Are Private Universities and Colleges Really Private?

 Abbreviations used in this article

Act 555 - Private Higher Educational Institutions Act 1996

EA – Education Act 1996

PHEI - private higher educational institution

UUCA - Universities and University Colleges Act 1971 (Act 30)

 

The Question

Are private universities and colleges established under Act 555 private, in the sense that they are not government institutions? Or are they hybrid institutions, established and funded by private companies but controlled and managed by the government through the office of the Registrar General of Private Higher Educational Institutions? These are not idle questions but arise from provisions of the Act that deal with the management of private higher educational institutions (PHEIs). The  answers to the questions may have far-reaching implications on who bears the responsibility for breaches of duty and other failures by the institution.

Act 555

The Act enables the establishment of a higher education institution by almost anyone, so long as the application to establish is made by a registered company, local or foreign, and in accordance with the establishment procedures laid down in the Act. The Act defines PHEIs to include all levels and types of higher education institutions, from colleges to universities, irrespective of size and regardless of their mode of delivery, whether by traditional face-to-face methods, online, or by distance education and includes universities established in this country as branches of foreign universities. The single definition also embraces within its scope, professional bodies that offer courses leading to membership in those bodies. The Private Higher Educational Institutions (Amendment) Act 2017 added two new definitions to the Act. A foreign branch campus is now defined as a branch of a foreign university or university college. College, which was a term that was not defined before the passing of the Amendment Act, is now defined as a PHEI without the status of a university, university college, or foreign branch campus.

When passed in 1996, the Act made ground-breaking changes to the way higher education has since developed in this country. Its most important contribution to that development is the establishment of a framework for private higher education institutions that had the immediate effect of legitimising an already vibrant private sector that had existed for many decades without any roots in any enabling laws.

The Company and the PHEI it establishes

Institutions established under the Act are private because they are defined, inter alia, ‘as not established or maintained by the government’. The definition, does not, however, stipulate where control and governance of these institutions lie. A reasonable assumption would be that the PHEI is managed and controlled by the company that established the institution. But such an assumption is not supported by the provisions of the Act. Instead, many provisions of the Act treat the PHEI as if it is a legal entity capable of acting on its own with powers of its own and without the agency of the company. Every imposition in the Act that in any way concerns the delivery of educational programmes is directed at the PHEI and not the company. It is doubtful whether these provisions as currently worded can be enforced against the company which is the legal entity carrying out the business of higher education. The statutory impositions on a PHEI must be imposed on the company that established the PHEI and not on the PHEI which does not have the capacity to do anything in law. The error in the Act probably arises because of the assumption that a PHEI is like a university established under the UUCA, which is an incorporated body.

The attempt to correct the anomaly

The Amendment Act 2017, attempted to correct the anomaly by introducing a new section 75A, which provides that ‘Where the Act requires a private higher educational institution to do or prohibits it from doing something, the obligation to comply is imposed on the company . . .’ This is at best only a limited solution as it still treats the company and the PHEI as two separate entities. It is also unlikely that the section will be enforceable because a PHEI, not being a legal entity, cannot be required or prohibited from doing anything. Hence, the company establishing the PHEI cannot be made liable to do something which cannot be done.

The Chief Executive

Section 31 of the Act requires every PHEI to have a chief executive appointed by the company. Section 33 provides that the chief executive is to exercise general supervision over arrangements for instruction, day-to-day administration, and the welfare and discipline in the PHEI.  Under s. 46 of the Act, the chief executive is also the disciplinary authority over student discipline. In all these matters concerning the powers/duties of the chief executive, the Act makes no reference to the company or its rights or obligations over those same powers that the chief executive is empowered to exercise.

An ordinary interpretation of the sections referred to will make the chief executive the sole governor and administrator of the PHEI. Section 46 confers on the Chief Executive the right to delegate his disciplinary authority, but he is not given any delegatory powers in respect of his other duties/powers. The prescribed constitutions allow for the board of directors of the company to be included in the management, but notwithstanding that, the statutory powers of the chief executive are not ousted by those provisions. There is also nothing in the Act to make the Chief Executive answerable to the board of directors of the company nor is there any provision that gives the board powers over the chief executive. When the chief executive is in a quandary as to who to obey, he will have no choice but to comply with the statute.

