Small tuition centres, big controversy

THERE is a saying that we should always read the small print but most of us unfortunately don’t, although there may be hidden complexities that could haunt us later on if we are not cautious.

In this case, the controversy over the 30% bumiputra equity in tuition centres originates from the 2006 guidelines in the Private Educational Institutions Policy Statement Book published by the Education Ministry.

The then minister was Datuk Seri Hishamuddin Hussein, who served under the administration of the late Tun Abdullah Ahmad Badawi.

The guideline was introduced as an administrative mechanism to align private education with Malaysia's broader socio-economic goals.

That historical fact is important because the controversy has somehow become another issue for the current Government to defend.

It was only a small paragraph in the guidelines. To be precise: Section 6.3.2 of the document stated that any private educational institution (including tuition centres, language centres, and enrichment hubs) operating as a Sdn Bhd (Private Limited Company) was required to have a minimum of 30% bumiputra equity ownership.

It remained dormant for the last 10 years until the issue suddenly blew up last month when tuition centre operators were said to be told that upcoming 2027 licence renewals would need to fulfil the 2006 rules.

Operators who had run successful businesses for decades potentially faced the sudden requirement to give up or restructure 30% of their shares to bumiputra partners just to keep their licences, leading to immediate political backlash and its eventual abolition.

The Madani government, especially Education Minister Datuk Seri Fadhlina Sidek, found itself in a storm which it has no part in as the policy wasn’t drawn up by her or the present government.

She has since cancelled the ruling but some internet users, who do not know the background, has slammed the government for making a U-turn while Umno Youth chief Dr Akmal Saleh has criticised the abolition.

Ahead of the general election, we can expect plenty of political rhetoric but there are times when governments should be judged not by how many new rules they introduce, but by how willing they are to remove rules that no longer make much sense.

The decision to scrap the 30% bumiputra equity requirement for private education institutions, including tuition centres, is a sensible move.

Tuition centres are not giant corporations or major investment vehicles. Most are small businesses, often started by teachers, former teachers or entrepreneurs who have invested their own savings and spent years building up their reputation in the neighbourhood.

The present Government did not create the 2006 policy. What it has done is recognise that the requirement needs to be reconsidered in today’s circumstances and, following discussions with the Investment, Trade and Industry Ministry (Miti), remove the minimum 30% equity requirement for private limited companies operating private educational institutions.

Now, Miti has said it was unaware of the abolition and that the matter was under the purview of the Economic Planning Unit (EPU), which is under the Economy Ministry.

Tuition centres today are part of the education ecosystem for thousands of Malaysian families. Parents turn to them for additional lessons in mathematics, science, languages and other subjects.

They are often modest, neighbourhood-based operations rather than large commercial enterprises which provide an important support system for families.

Imagine a teacher who has spent 15 or 20 years building a tuition centre, paying rent, salaries and other operating costs, only to be told that a portion of the business must now be given up to meet an equity condition.

What problem are we really solving? If the objective is to increase bumiputra participation in education, there are surely more constructive ways of doing it.

The Government can provide financing, training, grants, premises, mentoring and access to markets for bumiputra educators who want to establish tuition centres.

That would create new bumiputra entrepreneurs rather than requiring existing small businesses to rearrange their ownership.

There is also a fundamental distinction between encouraging participation and imposing ownership.

The first helps people build businesses. The second can become merely a licensing condition.

A good teacher is valued for his or her ability to teach, not the percentage of shares held in the company.

That does not mean bumiputra economic participation is unimportant. Far from it. It remains a legitimate policy objective.

But the question is whether every economic activity requires the same instrument.

There is a difference between restructuring the ownership of a large corporation, opening up major commercial opportunities and dealing with a small tuition centre operating from a shoplot with a handful of teachers.

Applying the same ownership principle indiscriminately can produce unintended consequences.

Removing the 2006 requirement therefore provides something equally important in business: certainty.

It also sends a message that the Government is prepared to review old policies when they no longer fit the realities on the ground.

That should not be seen as abandoning bumiputra policy. It should instead be seen as asking whether the policy instrument is appropriate for the particular sector.

There is nothing wrong with encouraging more Bumiputera participation in private education.

But the better question is how to create more opportunities for bumiputra educators to become successful owners in their own right such as providing them capital, training them to run tuition centres, make premises available, provide mentoring, help them compete and other support.

That is likely to produce more sustainable businesses than simply requiring someone else’s business to surrender 30% equity.

Let’s get our priorities right – we need tuition teachers to provide better supporting teaching, safer premises and affordable education for our children and not worry about equity.

Politicians and officials who make a fuss out of this seriously need immediate tuition to get them to think rationally and develop some common sense.