Federal v Selangor 2016 higher education budgetary policies

I would like to expand on the points I recently raised regarding the 2016 Federal Budget.

As I stated then, the biggest let-down for me as the Selangor education exco was the RM1.4 billion budget cut for higher education. Many advanced countries ring fence allocations for health and education due to their importance in the national development, yet here they are sacrificed.

I believe that one of the negative side-effects of this will be that more and more would-be tertiary education students will be pushed into private institutions of higher learning given the anticipated cuts to public colleges and universities.

The budget cuts may mean that students who would normally enter public institutions will instead have to head to the private sector as there will now be fewer places available in the former.

Now, I must state here that I have nothing against the private universities and colleges. They play a crucial role in Malaysia’s education system.

There are many relatively excellent private institutions like Sunway University, Universiti Teknologi Petronas, Multimedia University and Taylor’s University. Their contributions to Malaysia have been significant and one is confident they will continue to do so.

However, it is not clear if they will be able to cater to what might be a large influx of students turned away from public colleges and universities due to the cuts, or even if they would still be able to maintain their high standards.

This means that such students may have to resort to mid- or lower-tier private institutions. This has its risks as not all private institutions of higher learning are created equal.

As a Penang Institute report entitled "Private Higher Education - Avoiding a Hidden Crisis" argued earlier this year, all is not well in Malaysia’s private higher education sector.

As was well-publicised in the press at the time, the report, authored by Dr Paul Lim and Dr Geoffrey Williams, said many institutions in the private sector faced financial stress.

This includes, based on the 2013 financial statements of 41 private universities, 27 university colleges and 8 foreign institution campuses, 46% of which had insufficient assets to cover their current liabilities.

Also, more than 71% of the private institutions failed to hold twice as much current assets compared to current liabilities to cover risk. 64% of those private institutions had short-term debts which exceeded their paid-up capital.

At that point of time, there were some 120,000 students in these financially-problematic private institutions, to say nothing of the
academic and administrative staff who would also be negatively impacted if these institutions went under.

Many of these problems were attributed to cuts in National Private Higher Education Fund Corporation (PTPN) loans. Indeed, 70% of the income of private institutions are from PTPN loans.

What I personally found striking about the report was that it said while the percentage of private institution graduates who were employed was higher than their public institution counterparts, this was also the case for those who were unemployed.

That is to say, 27% of private institution graduates found themselves unemployed compared to 25% for public institution alumni.

The government’s move to push students into the private sector is hence very worrying on a number of fronts.

First, unless something is done to better regulate and improve the financial health of the mid- and lower-tier private institutions, there is a risk that more students will be left stranded educationally if such institutions close due to insolvency.

The recent high profile failures of several prominent private institutions demonstrate that this is not a remote scenario.

Second, the higher unemployment rates suggest that non-elite private institutions are not adequately preparing students for the working world.

The irony is that the new influx into private institutions may find themselves more heavily in debt (due to PTPN or other loans they will probably have to take to finance their studies) but with a lower quality education.

I must again stress that I have nothing against private institutions. Their operations should not be unreasonably hindered and it would be a great tragedy if they were so.

However, I have also long believed that more constructive oversight is needed to ensure their sustainability and the welfare of their students.

Budget 2016 has made the need for this all the more apparent and serious action must be taken in this regard.

It also reinforces how callous the 2016 Federal Budget is, in that it highlights how the Najib Razak government is increasingly abdicating its responsibilities to the rakyat – particularly the youth – and leaving them to fend for themselves.

Compare this with the 2016 Selangor Budget announced by Menteri Besar Mohamed Azmin Ali. RM21 million was allocated to Universiti Selangor (Unisel) to pay for bond repayments due from the university.

The Selangorku Scholarship Fund for Unisel and Kolej Universiti Islam Antarabangsa Selangor (KUIS) was maintained at RM10 million while the qualifying household income for the living costs fund for the two state institutions was increased from RM3,000 to RM5,000.

An allocation of RM5 million for a scholarship fund to pursue doctorates overseas was made under the Selangor Brain Bank Fund. RM4 million was allocated to expand technical courses at Inpens, the state's technical institution. – November 6, 2015.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.