Business of Higher Education in Malaysia:
Development and Prospects in the New Millennium

4.0 The Major Players

Who are the major players in the arena of private higher education? And how did they get involved in international business/education partnership for the delivery of training in the Asia-Pacific region? There are at least five categories of private higher educational institutions in Malaysia, which reflect their owners, namely:

1. The large corporations or organizations closely linked with the government (Universiti Teknologi Petronas, Universiti Tenaga Nasional (UNITEN), Telekom Malaysia (now Multimedia University); and Kolej IKRAM (formerly PWD's training outfit);

2. Those established by large corporations that are public listed companies (e.g. Sunway College of Sungei Way Group, Kolej Aman of Talam Corporation Bhd.; KBU of the First Nationwide Group, the Bandar Utama township developer)

3. Those established by political parties of the Barisan Nasional government (MIC's TAFE College Seremban, MCA's Kolej Tunku Abdul Rahman, and UMNO's UNITAR, etc)

4. Independent private colleges (including a broad range of them, from those that are very well established, with excellent track records and international connections, to those that are new to the business.)

5. Local branches of foreign universities (Monash University Sunway Campus, Curtin University of Technology Sarawak Campus, University of Nottingham in Malaysia)

How did these organizations "get involved" in the higher education business? The primary driving force behind these private colleges and universities appears to be the desire to provide alternative avenues for higher education while earning "normal" profits from the venture⁴. Some private foundations go into this arena as not-for-profit organizations to do charitable work, although not to the extent of providing subsidies to students (see Case Study). Some large corporations may prefer to channel some of their profits into these "education arms" in order to get tax breaks⁵. Whatever their motives are, all companies perhaps realize that there is a gap to be narrowed in the higher education market, where demand will exceed supply for many years to come, ironically, as a result of the economic downturn of 1997. Moreover, the local public universities have not been able to absorb all qualified applicants. Firstly, it is because of the limited number of places. Secondly, there is the quota system based on ethnic group-namely, 55:45 ratio "in favour" of bumiputras (indigenous people). There is no such, or any, quota in private education, even though it is a regulated industry in other ways.

Hence, there is not only an increased demand for higher education per se, but there is still a high demand for foreign degrees, reflecting Malaysia's high propensity to import. And because of the much higher tuition fees charged to earn these foreign degrees abroad, the obvious alternative is to set up branches of foreign universities in Malaysia. The 1996 Act enables this arrangement to be put in place between the foreign universities and their local partners. Students save enormously by attending these branch campuses in Malaysia.

Some former educators are also involved in the setting up of private colleges. Having something to do after compulsory retirement at the "tender" age of 55 is important to people's self-esteem. With improved life expectancy, more elderly Malaysians continue to work beyond 55, some even into the seventies. The running of private colleges keeps former academics gainfully employed and preserves the 'life styles' which they have been used to for a bit longer. Some senior academics even take early retirement to go into private higher education as CEO's.

The large corporations involved in private education are technologically based companies. Their first motive in establishing a university is perhaps to train their own engineers and technologists. In the past they (e.g. Petronas - the National Oil company, and Tenaga Nasional, the electricity corporation) have been sending students overseas on their scholarships. With the devalued currency, it became too costly to continue the practice. Hence the decision to venture into the tertiary education business to train their own engineers and others.

Political parties (especially ethnic-based ones such MCA and MIC) decided to open colleges because places in the public universities were rather limited for students of their respective ethnic groups due to the quota system they, as ruling coalition partners, had agreed to in parliament. With the opening up of hundreds of private colleges by independent companies, the non-bumiputras (and mainly middle-class bumiputras) now have unlimited opportunities to enroll in a college of their choice, provided they have the money⁶.