Selling higher education to foreigners is now worth more than $1.5 billion (Pounds 750 million) a year to Australia and the federal government expects earnings to rise sharply following its latest move into Thailand.

In Bangkok late last month, education minister Simon Crean launched the first offshore office of the new Australian International Education Foundation.

Set up to broaden economic and cultural links with Asia, the foundation will coordinate marketing in the face of competition from other countries The number of students from Hong Kong has fallen by 20 per cent over the past two years, whereas from Malaysia it has levelled off. China, which once provided almost half of Australia's international students, is now a relatively minor source.

Similarly, Australia has found it difficult to establish a strong foothold in countries such as Japan, Korea and Taiwan, where students are traditionally attracted to the United States, and has only begun to take advantage of its proximity to Indonesia.

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Speaking at the opening of the Thai office, Mr Crean said more than 2,000 students from Thailand were now studying in Australia and the number was growing by 40 per cent a year. There were also opportunities for Australian institutions to undertake training and education in Thailand.

"Australian education and training is now a major export sector. It contributes about $1.5 billion per annum to overseas earnings," Mr Crean said. "With appropriate marketing strategies, this is expected to increase to at least $2 billion per annum within five years. The AIEF will be central to generating and capturing this potential."

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Under arrangements with the Thai ministry of university affairs, Australia will assist in the upgrading of academic staff. Senior university administrators will be brought to Australia to understudy their Australian counterparts. Developments in Thailand had created a huge market for high quality education, he said.