The PHEI as a separate entity

We earlier remarked on the position of the company as the animating legal entity, but the Act is ambivalent on that point treating the company and the PHEI as separate entities. The sections in the Act that treats the PHEI as separate from the company might also support a conclusion that in law that it is the Minister, Ministry, and the Registrar General who are responsible for the proper management of the PHEI.

Minister’s and Registrar General’s powers over the chief executive

Such a conclusion is strengthened by the provisions of section 5 of the Act. The section states that (the) Minister may, from time to time, give a board of directors, a chief executive, or an employee of a PHEI directions, not inconsistent with the provisions of this Act, in relation to matters in respect of which regulations may be made under this Act, and such board of directors, chief executive or employee shall give effect to every such direction. 

To add to the confusion and the unenviable position of the chief executive, s. 37 of Act 555, gives the Registrar General wide powers over the chief executive which include, giving the chief executive directions in writing as to the exercise of the latter’s powers and the discharge of his duty.

Registrar General’s Responsibilities over PHEIs

Part VI of the Act, and the sections dealing with the chief executive specifically, suggest that the Registrar General is duty-bound to monitor the conduct of the chief executive and give him the appropriate directions. Read together, these provisions appear to impose on the Registrar General not only the power of overseeing the management of PHEIs but also a duty to ensure its proper management. Any failure in that duty may therefore impose on the Registrar General liability for any loss suffered by the shareholders.

Act 555 in an attempt to maintain control PHEIs, may have imposed unintended liability on the Registrar General and the Ministry for the failures of the chief executive and the company establishing the PHEI.

There is an urgent need to reevaluate Act 555 as it now stands.

Dormant Policymaking Body Unsettles the Malaysian Higher Education System

 Dormant Policymaking Body Unsettles the Malaysian Higher Education System

By

U K Menon LLM, Barrister and Lee Yin Su, MBA (UTAR)[1]

 

Abbreviations used in the article

EA - Education Act 1996

ITM Act – Universiti Teknologi Mara Act 1976

MQA Act –Malaysian Qualifications Agency Act 2007

NCHE Act - National Council on Higher Education Act 1996

PHEA - Private Higher Educational Institutions Act 1996

The Council – The council established under the NCHE Act

UUCA - The Universities and University Colleges Act 1971

Warisan Act - Akademi Seni Budaya Dan Warisan Kebangsaan Act 2006

 

Introduction

The National Council on Higher Education (the Council) is the policymaking component of the higher education system in Malaysia. The statute establishing the Council, the NCHE Act, is the only unifying instrument in an utterly diverse system that has at least four different acts of parliament regulating the establishment and governance of higher education institutions. Each set of laws manifests a different purpose and a different governance model. None pays any heed to the actual delivery of higher education or to student interests. The Council was to have played a coordinating role focusing on policies and strategies for the development of higher education. However, despite its important role, the Council has not been active for over 10 years. Without the Council to coordinate policies, higher education in the country will continue to be pulled in different directions with no prospect for a unified approach to the development of this most important engine of human development.

In this article, we examine the composition and functions of the Council and propose that the Council be reactivated. The Minister of Higher Education, announced in September 2021, that the National Council on Higher Education Act 1996 (Act 546) was being reviewed.  There is still no news of the fate of the Act or the Council.

Background

The National Council on Higher Education (the Council) was established through the NCHE Act. The NCHE Act was part of a package of legislation passed that year to restructure the higher education system in the country.[2] The Council’s role was to formulate national policies and strategies for higher education which the Minister of Education was required by law to implement. The other statutes in the package were the EA, the PHEA, and the National Accreditation Board Act 1996 (Replaced by the MQA Act in 2007). Changes were also made to the UUCA to enable the corporatization of public universities by expanding their commercial powers. The regulatory system that emerged from the reform had three distinct components – the Council as the policy formulating body, the National Accreditation Board as the body to set standards on higher education, accredit institutions and higher education programs, and the Ministry of Higher Education (with new roles added to it by the aforementioned legislation) as the implementing and monitoring body.

If each of these authorities functions in line with the legislative intent, the three components will add checks and balances to the higher education regulatory system, ensuring its legitimacy, fairness in its operations, and predictability of its processes. Together, the higher education legislation covered policy formulation and implementation, the establishment and regulation of higher education institutions, and the accreditation of higher education courses and institutions. Together they established  a sustainable system to develop higher education in the future.

