Conference on Governance and Financing of Higher Education South and East Asia

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1 COUNTRY SUMMARY MALAYSIA INTRODUCTION The government s efforts over the past 20 years in internationalisation Malaysian education and developing the private higher educational sector has made Malaysia an important higher education destination for international students from all over the world. Coupled with far-sighted human development policies, Malaysia is also a country of choice for reputable foreign universities to set up their branch campuses. Today, Malaysia already has a varied international student population of more than 83,000 from countries such as China, Indonesia, Bangladesh, Iran, Maldives, Nigeria, Sudan, Yemen, India, Botswana, Thailand, Saudi Arabia and many more. Its market share for international students was ranked 11 th in the world as a destination among international students which is 2 % of the world market for international students. Currently, there are five reputable foreign universities that have set up their branch campuses in Malaysia namely, Monash University (Australia), Curtin University of Technology (Australia), The University of Nottingham (UK), Swinburne University of Technology (Australia) and Newcastle University (UK). Malaysia aspires to be the education hub in this region by Strategic policies have been geared towards encouraging foreign universities to set up branches or faculties in Malaysia. Currently, there are about a million students enrolled at Malaysian higher educational institutions. The government s aggressive policy of human resource development in ensuring that at least 40% of the cohort aged will be pursuing higher education by 2010 is within reach. The availability of study loans for Malaysians through the National Higher Education Fund (Perbadanan Tabung Pendidikan Tinggi Nasional, PTPTN) and the high quality education at an affordable cost are the major contributing factors in achieving this target. Summary Data Table on Higher Education (Data in 2009 ) Enrollment Total Enrollment 1,050,726 % of Female 56 % of Private Gross Enrollment Rate % Total Student Teachers Ratios 16:1 Teaching Staff Gross Graduation Rates* Total Number 56,579 % of Female % Total % Male

2 % Female Total Public Expenditure on % of GDP 4.5 Education % of Govt. Expenditure 18.2 Total Public Expenditure on Higher Education RM 10, 815, 708, 568 Total 570 Number of Higher Education Public HEI 20 Institutions Private HEI 487 Polytechnics 24 Community Colleges 37 Source: Global Education Digest 2010, UNESCO, Ministry of Higher Education Malaysia 2010 * Number of graduates regardless of age in a given level or program expressed as a percentage of the population at the theoretical graduation age for that level or program Access and enrollment have grown rapidly, largely as a result of liberalization of the education markets and rapid expansion of the private education sector and public universities have penetrated all levels of tertiary education. Access in remote areas has improved with more higher education institutions (both public and private) being established. Issues 1 Quality Relevance Malaysia Qualification Framework (MQF) secures the standards of qualifications and reinforce policies on quality assurance; ensures accuracy and consistency of nomenclature of qualifications; supports flexible education by providing typical learning pathways and recognizing prior learning (RPL); encourages partnerships between public and private sector, links non degree with undergraduate and postgraduate levels; encourages parity of esteem among academic, professional and vocational qualifications; establishes a common currency for credit accumulation and transfer; provides clear and accessible public information; facilitates, where applicable, the presentation of the intended outcomes of qualifications in forms that enable professional bodies to gauge their contribution to professional formation and articulates links with qualifications from other countries. The MQF is sufficiently flexible to accommodate new kinds of qualification that may arise from time to time. Due to a growing number of unemployed graduates since 2000, there are concerns about: (a) the capacity of the economy to absorb the expanded output of graduates; (b) the quality of tertiary education; and (c) the mismatch between what higher education institutions are producing and the skills in demand. 1 Malaysia and the Knowledge Economy: Building a World-Class.., Report No ; World Bank,

3 Financing Governance/ Management Weak university-industry linkages. Employers, need to gap the bridge between graduates and industry requirements. In the absence of any performance-based budget allocation mechanism, there are no particular managerial and financial incentives to engender competition among universities or to encourage them to manage their performance differently. The student loan scheme is in danger of de-capitalization due to the low level of repayment Public and private higher education institutions operate under different regulatory and financing rules, resulting in the absence of a unified higher education system. Strict administrative and financial rules and controls that private universities are required to conform to in their daily management do not allow them to focus on important institutional development issues. Specific governance arrangements Reflecting the importance that the government gives to the HE subsector, the Ministry of Higher Education (MOHE) was recently established (split from the Ministry of Education in 2004) with the responsibility of providing strategic direction and overseeing the development of the sub-sector 2. The other key component of the overall system governance structure is the National Council of Higher Education, established in 1996 to plan and coordinate both the public and private sectors of higher education. The Council, which is chaired by the Minister of Higher Education, determines policies in relation to staff salaries in public institutions, fees, student selection, funding, courses of study and other matters. To date, MOHE and the Council have performed their functions along a model of centralized governance and management system that has granted some degree of autonomy to the public universities but not the authority to manage key aspects of their operation. The current system is restrictive, in particular, with respect to two critical decision-making processes, the ability to employ the most competent professors and researchers, and the quality of the university s leadership. Recent reforms that have taken place related to governance In the Tenth Malaysia Plan ( ), the Government has launched the National Council of Professors to mobilise intellectual potential in public universities. The intellectual capacity and expertise of more than 1,400 professors in public higher education institutions will be fully capitalised through this initiative. Producing quality human capital is another national agenda to realise Malaysia s objective to become a developed nation with high income. Therefore, public universities must have the best and highly motivated academic staff and researchers. 2 Malaysia and the Knowledge Economy: Building a World-Class.., Report No ; World Bank,

