Chapter 31: Funding reform in Malaysian public universities: examining the current situation
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Recent expansion of higher education requires considerable financing resources to be allocated for the cause. The worldwide experience shows that a considerable increase in spending level either through larger contributions by the state or increased participation of private sector funding has failed to cope with the increased demand. Facing with this intense pressure, the challenge for the higher education sector is to search for the optimal policy that is capable of addressing the issue of getting larger financial resources into the system but of equal importance is to design a policy that allows higher education institutions to improve their management capacity, ensuring sound and efficient financial engineering that promotes quality and accountability. Drawing upon the global experience of higher education financing, this chapter aims to examine the issues of financing higher education in Malaysia, focusing on the financial allocation mechanism, the extent of income diversification efforts among public universities and furthermore the readiness of the government and the public higher institutions to undergo a funding reform that explicitly ties funding to performance.

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