Challenges facing private education

  • Business
  • Saturday, 06 Jun 2009

Demand for higher education in Malaysia will surely grow as its population rises and in tandem with the Government’s emphasis on human capital development. The question is, can the private education sector take for granted it will have ample space to prosper?

IMAGINE Malaysia suddenly without private higher education. Our tertiary student population would shrink drastically, and hundreds of thousands of people would have no way of gaining the knowledge offered in certificate, diploma and degree courses. In other words, it would be a human capital disaster.

According to the Malaysian Association of Private Colleges and Universities (Mapcu), there were some 450,000 students at private institutions of higher learning as at December last year. This accounted for slightly more than 50% of the total enrolment in both public and private universities and colleges.

There are no two ways about it: the private sector’s involvement in education over the last few decades has contributed significantly to the nation’s progress.

“Private education has been absolutely central to the development, stability, and harmony of Malaysia for the past 25 years,” says Mark Disney, chief operating officer, Asia, of London Chamber of Commerce and Industry (LCCI), which provides vocational and business qualifications.

“It is the engine room for developing outward-looking graduates and it is the reason why Malaysia can legitimately call itself a regional educational hub.”

The National Association of Private Educational Institutions (Napei) president Elajsolan Mohan points out the powers that be would have to bear a huge burden if tertiary education was in its hands solely.

He adds: “Developing human capital is the Government’s responsibility, but here, the private sector has a big part in complementing and supplementing the Government’s role.”

Of course, it is not merely a case of sharing a social obligation. To the business world, the capacity shortfall in the public higher education system translates into market demand. It is an opportunity to make money, and there are lots of it at stake.

Education player, HELP International Corp Bhd, gave an indication of just how much the business is worth when it went for listing two years ago. Its prospectus conservatively estimated the annual industry turnover at RM2.1bil, assuming a student base of 300,000, with each paying average fees of RM7,000 a year.

Things have changed quite a bit since then. The student numbers to be used in such a calculation now should be 50% larger, and those in the know say the average annual fees ought to be between RM10,000 and RM12,000. This is how Mapcu has arrived at a ballpark figure of RM5bil for total fee income.

In addition, says the association, the tuition fees from the some 550,000 foreign students in 200 private higher education institutions (PHEIs) generate about RM1bil in foreign exchange earnings. The spin-off income (in areas such as healthcare, transportation and food) is estimated to be close to RM1.5bil a year.

A Napei study a few years ago found that foreign students added about RM4bil to Malaysia’s economy.

And let us not forget that higher education leads to plenty of other economic activities such as education fairs, advertising, publishing (directories, guides and periodicals) and property rentals.

Degrees of success

The story of private higher education in Malaysia is that of entrepreneurship, ingenuity and adaptability. The industry has had its ups and downs, and through it all, the key determinant of success remains the same – the ability to attract and retain students.

This is vital in a crowded and competitive arena. There are about 500 PHEIs in the country. At the peak about nine years ago, there were 700. Despite the consolidation over the past decade or so, few players will tell you that it is any easier these days to woo students.

On top of that, the number of places available in the public tertiary education system has been rising rapidly. In 2002, public universities, polytechnics and community colleges took in 89,500 students. Last year, the number of admissions was more than double that.

Says Elajsolan of Napei: “It’s becoming more and more challenging for us. The public system has become our competitor because the number of public universities and community colleges is increasing. Previously, the private sector played a complementary role to the public sector. Now the public sector is challenging us.

“But it’s good for the industry because we have to become more creative and innovative.”

Indeed, amid the tough competition, the pioneering spirit often makes a difference. Fortunately, this seems to be a speciality of the private higher education industry.

Mapcu president Dr Parmjit Singh reminds us that it was the private institutions of higher learning here that came up with the 1+2, 2+1 and 3+0 twinning degree programmes, thus providing Malaysians with more affordable options to study for degrees awarded by foreign universities.

Says Disney of LCCI Asia: “Remember, Malaysian edupreneurs have always been at the forefront of transnational education.”

According to Parmjit, some PHEIs have boosted their profile in other ways, such as commercialising their research and development, and venturing abroad to establish branch campuses.

Another element of the private sector’s success is its broad and flexible offering, particularly when compared with public universities. There was a time when students mostly went to PHEIs by default; it was Plan B when they could not get into public universities. Apparently, that is no longer the case.

Elajsolan explains: “With the public system, you may not get the course you want. So what do you do? Are you going to spend years studying something you don’t like?”

In fact, students are increasingly more likely now to bypass Form Six and head straight to private colleges and universities after their Sijil Pelajaran Malaysia (SPM) examinations.

“The private sector offers an array of options and opportunities to choose from after SPM. Students are able to make earlier and more informed decisions about their career and study choices due to the vast amount of information available,” says Parmjit.

