PUBLIC PRIVATE EQUILIBRIUM:

BALANCING GROWTH WITH QUALITY AND EQUITY OF HIGHER

EDUCATION IN MALAYSIA
ABSTRACT
The role of higher education in providing competent human capital for the nations development
has been highlighted by the Malaysian Government. The existence of private institutions further
enhances the access of higher education to the mass population. Nevertheless, striking a right
balance between public and private institutions to ensure both access and quality has become an
issue in the Malaysian higher education context. Thus, the main goal of this study is in
establishing the right public-private equilibrium of higher education in Malaysia that will ensure
access, equity and quality. A combination of qualitative approaches was utilized, including
secondary data analysis, case studies and focus group discussion. Five selected cases from the
Asia Pacific region were reviewed to extract the best practices of public-private mix.
Subsequently, higher education experts and practitioners from the region were invited to
participate in a panel of experts to discuss the research topic. Based on the emerged findings, a
number of recommendations and strategies were proposed to the policy makers and practitioners
from the higher education sector of Malaysia.

EXECUTIVE SUMMARY
With increasing investment in global higher education, it is important to strike the right balance
between public and private universities to ensure quality and equity. With the strong demand for
more and better higher education services, the government is embracing private institution
participation as a way to increase quality and efficiency while ensuring high quality education at
affordable costs quickly to meet the demand of populations that are growing in size and
aspirations. Nonetheless, expanding public and private institutions of higher learning to swiftly
plug gaps in provision leads to other problems. Hence, finding the right mix and the right model
for both the public and private institution of higher learning to co-exist and co-support is essential
for survival in these liberalized era of higher education in Malaysia.
Thus, the main goal of this study is in establishing the right public-private equilibrium of higher
education in Malaysia that will ensure access, equity and quality. The goal of the study is
supported by the following objectives:
To provide the current scenario of higher education in Malaysia in terms of access and
equity, as well as quality and relevance.
To establish a set of determinants for public-private mix of higher education institution.
To propose strategies for co-existence between the public-private higher education
institution (in terms of resources, demographic and market segmentation).
Three qualitative research methods were utilized in this project, namely, secondary data analysis,
case studies and knowledge elicitation via Delphi method. From the study, the following was
analysed in-depth: (1) The current scenario of higher education in Malaysia in terms of access and
equity; (2) The economic growth and its impact on employment; (3) Skills-based sector and
training providers; and (4) Analysis of international case studies.

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From the study, the core determinants in deciding the public-private mix in higher education
institutions are from the perspectives of: (1) Roles and characteristics of public and private higher
education; and (2) Funding of public and private higher education.
The role of higher education institution refers to the function it performs. Private higher education
institutions in Malaysia emerged to address the excess demand for higher education unfulfilled by
the public higher education sector due to government budget constraints.
In general, private higher education can play different roles in different contexts. Firstly, private
higher education may provide more and similar higher education, to continue to absorb the excess
demand unfulfilled by the public sector. Secondly, private higher education may provide more and
better quality of higher education. Thirdly, private higher education may provide more but
different types of higher education.
Hence, there is diversity in the provision of higher education between the public and private HEIs.
Public higher education can play a larger role in supporting the national need and strategic agenda,
such as equity. Comparatively, private higher education is more responsive to the changing
demand or need of the industry and market, including being innovative in its approach. Thus,
public and private higher education not only should co-exist but also should be more supportive of
one another in view of their similar goals as well as complementary roles and characteristics, even
though they may compete with each other especially in areas where their roles overlap.
The target to achieve the 50% GER by year 2020 may result in more students requiring subsidy.
Likewise, maintaining similar fees for international students may result in the government losing
substantial income. Subsequently, the corporatization of public HEIs may be the solution for
public HEIs in exploring alternative and diverse income generating activities which may also
include charging a higher fee for international students. On the contrary, private HEIs that fare
well in the rating should be provided additional funding or incentives which could be in the form
of monetary awards, subsidies, grants, scholarships, etc. On the whole, the universities have to
work in sourcing for alternate income for which, both the public and private HEIs must have a
vision leading to advancement which should not be bounded by the funding.
The study has outlined detailed recommendations and policy implications according to the
following themes: (1) Access and equity higher education perspective; (2) Quality and relevance
- economics perspective; (3) Vocational and skills based training; and (4) Learning from the
international case studies. The main recommendations include:
1. There is a need to increase student enrolment base in order to fulfil Malaysias vision of
becoming a high-income developed nation.
2. An optimal enrolment ratio of 1:1 is recommended between public and private, based on the
expected GER of 50% by year 2020 and the projected annual growth rate of public and private
sectors.
3. For public HEIs, undergraduate student enrolments can be capped at 5% and postgraduate
programme to be increased especially in the 5 research universities where the undergraduate to
the postgraduate ratio can be maintained 1:1. The private HEIs should be assisted to increase
international student enrolments.
4. Better incentives need to be structured to encourage private HEIs to set up their operations
fully or partially in locations that are out of Selangor and the Klang Valley. Based on the
current scenario in Malaysia and the practices of successful models in the region, it is
recommended
that
large public HEIs
be capped
at
25,000
students.

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5.

6.
7.

8.