The system, however, did not function to intended expectations. Legislation alone, it is revealed cannot ensure efficiency of systems. It requires the commitment of leaders. Despite the demarcation of roles, the Ministry encroached into the policymaking preserve of the NCHE, issuing new policies, and changing existing ones through circulars and subsidiary legislation. What is even more surprising is that the role of the Council is completely ignored in the report that was intended to be the most important review of higher education – the Malaysian Education Blueprint 2015-2025 (Higher Education).  The Blueprint, ignoring the provisions of existing laws, blithely declares the Ministry as the policymaker. The authors of the Blueprint were either not aware of the structure of the higher education system or simply ignored it.

In 2000, the Institut Teknologi Mara was upgraded to a university through the ITM Act. Whether the upgrading of the former Institut Teknologi Mara to a university was a matter that was placed before the Council is not clear.[3] However, the ITM Act proclaims the university as being established under Article 153 of the Federal Constitution as an institution established to serve the purpose of Article 153.[4] Other provisions of the ITM Act incorporates the university and confers on it powers that are identical to universities established under the main legislation on universities, the UUCA. Although the ITM Act specifically states[5] that the provisions of the UUCA shall not apply to the Universiti Teknolgi Mara, there are no provisions in the Act to exclude the university from the jurisdiction of the Council.

In 2006, the Akademi Seni Budaya dan Warisan Kebangsaan Act established the Akademi Seni Budaya dan Warisan (ASWARA) was established through the Warisan Act. ASWARA is a higher education institution with powers equivalent to that of a university, but its founding legislation makes it an institution sui generis. The Warisan Act expressly excludes the EA, the UUCA and the PHEA in the regulation of ASWARA. However, as in the case of Universiti Teknologi Mara, there is nothing to indicate that the establishment of ASWARA was considered by the Council.  

The role of the Council in higher education was also ignored when legislation was passed in 2007 to replace the National Accreditation Board which was formed in 1996 with the Malaysian Qualifications Agency. Unlike its predecessor, the MQA does not make any reference to the NCHE Act or the Council.

Finally, sometime in 2011 or 2012, the NCHE itself was made dormant. As the Council is not an incorporated body, it can only function if members are appointed to it and meetings are convened. The Council is made up of 14 members.[6] Six are appointed by virtue of their official position.[7] The remaining 8 members are appointed by the Minister from the universities, both public and private.[8]

The National Council on Higher Education

The Council’s functions over higher education policies are defined broadly under s. 12(1) (a) of the Act, which is to plan, formulate and determine national policies and strategies for the development of higher education.  Higher education is defined in the NCHE as education provided by a higher educational institution.[9] Higher educational institutions are defined to include ‘educational institution whether or not established under any written law and including a private educational institution providing higher education leading to the award of a certificate, diploma, degree or the equivalent thereof.’[10] These definitions give the Council a jurisdiction over higher education that is wider than that of even the Minister as it includes institutions that are not established under any written laws. The prescribed composition of the Council reflects its broad remit. Council members are appointed from both public universities and private higher education institutions.[11]

The policymaking functions of the Council are listed in s. 12(1) of the Act. The functions appear to cover every aspect of higher education from the formulation of higher education policies to determining policies on the entry of students, the areas of studies to be undertaken and even setting guidelines on fee structures. Although the functions do not expressly include questions concerning the establishment of higher education institutions, their numbers or location, such functions may be implied from 12 (1) (a) and (c) as shown below. The full list of the functions of the Council is;

(a)          to plan, formulate and determine national policies and strategies for the development of higher education;

(b)          to co-ordinate the development of higher education;

(c)           to promote and facilitate the orderly growth of institutions of higher education;

(d)          to determine policies and set criteria for the allocation of funds to higher educational institutions;

(e)          to determine policies relating to the entry of students to higher education institutions;

(f)           to determine policies and set guidelines on matters pertaining to the salary structure and personnel management system of Universities and University Colleges established under the Universities and University Colleges Act 1971;

(g)          to determine policies and set guidelines on fee structure;

(h)          to determine policies and set guidelines on the areas or courses of study to be undertaken by higher educational institutions;

(i)            to determine policies and set guidelines on the conduct of any course of study or training program by higher educational institutions jointly or in association, affiliation, collaboration or otherwise, with any University or institution of higher education or other educational institution or organization within or outside Malaysia;

(j)           to determine policies and set guidelines for the involvement in business activities by universities in accordance with the powers conferred under the Universities and University Colleges Act 1971; and

(k)          to take such actions or do such things as it deems fit or necessary to enable it to carry out its functions and powers effectively.