4 For this purpose the Government has announced an improved service scheme for professors and lecturers at public universities and teaching institutions The Malaysian Qualifications Agency (MQA), was established on 1 November 2007 with the coming in force of the Malaysian Qualifications Agency Act This entity is responsible for quality assurance of higher education for both the public and the private sectors. The main role of the MQA is to implement the Malaysian Qualifications Framework (MQF) as a basis for quality assurance of higher education and as the reference point for the criteria and standards for national qualifications. The MQA is responsible for monitoring and overseeing the quality assurance practices and accreditation of national higher education. With the vision to be a credible and internationally recognized higher education quality assurance body and the mission to inspire the confidence of its stakeholders through best practices, the MQA is set to chart new boundaries in higher education quality assurance. Specific financing arrangements Over the past two decades, the priority given by the GOM to human resource development and the vision of the importance of higher education have translated into significant investment to develop the sector. During the Eighth Malaysia Plan, education in general accounted for 20% of total government expenditure. Nearly 47% of the total development allocation for education was set aside for tertiary education, or RM 8.9 billion out of RM 18.7 billion. Thereby tertiary education commands the largest share of the education budget of all the sub-sectors. Compared to the financial effort of other countries on behalf of tertiary education, the Malaysian government is among the most generous contributors in the world. At about 2.7% of its Gross Domestic Product (GDP), Malaysia compares well with the top OECD performers, and invests a much higher proportion than Thailand (1.0%) and even the OECD average (1.3%). Like many countries in the developing world, Malaysia still relies on a traditional historical/negotiated allocation approach to distribute the budget among public universities. Every year, each university submits a budget proposal based on the enrolment intake numbers decided by the MOHE. The Ministry of Finance then makes the final allocation which usually reflects the previous year s allocation plus a small increase depending on the overall availability of public resources. There is great variation across private higher education institutions in Malaysia. Private universities in Malaysia cost more than public schools, but tuition varies greatly between as low as $2,000 per annum for distance education to about $30,000 per year for medical degrees. Areas of study among private universities are becoming more similar to those offered in public universities. Recent reforms that have taken place related to financing Budgeting : To improve accountability and transparency, the Government introduced in 1997 the Modified Budgeting System (MBS) which was supposed to operate as an output-oriented budget 4

5 allocation mechanism and bring the universities in line with all other statutory bodies in Malaysia. In practice, however, the final budget allocation has continued to be determined through negotiation without reliance on output measures. Funds are still distributed on the basis of an incremental cost approach linked to inputs. In 2009 government introduced one line budget system for APEX university in Malaysia to be used as a yardstick in higher education worldwide. Under the programme, the Apex university was promised autonomy in finance, service scheme, management, student intake, study fees and determining the top leadership. Student Support Mechanisms: Until the end of the year 2009, National Higher Education Fund Corporation (NHEFC) as a semi-autonomous body under the authority of the MOHE with the purpose of offering subsidized loans to help students with tuition fees has given out loans for 193,356 students worth RM 5.1 billion. Private HEIs : The current legislation, namely, the Private Higher Educational Institutions Act 1996 [Act 555] (which regulates the establishment of Private Higher Educational Institutions [PHEIs] with or without university or university college or foreign branch campus status) does not limit foreign equity participation in a higher education company. It means that 100% foreign equity may be allowed to a foreign entity but with the prior approval of the Minister of Higher Education. 5

6 REFERENCES The World Bank, Human Development Sector. Malaysia and the Knowledge Economy:Building a World-Class Higher Education System, Report No MY; World Bank, Lee Molly N.N. Restructuring Higher Education in Malaysia, Unpublished manuscript. Universiti Sains Malaysia, 2004, Mok Ka Ho. "Varieties of regulatory regimes in Asia: the liberalization of the higher education market and changing governance in Hong Kong, Singapore and Malaysia." The Pacific Review 21, no. 2, May 2008, National Accreditation Board. Malaysia - Quality Assurance System in Higher Education, Available Accessed on Janury 2, 2010., Wilkinson Roy and Ishak Yussof. "Public and private provision of higher education in Malaysia: A comparative Analysis." Higher Education 50, no. 3, October 2005, World Bank Malaysia s Firm Competitiveness, Investment Climate and Growth Washington D.C: World Bank. 6