Introduction

The growth of private higher education institutions (PHEIs) in Malaysia is politically and economically motivated. Excess demand and the use of ethnic quotas in a limited number of public universities with the implementation of the New Economic Policy in 1970 had raised the potential for inter-ethnic conflicts in multi-ethnic Malaysia. The government therefore utilized private provision to supplement public supply, thereby increasing access and reducing the possibility of inter-ethnic conflicts due to limited access. Over time, the perennial deficit in services trade since independence in 1957 contributed to the idea of using private higher education to reduce student outflows and its negative impact on services trade and, instead, to increase export revenues through inflows of international students. This led to the aspiration to be a regional hub for higher education based on Malaysia’s comparative advantage in terms of costs and language via the use of English in transnational programmes offered in PHEIs, with degrees awarded by parent institutions in developed countries such as Australia and the United Kingdom.

PHEIs grew rapidly with the formal opening up of the education sector in 1996 so that by 2012, there were twenty-nine private universities, twenty-one university colleges, five foreign university branch campuses, and 415 colleges. Intense competition, due to the large number of private providers and a small domestic market, with a population of 28 million, has forced these institutions to look outwards for international students. These institutions are allowed to recruit up to 80 per cent of their enrolment from outside the country. By 2009, Malaysia had captured 2 per cent of the global market for international students and was the eleventh preferred study destination for higher education. In 2010, 72 per cent of international students studying in Malaysia were enrolled in PHEIs, as public universities had capped their enrolment of international students at 5 per cent due to the continued excess demand from local students, as fees in public universities are highly subsidized.