A study shows 97% of universities and university colleges will make losses and 51% would become insolvent because of the MCO
by RAHIMI YUNUS/ graphic by MZUKRI
ALMOST 20% of the 440 private higher educational institutions (PHEIs) across the country are at risk of closure this year due to restriction on new foreign students’ intake that has also led to a decline in tuition fees as all parties adhere to the new normal.
Malaysian Association of Private Colleges and Universities president Datuk Dr Parmjit Singh said the crisis faced by PHEIs has become acute because new international students are still not allowed to come to the country.
He said local PHEIs lost the opportunity to get new foreign students in the March to June period during the Movement Control Order (MCO).
He also said foreign students may not be attracted to sign up with local private universities as they would still prefer physical classes over online learning.
“The situation is bleak moving forward unless the authorities allow us to bring in new foreign students. At this point, they asked us to wait,” Parmjit told The Malaysian Reserve (TMR).
He said PHEIs take roughly 25,000 new international students yearly, which account for 30% to 40% of total students. The industry players are aiming for at least 7,000 to 8,000 new foreign students in September and October, he added.
“Foreign students come not for a few months, but three to four years. If we do not bring them in this year, the impact will continue for three or four years, even if we are allowed to bring new ones next year.”
He said these PHEIs were already making losses in the last few years. Now, even those who are financially strong are in a weakening fiscal position.
The outbreak delivered a one-two punch to PHEIs as local students’ intake is also dwindling in tandem with the economic slump.
Parmjit said the decline in international students will be hard to cover by intake of local students, the latter is expected to decrease too as parents face financial strains to send their children to private universities.
Higher education management specialist Dr Geoffrey Williams said 97% of universities and university colleges will make losses and 51% would become insolvent because of the MCO, according to a study he conducted.
“I now believe that this will be worse and that some will close down or merge. There will be a significant restructuring, salary cuts and job losses,” Williams told TMR.
He said some household names posted up to 70% to 80% revenue drop in international students. Williams said local PHEIs are dealing with multiple layers of difficulties including new international student intake, fewer local students and cheaper course fees with e-learning.
“Even if new international students are allowed to register, it does not make sense for them to pay RM60,000 to RM100,000 for online courses. They can choose other universities besides in Malaysia with better quality in online learning.”
Moreover, Williams said tuition fees for online programmes are becoming cheaper, which further squeezes profits. For instance, the standard fee for an MBA programme was about RM36,000, but it is now down to RM10,000 with e-learning.
“Competition in online learning is going to be massive and these (fees) could fall to nothing.”
PHEIs in Malaysia consist of those individually or family-owned such as Lim Kok Wing University; corporate-owned; stateor government-linked companies (GLCs)-owned such as Universiti Teknologi Petronas, Universiti Kuala Lumpur and Universiti Selangor; and directly owned or joint venture between foreign entities and local partners in the likes of Monash University Malaysia and Nottingham University Malaysia.
Williams said the state- and GLCs-owned universities will get help from the owners to survive, while the individually- or family-owned institutions will struggle to find financing.
He also raised issues on the sustainability of the National Higher Education Fund Corp, which supports private university students to pay fees, amid the current pandemic.