Forum on Public Policy Privatization Of Higher Education In Malaysia

The study will trace the external factors influencing the liberalization, deregulation and privatization of higher education in Malaysia from 1970 to the present and to analyze the effects of liberalization, deregulation and privatization on the modes of privatization and the internal restructuring of institutions of higher learning to increase efficiency, reduce costs and improve quality. In the 1970s, higher education was a small sector and was monopolized by the public sector and there was considerable public resistance to the establishment of private universities. The received knowledge was that returns to primary schooling were higher than returns to higher education and hence the shift of the public budget away from higher education to primary education. The impetus for the privatization of higher education came after the 1985-1986 economic crisis, which placed limits on the expansion of the public provision of higher education. The privatization of higher education was to facilitate educational reform to produce quality graduates that could transform Malaysia from an agrarian economy to an industrialized and knowledge based economy by 2020 for the primary purpose of enhancing the competitiveness of the Malaysian economy. The 1996 Private Higher Educational Institutions Act, 1996 and 1997 East Asian economic crisis further opened the country to elite foreign universities to increase the supply of quality graduates to increase Malaysia’s competitiveness. The liberalization of education therefore facilitated the process of globalization and Malaysia’s deeper integration with the world economy as a regional center of academic excellence and as an exporter of educational services. At the same time the received wisdom was that increases in graduate education did not necessarily result in graduate unemployment and graduate unemployment did not reduce the social demand for higher education. The effect of the reforms in institutions of higher learning are improved corporate governance, new programs and more autonomy in finance.