Financial Sustainability at Malaysian Public Universities


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UUniversities are confronting challenges that are putting financial performance and sustainability under tension. Financial sustainability is one of the key challenges facing Malaysian universities. The majority of funding of public universities' income came directly from the Malaysian government and acted as self-managed institutions under the Universities and Universities Colleges Act 1971. According to Education Minister, Dr. Maszlee Malik, Budget 2019 shows the government's commitment to building up the nation via education. Therefore, a high level of public funding in the overall university budget means that any reduction is bound to have the highest impact on their financial sustainability. 

The higher education institutions funding constitutes nearly 85 percent of government funding, and the rest of 15 percent comes from the students' fees, and fees including contracts with the business sector, philanthropic funding, and income from commercial activities. Diversifying income sources other than government funding help them to have better financial stability. 

However, while there is potential to increase additional funding from private sources, the study showed that these could not replace sufficient public funding. There are some ways to create conditions for successful diversification at universities:

  • Higher Education Governing Authorities under the Ministry of Higher Education (MOHE), which regulates the nation's higher educational institutions affairs, have to play a key role in helping universities overcome all of these challenges.
  • Governments and other funders, particularly at the Malaysian level, need to streamline the modalities and requirements of their funding programs while reducing the complexity of rules and excessive reporting.
  • Simplification of the rules will ensure that financial and human resources are released for the primary objectives of high-quality teaching and research. This should be underpinned by proportionate accountability measures as well as consistent rules and terminology across programs.
  • Developing countries, such as Malaysia, have different political, economic, and educational systems, they need to develop models that are appropriate to the country's educational structure. Therefore, the budget allocation and expenses for development and operation should support the universities for growth in the future. 

Universities themselves also need to continue to seek to diversify their income further. This requires a proactive approach on several levels. 

  • To position themselves in an increasingly competitive environment, universities need to identify their strengths and specialisms, allowing them to develop an adequate branding strategy. This should be complemented by an analysis of their activities in relation to the potential for income generation.
  • To turn the strategy into reality, universities will also need to invest in the development and professionalization of their support staff. None of this is possible, though, without the university leadership's experience and commitment to the process.
  • To develop a model that is appropriate to the country's educational structure because of different political, economic, and educational systems, universities need to support communities and stakeholders to ensure its success. As funding is a crucial portion of the strategic planning, the government, universities, and other stakeholders must take part in the plan.
  • To expand income, universities also require utilizing different ways such as enrolment and net tuition revenue management, persistence, program portfolio (launching new programs, research funding, new business ventures (online executive education), auxiliary revenues.

Universities in Malaysia that follow these steps can generate new revenues to invest in initiatives to attract more students, deliver on the mission of student success, and drive excellence in teaching and research in a sustainable manner. These universities can focus on preparing their students to excel in the world and planning the university's future, rather than depleting their energy by worrying about their continued existence. u