Crisis in private varsities: Are mergers the way forward?

THE COVID-19 pandemic is threatening to close the book on private higher education institutions (PHEI) in Malaysia.

According to news reports, enrolment is plunging as students – both local and foreign – are leaving in droves, forcing some universities and colleges to throw in the towel, while others are barely staying afloat.

As of March 2021, Malaysia has 435 PHEI, comprising 335 colleges, 39 university colleges, 51 universities and 10 branch campuses of foreign varsities.

This therefore begs the question: Is it time for smaller private institutions that are not able to stay afloat to consider merging with bigger ones?

The Malaysian private education sector’s economic growth has been showing worrying signs even before the pandemic, but there is no doubt that COVID-19 might be the final nail in the coffin for some of them.

Most private universities and colleges in Malaysia rely on receiving student fees to stay afloat, and with the COVID-19 crisis, it is highly possible that prospective students may defer or delay their studies.

The enrolment of foreign students, too, have suffered due to the closure of international borders. This has put further strain on the cash flow of the institutions.

A number of private institutions have already lowered tuition fees by up to 20% to help parents ride out the financial crisis caused by the economic fallout. To make up for the losses, they have downsized by letting go of part-time staffs while reducing the salaries of many others.

While medium and large-sized private varsities might able to pull through, what about smaller and struggling varsities with enrolments fewer than 100 students?

Lowering tuition fees and downsizing are merely temporary solutions that are only delaying the inevitable, which is, in this case, the eventual closure of these institutions.

Therefore, the merger of smaller, troubled private varsities with larger, more structured institutions to help them would be the most logical move going forward to help them weather the economic crisis.

In addition to easing the financial burdens of these smaller PHEI, a merger would also allow them to tap into the bigger institutions’ funds and resources, while sharing their bigger counterparts’ bigger and better facilities.

In the end, change is inevitable and PHEI has to adapt accordingly, or risk going bust in the near future. – May 23, 2021


Photo credit: Malaysia Students

Subscribe and get top news delivered to your Inbox everyday for FREE