Private higher education in Malaysia: How it started, how it’s going (Part 1)

Education, especially higher education has been a contentious issue for a long time. A lot of acrimonious debate has taken place over the way university places and scholarships had been and are being awarded. The controversies surrounding the issue have thus engendered deep resentment towards the government. Its response to this issue was not direct intervention. Instead, the private sector was called upon to help resolve the matter. The first part of this article will explore the history of private higher education institutions till present day with the second part exploring the negative impacts arising from the reliance on them.

The Beginning of Private Higher Education in Malaysia

Private higher education institutions were officially recognised in Malaysia with the enactment of the Private Higher Education Institutions Act 1996, governing the establishment and operations of these institutions. The passing of the Higher Education Act in 1999 must therefore be viewed, not only as an attempt to create more places for tertiary education but more significantly as a turning point in the development of higher education in Malaysia.

The premise then was that the entry of the private sector would catalyse wider, deeper and more dynamic growth in tertiary education. The government’s complete faith in the inherent ability of the private sector to deliver led it on an imperceptive path of liberalisation to encourage the private sector to play a more dominant role in providing higher education.

The neoliberal premise that private enterprise was more “efficient and equitable” in providing higher education became the dominant narrative. It was felt that the private sector would bring significant changes in the form of greater autonomy, improved cost effectiveness, healthy competition, state-of-the-art facilities, teaching excellence, and an overall improvement in institutional management.

Making it attractive for private sector

The government started by relaxing rules for issuing permits to set up colleges and universities. It also gave generous financial incentives such as exemptions on import duties and sales tax for the import of educational equipment and 100% tax allowances for investing in technical and vocational institutions (Prof G. Sivalingam 2006).

The setting up of the National Accreditation Board and the introduction of the Malaysian Qualification Framework (MQA), SETARA (Rating System for Higher Education Institutions in Malaysia) and later, the establishment of the National Higher Education Fund (PTPTN) under the National Higher Education Fund Board Act of 1997 dovetailed neatly with the other legal, regulatory and procedural rules to encourage the private sector to play an “active and dynamic role” in the country’s tertiary education landscape. In fact, the government went so far as to declare that the aim of privatisation was to enable educational reform to produce quality graduates who could help “transform Malaysia into an industrialised and knowledge-based economy by 2020” (Prof G. Sivalingam, 2006).

It was further argued that liberalising higher education would aid in the globalisation of the Malaysian economy and its integration into the world economy as a “regional centre of academic excellence”, with the private sector to playing a pivotal role in realising this.

Some quarters were perplexed as to why the government was so obdurate in the matter of allowing the private sector into the realm of higher education, and in wanting it to be instrumental in bringing about material changes to the higher education scene. It was quite rightfully felt that the private sector hardly had any proven track record in this field. Besides, conventional wisdom had it that a public good such as higher education was much too important to be entrusted to the profit-oriented private sector to take it to greater heights.

Furthermore, even in developed countries, the number of private higher education institutions allowed clearly reflected the lack of faith of those governments in the private sector’s ability to deliver. For example, in 2015 only 3.3% of the institutions of higher learning in the United Kingdom were in private hands, while in the United States, private institutions make up 23.4% of the total. In Hong Kong and Singapore too, the private sector’s stake in tertiary education remains negligible. Singapore, in fact, keeps a close eye on the marketability of graduates from private institutions, as a check on the performance of these institutions.

In Malaysia, private higher education constituted 42% of the total in 2016 (Richard Teng, The Edge, Oct 31 2016). It could be higher now.

Regional education hub?

The government’s primary objective in its quest to make Malaysia an educational hub in the region was to attract investments and the focus was on the inflow of private capital from other countries using private higher education as the vehicle. Overall economic development accompanied by the multiplier effect probably figured more prominently in their plans.

Of course, the government also wanted to reduce capital outflow by reducing the number of students heading overseas for tertiary education. To realise these goals, it confidently placed its faith on the private sector to make Malaysia the biggest education hub in the region.

The overly optimistic Malaysian government envisaged a huge education sector with a total of 2.5 million students – of whom 250,000 would be foreign students (Malaysian Education Blueprint, Higher Education 2015-2025). It also projected that continuous economic growth would guarantee jobs for all graduates, including those graduating from private institutions.

With all the legal and administrative arrangements in place, the setting up and running of private colleges and universities became quite a seamless affair for most investors. The stage was set for a truly historical change in which higher education was going to become like all other goods and services, a commodity readily available for sale in the marketplace to whoever was willing and able to pay the price determined by the vendor. In short, higher education now became a business proposition with profit as the underlying motive.

The expansion of private higher education thus began in earnest. From 292 private tertiary institutions in 1995, the number swelled to 500 by 2019, including foreign university branch campuses such as Monash, Nottingham, Newcastle, and Curtin. Today there are 47 private universities, 414 private colleges and 10 branch campuses of foreign universities in the country – offering a variety of courses in the physical and medical sciences, business studies, computer studies, humanities, to name a few. The impressive facilities and academic faculty, especially in the branch campuses of prestigious foreign universities and those owned by the government and corporations have helped to increase the confidence and gain the trust of students, parents and the government.

It is important to note that the big players in the industry, besides foreign universities, were the established and financially strong local institutions owned and operated by, among others, the corporate sector, state governments, government-linked companies, political parties, government agencies and small companies.

The steady increase in the number of private higher education institutions was matched by the concomitant increase in the number of students. At the beginning of 2007, there were more than 320,000 students studying in private higher education institutions and about 35,000 were international students ( According to the Malaysian Education Blueprint, the number of students in private higher learning institutions is projected to grow from 455,000 in 2012 to an estimated 867,000 by 2025, an annual increase of 5.1%. According to most recent figures about half of Malaysia’s tertiary education students are enrolled in private tertiary institutions (600,000 out of 1.3 million, reported in 2019).

Those enrolled in the private education institutions included those from poor families, relying on the PTPTN loan scheme. Since its establishment, PTPTN has helped finance more than 60% or three million Malaysian students pursuing tertiary studies, both in private and public higher education institutions with a total disbursement of RM56 billion as at February 2019.

Incidentally, it is important at this juncture to take cognisance of the fact that the PTPTN loan scheme served the private institutions better than it did the students because it propped up poorly funded colleges while at the same time guaranteeing the financially stronger institutions a steady return on their investments. But the students who took the loans became debtors upon completion of their courses, having to repay their loans with interest.

This in turn has far-reaching consequences. The amount defaulters owe PTPTN is staggering – RM40 billion in debt guaranteed by the government and this is expected to balloon to RM55 billion in 10 years and RM76 billion in 20 years. This shows that the reliance on PTPTN causes long-term indebtedness amongst graduates, many of whom are not able to repay their loans.

Read Part 2 by clicking this link

Banoo Vasudevan
Parti Sosialis Malaysia Kedah

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