A Strategic Look at the Private Education Industry In Malaysia

By Dominic Shum

Since the introduction of the Private Higher Education Act in 1996, the industry has transformed itself from a dull listless backwater industry into a thriving industry with enrollment of more than 1.5 million students  in 2013 including tens of thousands of foreign students. The certainty that comes with having a legislation and the introduction of the Malaysian Qualification Framework  which is modeled along the British Education Systems. Within a few years the number of private colleges and other institutions of higher learning sprouted up. As the lack of expertise or academic capability was apparent, many colleges resorted to providing UK, US and Australian qualifications under twining programs and later when the experience was garnered 3+0 programs were introduced.

With the coming of age of local institutions of higher learning, those which benefited from the growth of the industry then proceeded to open up or upgrade themselves to university colleges and universities. These includes colleges like HELP, SEGI, UCSI, KBU, KDU and many others. Looking at the attractiveness of the local market and the growth of local academic talents, foreign universities then started to position themselves in the market. These include Nottingham University, Monash University, Manipal University and many more. The rapid development now posed a new challenge to the players and overcrowding  of the sector became a reality with more than one hundred universities or university colleges and a few hundred other college level institutions.

PHEIs now have to work out new strategies to tackle the new market dynamics and the forces that affect their survival. Conceptually the forces that provide the challenges are shown below and the challenges includes factors like Funding, Cost Management, student attrition , regulations and margins.

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Funding refers to student funding. A lot of growth in the first 15 years was driven by easy money in the form of PTPTN loans/grants, MARA loans/Scholarships, Bank Loans, EPF withdrawals. As we now know MARA and PTPTN funds have at some time another was a very challenging factor. The industry is also concerned with the rapid rise of academic salaries and other cost which eats info the profit margin of the PHEIs. Student attrition is also an alarming challenging  which must be handled well. The industry is also concerned with margins as this as cost began to rise while fees are becoming more competitive which was sensitive to PTPTN and MARA’s disbursement quantum. Lastly, being caught out by changes in the government regulation could be a disaster for PHEIs not unlike the situation Masterskills found themselves in.

In order to thrive, PHEI must constantly monitor the environment and conduct strategic analysis of the industry when necessary to come out with new strategies to even survive let along succeed. The five factors or challenges must be taken care of and monitored closely. the demand side of the industry is always there and is projected to grow but PHEIs must look within to find the best answer as to how such demand will be made and be met profitably.

References:
  1. Guidebook-Getting Started, PHEI Business in Malaysia (2009), retrieved February, 2.2016 from http://www.mampu.gov.my/documents/10228/25989/21-PHEI_Guidebook.pdf/bb929c17-91e5-4029-8b28-55bce6ff52df
  2. Malaysian Qualification Framework (2011), retrieved February 4, 2016 from  http://www.mqa.gov.my/portalMQA/dokumen/MALAYSIAN%20QUALIFICATIONS%20FRAMEWORK_2011.pdf

First Published Feb 2016 at https://drcservices.me/blogger-dominicshum-writer-malaysia/management-articles/