The global trend toward the neoliberalisation of higher education, characterised by market-driven practices, privatization, and financial austerity, poses serious threats to educational equity, quality, and academic freedom. Education International, the global federation of educators’ trade unions, has raised significant concerns about the rapid commercialisation of higher education worldwide, emphasising its detrimental effects on teachers’ welfare and institutions’ ability to fulfil their societal roles.

In the Asia-Pacific region, these trends are most visibly manifested in the dramatic expansion of private sector enrolments, reflecting a broader structural shift toward market-oriented governance. Between 2006 and 2018, private tertiary enrolments in the Global South increased by 121%, significantly outpacing the 80% growth recorded in public institutions.India alone accounted for 39.8% of global private enrolment growth, becoming a pivotal case of the privatisation turn in Asia.

Recent developments in Malaysia, a middle-income economy with relatively high rates of tertiary enrolment, typifies this neoliberal trajectory. The incumbent federal government’s boasts of support for the sector obscure are at odds with the reality of chronic underfunding and stagnant academic wages.

At first glance, between 2010 and 2013, Malaysia’s annual higher education budget grew from around RM13 billion to nearly RM16 billion, before dipping to approximately RM12.1 billion in 2017 (see Graph A above). From 2020 onward, the budget shows a steady upward climb, culminating in its highest nominal level, approximately RM18 billion by 2025. However, the figures in question fail to account for inflation, yet political discourse and media reporting frequently highlight the apparent upward trend in education funding from 2018 onward as proof of governmental prioritisation of the sector.

While nominal budget figures might suggest strong fiscal support, the inflation-adjusted numbers tell a different story. The inflation-adjusted budget is calculated by dividing each year’s total budget by its July inflation index and multiplying by 100, using 2010 as the base year (inflation index = 100). This adjusts for changes in purchasing power over time. Using July’s CPI is sufficient for adjusting annual budget data, assuming it reflects the general inflation rate affecting higher education spending. However, this may not capture sector-specific inflation rates, such as those for tuition or academic resources.

When adjusted for inflation, we see that current levels of funding represents a substantial fall from peak levels of funding during the last Barisan Nasional government. This discrepancy critically undermines the government’s claims of increased support for the sector, as funding has in real terms not moved much despite politically charged proclamations of reform

Indeed, as Graph B indicates, there has been a general downward trend in the share of Malaysia’s total budget allocated to higher education from 2010 to 2025. Beginning at around 6.8% in 2010, this proportion falls to roughly 5.0%–5.4% in the mid-2010s, then continues declining toward the 4.0% range from 2018 onward. Since 2015, Malaysian public universities have experienced budget cuts, reflecting an overall trend of declining governmental prioritisation of higher education funding, with 2023 marking the lowest allocation at only 3.9% of the total national, slightly increasing to 4.1% in 2024 and 4.3% in 2025.

This persistent resource gap points to a widening disjuncture between the state’s reformist discourse and its actual financial commitment to public higher education, reinforcing the broader pattern of neoliberal restructuring in the country.

Illusory autonomy

Historically, Malaysian public universities have relied heavily on state funding, rendering them vulnerable to government influence over key institutional decisions and academic directions. The dependency on governmental financial support has in practice restricted institutional autonomy, as funding often comes attached with conditions and expectations aligned with political and economic priorities rather than purely academic considerations.

In recent years, Malaysia has renewed its emphasis on university autonomy, exemplified by the Ministry of Higher Education granting increased autonomy to public universities since 2012. The Malaysian Education Blueprint for Higher Education 2015–2025 promises to empower institutions with greater financial autonomy, by enabling independent budgeting and revenue-raising mechanisms. Framed within neoliberal rhetoric of efficiency and competitiveness, this policy shift effectively transfers financial burdens from the state to individual institutions, thereby masking deeper structural underinvestment in the sector.

Local advocates argue that such autonomy will spur innovative, independent financial management. Yet the reality is that constrained development budgets leave institutions bereft of the capital needed for their sustainability and social missions. Consequently, universities remain heavily reliant on government appropriations, and thus subject to government control, severely limiting their capacity to improve the quality of higher education in a fast-changing educational landscape.

Consequently, the top management at Malaysian public universities increasingly adopt market-oriented approaches, including raising tuition fees, expanding commercial activities, and forming partnerships with private sector entities. Moreover, the widening gap between nominal and inflation-adjusted budgets signals a failure to address the sector’s real needs. This shortfall not only jeopardises the quality of teaching, research, and facility upgrades but also reinforces the restrictive impact of laws like Universitites and University College Act and Act 605, which continue to stifle academic freedom.

The combined effect is a system where the lofty promises of the Blueprint are systematically undermined, as stagnant and inadequate funding, coupled with a persistent reliance on outdated financial models, reflects the creeping influence of neoliberal education policies that shift financial burdens onto students and faculty through cost-recovery mechanisms (such as higher tuition fees, corporate sponsorships, and commercialised research) while simultaneously enforcing performance-based funding models that prioritise short-term metrics like publication counts and graduate employability over long-term academic excellence and knowledge production.

This neoliberal discourse has been normalised among university leadership. For instance, Noor Azlan Ghazali, former vice-chancellor of Universiti Kebangsaan Malaysia, advocated for higher tuition fees at top-ranked institutions, suggesting that improved university performance should correspond with increased fees.

