The seriously inadequate investment in public education, coupled with the rapid rise in the number of middle class families, stimulate the demand of high-quality private schools. However, the previous Education Law stimulated that private Education Institution should not operate as for-profit institutions. Therefore, all private schools used to operate in a gray area and had no clear legal status. Even if it was allowed to operate, they would face uncertainties in renewal of license and tax concessions
The newly revised “Non-state Education Promotion Law” came into effect on September 1st, which clearly classifies private schools into non-profit and for-profit categories, giving private education institution a formal legal status. Under the new Education Act, schools providing compulsory education (primary to junior high education) must be operated as non-profit institutions, while schools providing high school education service can be either for-profit or non-profit institutions. In addition, non-profit private schools will enjoy equal tax benefits with public schools, which will significantly reduce their expenditure, boosting their profitability. It is expected that the implementation of the new Education Act will eliminate investors’ uncertainties in the education sector. It is expected that the entire education sector will likely to be rerated, recommend buy.