Study on Funding Methodology for Malaysian Public Institutions of Higher Learning – Ministry of Higher Learning (MOHE)

The Ministry Of Higher Learning (MOHE) is responsible for developing an advantageous higher education ecosystem in Public and Private Institutions of Higher Education (PIHE and PvIHE respectively), Polytechnics and Community Colleges.


Funding the education system of a country is critical for nation-building and is a formidable task which can be financially strenuous for the government. In light of this, the Ministry of Higher Education ( MOHE) commissioned iA to study the cost structure and formulation of funding methodology for public institutions of higher education (IHEs) , review the existing funding mechanism and redefine a new Funding Methodology (“FM”) that is more efficient and effective in the allocation of resources for public IHEs.


We had to broadly evaluate the current budgeting and allocation system of public IHEs. The standardised budgeting system that was in use was called Modified Budgeting System (“MBS”) . We discovered that it was critical to not only customise a generic MBS but to ensure its effective implementation for achieving a balanced budget and improving the accountability of managing public IHEs.

Our study identified 4 public IHEs, namely : Universiti Malaya – a full fledge university offering a whole range of degree programmes; Universiti Malaysia Sabah – a fairly new university located in east Malaysia; Universiti Teknologi MARA – a unique university with 14 branches all over Malaysia; and Kolej Universiti Teknikal Kebangsaan Malaysia .

Among other things, weaknesses in the mechanism which hindered the effective implementation of MBS were analysed and a comparative study of foreign universities’ funding mechanisms was conducted.

The output delivered to MOHE included:

  • A new funding framework and mechanism for more effective and transparent resource allocation to public IHEs, encompassing : appropriate measures linking funding of IHEs to input performance and quality criteria .
  • A strategic roadmap that described the framework for implementation, organisations involved and the restructuring of IHEs. The roadmap also included necessary transitional arrangements for implementing the new funding methodology, while highlighting methods to overcome issues and constraints that may hinder effective implementation