The Minister and the Council.

Our view, with respect, is that the Minister in charge of higher education will be unable to exercise his powers over higher education except in accordance with the policies and guidelines issued by the Council.

The Minister’s role in higher education is specified in several of the legislation on higher education. Under the EA,[12] the parent legislation on education, the Minister bears the responsibility for higher education and the general direction of higher education. Section 70 of the EA provides that the,

‘Minister may provide higher education in higher educational institutions, ‘in accordance with any written law relating to higher education.’

This is distinctly different from the way the Minister’s powers over the other levels of education are stated in the EA. The Minister has a duty to provide primary education[13] and secondary education,[14] and discretion to provide post-secondary education and establish vocational colleges.[15] Under the EA, the Minister is also vested with the discretion to establish and maintain colleges and polytechnics other than colleges with the status of a university or university college established under the UUCA. As for teacher education colleges, the Minister’s approval is required for their establishment and maintenance, but the Minister may establish and maintain such colleges.

The implications of section 70 when read in conjunction with the other provisions of the EA are first, the Minister has no powers to establish higher education institutions other than those provided for in the Education Act, and that as far as higher education is concerned, the Minister is bound to act in accordance with any written law relating to higher education. The other implication of s. 70 is that the provision of higher education in the country is to be determined by specific legislation creating such institutions.

The two main legislation establishing higher education institutions are the UUCA and the PHEA. Each of these two acts describes the role of the Minister in almost identical terms and they echo section 70 of the Education Act. Under section 3 of the UUCA, the Minister is responsible for the ‘general direction of higher education and the administration of the Act, which shall be in accordance with the national policies, strategies and guidelines on higher education formulated or determined an authority established under any written law for such purpose (emphasis added).’ Under section 4 of the PHEA, the Minister is empowered to give directions to the Registrar General of Private Higher Education on matters that are not inconsistent with the provisions of the Act[16] and that the directions may be in relation to matters in which national policies, strategies and guidelines on higher education are formulated or determined by the Council.[17]

Section 12 (2) of the NCHE Act reinforces the provision in section 70 of the EA. The subsection states that ‘upon the formulation or determination by the Council of the national policies, strategies, and guidelines in relation to its functions under paragraphs (1)(a) to (k), the Minister shall implement the policies, strategies and guidelines accordingly (emphasis added).’

The National Council on Higher Education is, therefore, a vital part of the national higher education system, particularly in relation to the powers of the Minister. Without the Council the system is incomplete, and the Minister may not be able to act on matters concerning higher education under any of the legislation if they concern policy over which the Council has jurisdiction.

The Council was established in 1997. The establishment requires the appointment of members to the Council as stipulated in the NCHE, which is the statutory duty of the Minister. The Council is made up of the Minister, who is the chairman and other members who are appointed by the Minister. As such, it is the Minister’s duty under the Act to appoint the members of the Council (see s.3 and s.4 of the NCHE). Not establishing the Council amounts to non-compliance with the NCHE Act. The Minister has no discretion on the matter. Section 4 of the NCHE Act stipulates the individuals who are to be appointed as members. It must be emphasized that the appointment of members to constitute the Council is not a discretionary matter for the Minister. It is a requirement of the law.

However, at some time in 2011, the Council ceased to function. This could only have happened if members were not appointed to the Council and those acting in ex-officio capacities failed to fulfil their obligations under the NCHE. It would appear from the report in the Star[18] that there are doubts about the membership of the Council because of a confusion of ministries. When the NCHE was passed, there was only one ministry in charge of education. With the establishment of the Ministry of Higher Education, there are now two ministries with oversight on education. Some of the ex-officio appointments to the Council under the NCHE Act are of officials from the Ministry of Education when the appropriate ministry now is the Ministry of Higher Education. This is a matter that could have been resolved by an amendment to the NCHE Act. It cannot be a reason to suspend the NCHE Act and the Council. Such amendment was proposed by the committee appointed by the Minister in 2019 to review the higher education system and recommend provisions for harmonization of the laws.

