University mergers are a welcome development, private ones should be included

The proposed merger of Universiti Sultan Zainal Abidin (UniSZA) with Universiti Malaysia Terengganu (UMT) is a welcome development that will hopefully signal the start of a long-awaited structural reform of higher education which will benefit all universities in Malaysia.

If it comes to pass, this exercise will provide a valuable opportunity to test the mechanism of structured mergers for higher education institutions (HEIs) to ensure that the best outcomes can be achieved for students, academics and administrative staff.

It will also test and clarify the processes for merging different management systems and recognising academic credits already earned towards the award of final degrees.

Rationalisation of this type will improve efficiency in the system and release resources to be reinvested in new areas. This will improve quality overall and allow HEIs to expand sustainably and create better learning and research environments to prepare for the challenges of the fourth industrial revolution.

It will also provide resources to improve academic salaries as a much-needed incentive to deliver improvements in quality.

As part of this process, the Government should also consider the merger of public universities with struggling private universities. As is now well-understood from our research, the majority of private HEIs are financially unstable, and many are technically insolvent or even potentially bankrupt.

This is a huge problem because private HEIs account for around half of the students and faculty, and take up 60 percent of PTPTN loan funds which is a huge burden to the system and to students alike.

Merging public and private HEIs will provide stability to both the public and the private sector.

It will allow sharing of facilities, including libraries, laboratories, hostels, accommodation, catering, maintenance, security and sports facilities, among many others.

It will reduce the replication of administration departments and would facilitate a centralized student recruitment system to reduce marketing expenses. We estimate that marketing costs wasted by private HEIs would be enough to build one new university every year or to repay 10 percent of PTPTN loans to private HEI students annually.

Not only would there be significant savings, but there would be significant opportunities for public universities to generate revenue from private higher education within a more flexible model.

This process should not be in only one direction, since some private universities might well be in a position to absorb public HEIs too, particularly smaller public colleges and polytechnics, TVET training centres and even research institutions in shared areas of expertise. There are more than 550 government training centres alone which could easily be absorbed by some of the larger private universities.

Again this would rationalise costs, improve management and create new opportunities within a leaner and more flexible system.

But what about the elephant in the room in the form of PTPTN? Structural reform of the system as a whole should in principle create efficiencies which could reduce the dependence of both public and private HEIs on government funds, either direct funding from the Ministry of Education or indirect funding through government loans to students.

This is where a wider opportunity creates itself. PTPTN should be restructured to support this initiative and its role should be changed from being a ‘loan-provider-cum-debt-collector’ for students to being an investor in HEIs directly.

PTPTN funds and expertise can then be used to support the restructuring and reinvigorate the management through active investment in the new public-private entities created by mergers.

This is a bold alternative which would change PTPTN into an investor in universities – a sort of national higher education investment fund.

At the moment PTPTN provides loans to students who use it to pay fees which are the only source of income for many private HEIs and account 40 percent of the income in the private sector, and 10 percent in the public sector. If PTPTN was an investor in universities it could be an active player to turn them around.

This is a better business model in the longer term for PTPTN and can help it to restructure its own role as an active partner in the improvement of higher education quality, efficiency and outcomes.

It is natural to do this because the current proposed merger of UniSZA and UMT is a recognition that the system, as a whole, should be restructured and PTPTN is the main funder of at least half of that system.

Understandably, students, faculty and staff will be cautious about change, but given the current state of the system as a whole, both public and private, they should hold their fire.

Of course, all stakeholders should be included, so, in the current case, students at UMT are right to ask to be consulted. Their active input and the active input of faculty and staff will beessential to ensure that this merger is a success if it goes ahead.

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GEOFFREY WILLIAMS is a Professor at ELM Graduate School at HELP University and former Deputy Vice Chancellor of UniRazak. The views expressed here are his own. - Mkini