“This is why they prefer to move into tertiary education immediately after SPM, instead of the traditional route of applying for admission to universities after completing the STPM (Sijil Tinggi Pelajaran Malaysia) exams.”

It helps too that they can individualise their courses by selecting from a diverse menu of subjects and programmes, some of which are unique and tailored to industry requirements. In addition, the operators are attuned to market needs and are quick in rolling out new programmes.

A discerning market

However, it is not purely a matter of running popular courses. Quality is critical, maybe more so in education, where reputation is a make-or-break factor.

An industry analyst warns that the growth of PHEIs may not always be accompanied by improvements in the delivery of quality teaching and research. “Some of these institutions have expanded so fast that their quality of education has failed to keep up,” he says.

He advises that in deciding on the institutions to send their children to, parents should weigh criteria such as the investment in libraries and faculty members’ qualifications, instead of being dazzled by claims of high student enrolment. He says the big numbers may not necessarily mean that the PHEIs are successful.

Adds Disney of LCCI Asia: “The need to balance quality with quantity is always pressing, made harder by the fact that commercial imperatives are impossible to ignore. The intense competition for students is still a problem because it makes it more difficult to establish and maintain a critical mass of students.

“Operators have to keep one eye on the bottom line and the other on the education process. The Klang Valley, especially, is over-crowded with providers.”

It is understandable then that the presence of the Malaysian Qualifications Agency (MQA), the Government body in charge of the accreditation of higher education programmes, is widely regarded as a positive for the industry.

Parents and students are now more conscious of quality, and they seek some assurance in the form of MQA accreditation. Napei’s Elajsolan is convinced that this has vastly altered the private higher education business – for the better.

“In the past, you could just offer a diploma course or a certificate course, and you could start running the college. But today, there’s the accreditation process, and the students and parents are more demanding. They really shop around before they make a decision because there’s so many to choose from,” he says.

“So, if your quality is not good or if your facilities are poor, they won’t come. I remember when you could set up a college with less than RM100,000. Today, if you don’t have RM5mil, forget about it. That’s the kind of investment students are looking for before they will sign up.”

The future course

The demand for higher education in Malaysia will surely grow as its population rises and in tandem with the Government’s emphasis on human capital development. The question is, can the private education sector take for granted that it will therefore have ample space to prosper?

Mapcu reckons that the industry is at the crossroads in its development because of the expansion of the public tertiary education system.

Parmjit says the PHEIs have invested a lot in infrastructure and resources in anticipation that they will have a bigger role in educating Malaysians. However, when the public sector increased its capacity over the last seven years, the private sector had to deal with a surplus of seats.

“It was fortunate that growth was then shifted to the increasing demand from foreign students, which helped in taking up this surplus. This has led to most of the larger private sector institutions becoming dependent on a higher proportion of foreign students in comparison to local students,” he adds.

“It is hoped that private institutions of higher learning are provided with tangible support to ensure their continued growth, and to participate meaningfully alongside, and not in competition with, the Government’s efforts to provide further opportunities for higher education.”

Says Elajsolan of Napei: “The Government should stop building new universities and send students to us. Under the National Higher Education Strategic Plan, the public and private sectors are supposed to provide for the human capital needs of the country. That’s why the plan makes no distinction between private and public institutions. The objectives are all the same.”

Disney agrees that the private sector needs foreign students because at the industry’s current size, the local population is too small to sustain it.

“This means we have to be a lot better at putting out a co-ordinated message that attracts international students. Allowing them to work, or to remain for a period of time, would be a good start because it is the single biggest attraction for countries like Singapore and Australia,” he says.

There is also some impetus for PHEIs to merge. The mid-term review of the Ninth Malaysia Plan says the institutions will be encouraged to consolidate and merge in order for them to be more viable and competitive.

Napei supports this because it will protect the interests of the students and the operators. “If there are incentives for mergers and acquisitions in education, it will be healthier. Students can transfer and the investments will not be lost,” says Elajsolan.

“We have told our members that the landscape is changing. If you don’t have the means, it’s better than you merge with others or sell your businesses to somebody who can take them to a larger scale.”

Related Stories: Big firms see a need, fill a need A tall order forstudy loan provider From quality control to quality assurance and enhancement

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 0
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Business News

NCCIM urges govt to consider alternative measures on electricity surcharge hike
Ringgit ends slightly higher versus greenback after less hawkish remarks by Fed chairman
YGL Convergence's auditor resigns amid disagreement over fees
Ecomate seeks to transfer listing to Main Market
Crescendo buys 109.86-acres land in Johor for RM67.55mil
BAT Malaysia is optimistic on FY23
Downtrend continues on Bursa Malaysia
MAG implements a more targeted operating model, appoints new senior leadership team
Perodua January sales up 43.5% year-on-year
Hotels, retailers call for electricity tariffs moratorium

Others Also Read