As for private HEIs, there are currently too many small private colleges. To ensure economies
of scale, mergers or acquisitions are recommended to institutions with less than 2,000 students.
In line with the governments aim to increase the number of non-degree holders, the public
HEIs need to be intensify their efforts to expand non-degree programmes, thus, increasing the
total number of non-degree holders in the country.
The public and private HEIs to offer field of studies that are essentials to support the sectors
and subsectors in the 12 National Key Economic Areas.
With the merger of the former Ministry of Higher Education and Ministry of Education, a
strategy can be worked to reach out to male students at school level to encourage them to
continue their studies and provide other assistance and pathways that can further increase the
enrolment of male students in HEIs.
Two (2) projected scenarios are recommended based on the different growth rate of HEIs.
For Scenario1 - Based on growth rate in public HEIs (4 %), community colleges (2 %), private
HEIs (9 %), the following is projected:
2015: GER=41%; Public: Private (54:40)
2020: GER=50%; Public: Private (49:47)
Projected number of private universities for 2020 is 89 (for 2012 is 84).
Projected number of private colleges for 2020 is 245 (for 2012 is 364).
Scenario 2 - Based on growth rate in public HEIs (4 %), community colleges (2 %), private
HEIs (6 %), the following is projected:
2015: GER=39%; Public: Private (56:38)
2020: GER=45%; Public: Private (54:41)
Projected number of private universities for 2020 is 85.
Projected number of private colleges for 2020 is 254.
* Projections based on MOE data only. It does not include student enrolment in other
ministries.

9. Entrance examination to all HEIs to be harmonised (i.e. STPM, Matriculation, A levels). As

used successfully in other countries in the region, the harmonisation can create a SAT
(Scholastic Assessment Test) type of entrance examination for all students seeking entry to the
HEIs.
10. PTPTN loan should be offered strictly based on financial needs only. In the event, the student
receiving the loan excels in his/her studies, the loan can be partially be converted into
scholarship.
11. The government need to proactively work on establishing a sustainable labour force for
specific niche industries which are in line with NKEA namely in the following sectors: (a) oil,
gas and energy; (b) palm oil and rubber; (c) wholesale and retail; (d) financial services; (e)
tourism; (f) electronics and electrical; (g business services; (h) communication, content and
infrastructure; (i) education; (j) agriculture; and (k) healthcare. focus on the service sector.
HEIs also need to work with industries to develop curriculum that are relevant to the needs of
the industries.
12. HEIs need to have a strategic plan to balance the workforce based on the economic changes
and to start investing on high end R&D activities or clusters to groom highly skilled workforce.
13. It is recommended that the targeted 33% should be met by focusing on the sectors and
subsectors that has been highlighted as the NKEA as well as the emerging industries that will
move Malaysia up the value chain. HEIs have to think out of the box in training personnel for
jobs that do not exist now. As most of these emerging sectors and subsectors require
specialized physical and human resources, public and private HEIs should collaborate or
complement each other in offering these specialized programmes.

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HEIs need to design their academic programmes and develop their curricula based on market
requirements to ensure the employability of graduates. Industry attachment for staff
(lecturer/trainers) can also be introduced as this will bring the industry into the classroom and
mould better graduates/trainees.
14. All providers of any form of training and education from SKM1-8, must be coordinated by the
MoE. As in the current set up, MQA can oversee the quality control of TVET and skill-based
programmes via the Department of Skills Development (DSD) in the Ministry of Human
Resources.
15. MQF must be fully implemented so that students or apprentices are able to move between the
4 sectors (skills, technical and vocational, higher education and lifelong learning) of the
education seamlessly. More efforts are needed from the HEIs in getting developing more
lifelong learning programmes and also programmes that recognised prior working experience
via the Accreditation of Prior Experiential Learning (APEL) programme.
16. The number of programmes under the coordination of DSD should be increased and well
spread-out in the country with more public centres needed to support the initiatives in rural or
out of the city locations.
17. There is an urgent need to increase student enrolment in skills-based and TVET sectors by
making the programmes attractive to young people. The government needs to recognise these
qualifications as a mandatory requirement for the skills to be practiced. All personnel without
these paper qualifications should not be allowed to practice or their practice should be more
controlled.
18. Generally, the following sets of recommendation are critical for the alternate pathways in
TVET and skill-based to succeed in Malaysia. They include: (a) Raise the profile and
acceptance of TVET in Malaysia; (b) Rationalizing the national framework and delivery for
TVET; (c) Scale-up private skills training provision; (d) Amend the Higher Education Act to
establish MoE as the sole coordinating agency for all skills and TVET and skills based
institutes and centres; (e) Develop TVET curriculum in line with industries actual requirement;
(f) Train effective TVET instructors to enhance the quality of programmes; and (g)
Encourage/ensure that both public and public accept transfer students from TVET institutions.
19. In line with the Blueprint on enculturation of lifelong learning for Malaysia (2011-2020), an
adaptive approach to lifelong learning is recommended whereby we now require models that
place revolving doors in universities, offering sabbaticals to workers throughout life for
retraining or for pursuing new skills for the same job.
In conclusion, it is envisaged that the public and private HEIs can equally compete on level
playing field in the area of teaching and learning, whereas in the area of knowledge transfer and
research, it may take much longer to achieve parity. Nonetheless, as both the public and private
HEIs are targeting different market segments and aims, competition may not be a significant issue.
Instead, they will complement one another. In addition, the right public and private equilibrium
will balance growth with quality and equity of higher education in Malaysia.