Are Australia’s International Student Caps Deepening Engagement With Southeast Asia?

Nikko Riazi | Australian Foreign Policy Fellow

Image sourced from Zsófia Hajnal via Unsplash

According to the Assistant Minister for International Education, international education is “the biggest export we don’t dig or drill out of the ground”. Worth approximately AUD$50 billion in 2023–24, it is Australia’s fourth-largest export, and international student fees are a major source of revenue for universities.

Amid public concern about migration and housing pressures, the government moved in 2024 to limit international student numbers, and universities warned of the financial consequences. It set a National Planning Level of 270,000 new commencements for 2025, designed to keep growth sustainable and protect the integrity of the migration system.

For 2026, the planning level rose to 295,000 and took on a broader purpose. Public universities were invited to apply for places above their allocations by demonstrating delivery on government priorities, including student accommodation and deeper engagement with Southeast Asia consistent with Invested: Australia’s Southeast Asia Economic Strategy to 2040. Hill writes the government wants to “welcome more students from Southeast Asia”. A migration tool is now being asked to deliver a foreign policy objective.

That raises a question: is the policy changing where international students come from? So far, the evidence suggests not. With the new Australian Tertiary Education Commission taking over university allocations from 2027 under legislation passed in October, it is worth asking whether the framework is built for the job.

Australia’s shifting international student landscape

China has long dominated Australia’s international student intake, but the number of Chinese students abroad has decreased by 20 per cent since 2019, partly as more students choose a strengthening education system at home. Australian universities have increasingly looked to South Asia to fill the gap.

National figures show that India and Nepal are Australia’s second- and third-largest countries of origin for international students, with commencements from Nepal up 33.5 per cent between 2024 and 2025. Vietnam is the only Southeast Asian country in the top five.

Enrolments from Southeast Asia, however, have not kept pace. In 2025, Vietnam was among the top five countries of origin at six New South Wales universities, unchanged from 2024, while some students in the region are increasingly considering study closer to home.

Student demand from South Asia remains substantial. Between late 2025 and early 2026, India, Nepal, and Bangladesh supplied 65 per cent of offshore university visa applications from Australia’s top 10 countries of origin. Yet applicants from these countries faced far higher refusal rates: Australia refused 69 per cent of applications from Nepal, 45 per cent from Bangladesh, and 42 per cent from India between January and March 2026, compared with 4 to 15 per cent for Vietnam, the Philippines, and Indonesia.

These figures show a gap between what the government wants and where students come from. If the Southeast Asia priority were working, a greater student visa approval shift towards the region should be observed.

A policy without direction

One gap in this framework is that “engagement with Southeast Asia” can be demonstrated without bringing any Southeast Asian students to Australia. Universities run campuses in Malaysia, Vietnam, and Singapore, and the Invested strategy calls the region one of Australia’s largest transnational education markets while recommending expanded offshore delivery. A university could cite its Kuala Lumpur campus as regional engagement, receive additional places in Sydney, and fill them from anywhere.

In practice, university places are more likely to be filled by students from South Asia, where demand is larger, driven by limited opportunities at home and tighter visa and work policies in competing university destinations such as Canada. With no reason to prefer one country over another, universities recruit where demand is strongest.

The creates a tension between Australia’s international education interests and Australia’s migration policies. The planning level sits in the Education portfolio, and the visa prioritisation that governs which applications receive priority sits within Home Affairs. The visa system subjects South Asian applicants to greater scrutiny over the legitimacy of their study intentions, even as the allocation system grants additional places that South Asian students increasingly fill.

Aligning objectives with incentives

If the government wants allocations to deepen engagement with Southeast Asia, the regional priority should be clearly defined and assessed separately from accommodation. The Department of Education has said only that an independent panel evaluated applications, not how either priority was assessed. A published standard counting onshore enrolments from Southeast Asia, not just offshore activity, would tie the priority to its intended outcome.

Even then, a planning level sets how many students a university can enrol, not who fills those places, so a regional priority cannot outweigh South Asian demand of this scale. Offshore delivery builds capacity, but not the familiarity of studying in Australia. Targeted scholarships for Southeast Asian students would build those connections more directly.

The new legislation lets the minister specify matters the commission must consider when allocating places, so the means to set clearer criteria already exist. Before the commission takes over in 2027, Australia should settle whether international education is a migration variable that happens to earn export income, or a foreign policy asset that carries a migration cost.

Nikko Riazi is a government relations and public policy professional whose work experience spans banking, healthcare, international trade and investment, infrastructure and the public service. Her writing has appeared in The Mandarin, the Lowy Institute’s The Interpreter and ASPI’s The Strategist, focusing on Asia-Pacific housing, superannuation and the links between finance and national security. 

A former OECD Australian Youth Delegate, she also chairs the Education CHANCES Foundation - a youth education not-for-profit. She holds a Master of Public Policy and Management, Bachelor of Commerce (Economics/Finance) and a Diploma of Languages (French Studies) from the University of Melbourne.

Disclaimer: The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views and opinions of Young Australians in International Affairs. All content is original, and no plagiarism has been used in the preparation of this article. No AI tools were used by this author in the preparation of the article.