last week, newswires reported that the US-based network equipment manufacturer Cisco would be retrenching 20% of its global workforce (amounting to 14,000 people) as it tries to transit from a hardware company into a software-focused firm. The company apparently needs employees with different skill sets as compared to the past.

Cisco, if the reports are true, will not be the only tech company to embark on massive retrenchments in recent times. Over the past year, Intel and HP have both announced layoffs for tens of thousands of employees.

These developments are stark reminders for the need of employees in Singapore to constantly upgrade their own ‘software’ and this is where private education providers could enter the picture.

In Singapore’s stock market, companies such as TMC Education Corporation Ltd (SGX: 586) and Raffles Education Corp Ltd (SGX: NR7) are providers of private education services.

More specifically, TMC’s main business is to provide tertiary education in Singapore. It has courses that are partially subsidised by the government through schemes as the Skills Development Fund and SkillsFuture.

As for Raffles Education, the company runs tertiary education institutes across Asia. If you would take a more global perspective, disruption will not be limited to just Singapore. People from other countries would also require constant upgrading of knowledge and skill sets. Raffles Education has 30 colleges and universities in 13 countries.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.