The national higher education sector blueprint 2015 – 2025 to be launched tomorrow will not help the outlook of higher public education as it overlooks private varsities, which are facing financial distress.

 

According to a study by Penang Institute, changes in funding rules could force as many as 70 percent of private higher education institutions in Malaysia into the red.

 

“Using new data from the Companies Commission of Malaysia (SSM), Penang Institute researchers found that 45 percent of private universities and university colleges had insufficient current assets to cover their current liabilities.

 

“Around 71 percent were below the market average in terms of sufficient assets cover,” said the think tank’s general manager Ong Kian Ming ( right ) in a statement today.

 

“The SSM data also showed that 28 private varsities, or 46 percent of those reporting, made year-on-year losses during the 2013 fiscal year, the latest year for which complete financial data is available for all private varsities,” he added.

 

Ong said changes to the National Higher Education Fund loan (PTPTN) system announced last November – a cut by 5 percent for public universities and 15 percent for private universities excluding medical courses - would lead to 69.2 percent of private varsities falling into the red in the coming year.

Around 76.2 percent of university colleges and three-quarters of the foreign branch campus could see their finances in negative territory due to these changes, he said.

 

He lamented that the blueprint that Prime Minister Najib Razak is to unveil tomorrow will not help much as it is focussed largely on public varsities.

 

“The fact that the private higher education sector was largely ignored is a serious omission given that almost half of the total enrolment in post-secondary education are in private universities, university colleges and colleges,” said Ong.

'May hit over 200k students'

Ong, who is Serdang MP, said roughly 120,000 students are currently enrolled in those private varsities facing financial stress due to the changes in funding.

He expects the figure could rise to 215,000 students, or 44.5 percent of total private education enrolment.

He recalled that the closure of Alliance University College of Medical Sciences ( AUCMS ) last year from financial problems reportedly affected around 2,000 students and 500 staff.

 

Ong also cited the case of Masterskill Education Group Berhad, owner of Asia Metropolitan University, whose share price fell from RM4.24 in August 2010 to a low of RM0.30 in May 2014.

One of those affected by the new policy, the company's share price recovered only to RM0.62 by March 2015 following restructuring and changes in management and share ownership, he said.

The Penang Institute study looked at 41 private universities, 8 foreign branch campuses and 27 university colleges.

"At least two university colleges have been upgraded to university status in recent months. Both are in the 'financially stressed' group," noted Ong.