The same news item that was mentioned earlier reports that the functions of the Council are now being performed by a committee described as the Higher Education Advisory Committee (JPPT). This would only exacerbate the situation because there will now be a group of persons purporting to perform statutory functions of the Council without legal authority. Any policy or actions emanating from the JPPT will clearly be open to challenge. The statutory functions of the Council cannot be performed by any other person or entity. The Ministry will be usurping the powers of the Parliament by attempting to do so.

Reasons for reactivating the Council

The reasons for reviving the National Council on Higher Education must be obvious from what has been discussed so far. But there is also some urgency in restoring the Council because, without the Council, policies that have been made in the interregnum when the Council was not functioning may be open to legal challenge and made void. The absence of the Council may also draw criticism that the Minister is avoiding the oversight of a council established by Parliament to formulate policies and guidelines for higher education. Also, because of the integral role a policy-making body plays in the system of higher education, its absence leaves the system weak if not dysfunctional.

 

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[1] The authors are CEO and Executive Manager respectively of Espact Education Services www.espact.com.my

[2] Surprisingly, there is no single official document to explain the purpose of the several acts that were passed especially since it was the first attempt to give legislative shape to the higher education system. Also, and more importantly, the establishment of private universities which was being facilitated by the Private Higher Educational Institutions Act 1996 was a policy move that abrogated government monopoly over the establishment of universities in the country. The closest to an official statement on the reforms that were being made appears in a keynote address delivered on 22 April 1996, by the then Minister of Education, Dato’ Seri Najib Tun Abdul Razak at a seminar on the management of higher education institutions at the Petronas Training Centre in Kajang. The Minister described the passing of the five acts as a ‘great milestone in the history of higher education in Malaysia’ and that there had never been a reform of the scale that was being attempted with the five acts of parliament. However, his address does not go on to explain how the different acts would lay the foundation of a higher education system. Instead the rest of his comments deal mainly with the changes being made to the UUCA and what appears to be concerns he perceived in the proposal to corporatize public universities. His answers to these concerns were that corporatization will make universities more efficient and improve the salaries and working conditions of those who worked there. He also allayed concerns that the move might lead to universities charging fees. The Minister makes no mention of the important systemic changes that the statutes would bring about or how there would be a separation and balancing of the powers over higher education.

[3] One of the weaknesses of the NCHE Act is that its actions are not transparent. There are no provisions imposing any obligation on the Council to publish its policies or issues raised before it. The Council’s functions under s. 12 of the NCHE Act, including the determination of policies and guidelines do not create any obligation on the Council to publish its decisions.

[4] Article 153 of the Federal Constitution makes it ‘the responsibility of the Yang di-Pertuan Agong to safeguard the special position of the Malays and natives of any of the States of Sabah and Sarawak and the legitimate interests of other communities in accordance with the provisions of this Article.’

[5] ITM Act, section 3A.

[6] NCHE Act, section 4.

[7] The six members appointed by virtue of their official position are the Minister as Chairman, the Secretary General of the Ministry of Education the Director General of Education, the Secretary General of the Ministry of Finance, the Director General of the Economic Planning Unit and the Attorney General.

[8] The other eight members, appointed by the Minister of Education are three Vice-Chancellors of any of the Universities or University Colleges established under the UUCA, not more than two persons who are the chief executive officers of any private higher educational institution and not more than three persons who because of their knowledge and experience would in the opinion of the Minister be of assistance to the Council.

[9] National Council on Higher Education Act 1996, section 2.

[10] Ibid.

[11] National Council on Higher Education Act 1996, section 4.

[12] Similar provisions are found in the Universities and University Colleges Act 1971 and the Private Higher Educational Institutions Act 1996.

[13] Education Act 1996, section 27.

[14] Education Act 1996, section 30.

[15] Education Act 1996, sections 33A-33D.

[16] Private Higher Educational Institutions Act 1996, section 4(1).

[17] Private Higher Educational Institutions Act 1996, 4(2).

[18] Please refer to footnote 1 above.