The reduction in direct public funding to Malaysian universities outlined in the data above is integral to  the government’s broader shift towards neoliberal policies and market-oriented higher education strategies. In a context of diminished public funding universities have increasingly turned to alternative revenue streams, such as raising student fees, engaging in private-sector partnerships, and commercialising research activities. However, these approaches create new pressures, as universities grapple with balancing financial self-sufficiency with their educational and social missions.

Eroding academic quality

There is substantial evidence indicating that neoliberal approaches to higher education in the United States have undermined principles of social justice and equity, resulting in increased financial burdens on students, rising educational inequality, and the erosion of universities’ broader democratic and civic missions.

Given the documented adverse impacts of such policies on creating a fair and inclusive society, it is critical to question why Malaysia appears determined to replicate these very strategies, potentially repeating the same failures and exacerbating inequalities within its own higher education sector.

In the context of Malaysia’s aspirations to transition to a high-income economy, reduced emphasis on higher education may impede progress in developing the skilled workforce and research capabilities required for sustained growth and innovation. Over the long term, diminished relative funding could exacerbate challenges related to talent retention, academic freedom, and research competitiveness.

One of the most striking features of Malaysia’s higher education financing is the persistent imbalance between operating and development budgets, a dynamic now compounded by the corporatisation of universities and an intensified obsession with global rankings. As illustrated in Graph C, there is a persistent imbalance in Malaysia’s higher education budget allocation, with operating expenditures consistently dominating, accounting for approximately 65% to nearly 90% of total budgets. In contrast, development expenditures, crucial for capital projects, research infrastructure, and strategic long-term growth, have not exceeded 26% since 2011.

This imbalance is exacerbated by reforms such as the Public Service Remuneration System (SSPA), which is ostensibly meant to raise public sector workers’ performance while improving their welfare. While raising staff salaries and recurrent costs, this reform ultimately redirects funds away from long-term development projects and heightens universities’ financial pressures. In turn, institutions are driven to pursue alternative revenue streams, diverting resources from essential investments such as innovative research, modern infrastructure, and faculty development toward short-term, income-generating activities.

Despite ambitious rhetoric highlighting holistic student development, financial sustainability, and global competitiveness, there is growing evidence that many Malaysian higher education institutions (HEIs) are increasingly prioritising income generation at the expense of quality scholarship and their core educational missions. Universities are increasingly adopting revenue-focused strategies, such as lowering admission standards to attract more international students and pursuing commercial academic ventures.

Simultaneously, pressures to climb international rankings have incentivised universities to emphasise publication and citation metrics, often undermining academic integrity. This has resulted in a documented rise in plagiarism, citation stacking, and other forms of academic misconduct. Such practices compromise academic excellence and erode universities’ foundational roles in promoting critical thinking and intellectual rigour.

While the diversion of endowments and research project funds toward lecturer promotions may reflect efforts to manage financial constraints or reward certain individuals, such practices are neither transparent nor sustainable solutions to systemic corruption and mismanagement within the higher education sector. The infiltration of neoliberal policies into higher education has had demonstrable negative consequences for academic quality and research ecosystems globally, as institutions increasingly prioritise market-driven metrics over intellectual rigor and societal impact.

In the UK, the Teaching Excellence Framework (TEF) and Research Excellence Framework (REF) have reduced scholarship to quantifiable outputs, incentivising universities to chase rankings and funding at the expense of critical pedagogy. Similarly, Australia’s post-2020 performance-based funding model, which ties university budgets to graduate employment rates, is arguably leading to a decrease in university participation among young Australians and a narrowing of curricula toward “job-ready” skills. In light of these developments, one must ask: what happened to the noble public ethos of the university?

Structural reform the way forward

Amid the rapid boom in AI and the dominance of big tech companies in the sector, the traditional role of public universities as independent hubs for critical research and intellectual discourse is increasingly being sidelined. This critical juncture calls for a fundamental re-evaluation of both budgetary priorities and institutional governance to restore and reinforce the public ethos of higher education.

The tabling of the Higher Education Plan 2025–2035 by a local expert group convened by the Ministry for Higher Education presents an opportune moment for such reassessment. Policymakers and academic leaders in Malaysia must confront the unintended consequences of current funding models, which have skewed the balance between operational expenses and developmental investments. Only by reorienting funding strategies to prioritise genuine academic excellence that is supported by vigorous development budgets that enable meaningful research, infrastructure modernisation, and the nurturing of intellectual merit can Malaysia hope to realise the transformative potential envisioned in the government’s education blueprint.

In other words, the successful realisation of the Ministry’s 2025–2035 plan critically depends on policymakers’ willingness to recalibrate financial priorities and fundamentally transform governance frameworks. This includes dismantling entrenched patronage systems and implementing genuinely inclusive policies within Malaysia’s higher education institutions. Such bold reforms are not only essential for addressing deep-rooted structural challenges but also crucial to aligning the sector with national ambitions for educational excellence and global competitiveness. Given that strategic investments in higher education yield tangible benefits for both the educational sector and broader economic growth, failing to enact these reforms risks perpetuating inefficiencies and inequalities, ultimately undermining Malaysia’s long-term economic and social advancement.

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