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Private Higher Education in Developing Economies in Southeast Asia: Challenges to and Prospects for its Sustainability in a Post-Pandemic World

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The COVID-19 pandemic has created massive economic disruptions and challenges to private higher education institutions (HEIs) across Southeast Asia. Before the pandemic, private universities shared an extensive reach in college enrolment and was a growing sector. In contrast, private universities are now confronted with significant enrolment declines and higher dropout rates due to prolonged erratic school closures, economic losses, financial uncertainties, and disruptions on traditional modes of teaching.


University World News reported in April that almost half of private universities in Indonesia saw at least a 50% decline in new students coupled with significant dropout rates. In another report, the Philippine Association of Colleges and Universities (PACU) revealed that almost half of the private universities suffered an enrolment decline of 10 to over 50% in the 2020–2021 academic year. These losses were piled on top of long-term deficits from the K-12 transition. In Malaysia, a report with the foreboding title “The Collapse of Malaysian Private Universities” described a pending collapse as 44% of private universities were technically financially insolvent, and around 55% were operating on trading losses. Travel restrictions for foreign students had also hampered foreign admission in private universities. In the same report, according to the Malaysian Association of Private Across Colleges and Universities (MAPCU), foreign students deferred admission which translated into a 44% revenue drop, particularly among foreign-affiliated universities. In Vietnam, in a 2021 paper published by Dr Que Dang Nguyen, Vice President of the Vietnam National Academy of Public Administration, the private sector needed to narrow down their scale or face closures.


The narratives of Southeast Asian private universities amid the COVID-19 pandemic paint shared accounts of change and challenge for most. The pandemic certainly exacerbated their already precarious financial standing. The accelerated, albeit drastic, shift to emergency remote teaching and learning, has also weighed heavily on their financial viability and operational capacity.


The pandemic raises these questions: Has the pandemic altered prospects for private education in Southeast Asia? What opportunities does the post-pandemic context offer private universities in the region?

During the pandemic, private HEIs resorted to cost-cutting measures that involved laying off untenured employees or to draw reserves. These measures, however, are not sustainable for the long term.

Private Education: Context and Challenges
Private universities were grappling even before the pandemic with economic and political externalities that threaten their survival. In its golden era, private education was founded as a viable and even preferred alternative to public higher education. In 2018, Philip Altbach and Liz Reisberg — founding director and research fellow at Boston College Center for International Higher Education, respectively — alluded to the market-driven trend in privatisation as the “massification” of higher education. However, a challenge to privatisation is the shifting political focus and bias towards free, public higher education in Southeast Asia. The Philippines is a prime example. As a palliative, the government extended access to private universities through student loan schemes and tertiary education voucher subsidies (called UniFAST) for students who opt to enrol in private universities. Despite this initiative, financial support for low-income students is still mostly sourced from university funds or private donors and endowments.


Before the pandemic, problems relating to quality, retention, high costs, access and equity had long hounded private universities. The market forces that drive private universities hinder research productivity as universities focus on programme offerings that are labour market-driven and can yield immediate results (i.e., employability). Arresting student attrition and retention of highly qualified faculty are recurrent problems. Unfair competitive practices and tuition price wars among neighbouring private HEIs are also evident.


Tuition and fees vary widely across the different types of private universities with the more elite, exclusive universities charging higher rates versus mass market and non-selective private universities. As the pandemic has highlighted, poorly funded private universities are at the highest risk as they depend on tuition revenues. The lack of resources, in the absence of government subsidies, adversely leads to the dearth of investments in infrastructure, research and faculty development. During the pandemic, private HEIs resorted to cost-cutting measures that involved laying off untenured employees or to draw reserves. These measures, however, are not sustainable for the long term.


Government regulations and unfavourable policies hinder institutional autonomy for new offerings and flexibilities in fees. Legislated tax incentives for private universities are also subject to political changes. The recent Philippine experience presents an interesting case. Its Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act — which temporarily reduced the tax rate to 1% for three years — was meant as a relief for private universities during the pandemic. However, private universities opposed its interpretation by the tax authority. It has been reported that, if enforced, CREATE would instead increase the sector’s tax rate to 25%.


Private Universities and Their Responses to the Pandemic
Across Southeast Asia, private universities responded to school closures and made large-scale transitions towards online or remote learning to ensure learning continuity. Some HEIs opted for massive open online courses (MOOCs) while others introduced new models for instructional delivery, including setting up learning management systems (LMS) and video-conferencing facilities. While digital education is the path ahead, such transition demands substantial costs and investments.


Private universities struggle to remain resilient and viable in the face of competition from public HEIs and the economic fallout from the pandemic. Online learning has highlighted inequities in access to technology, limitations in internet connectivity, and the lack of gadgets for many students. Across Southeast Asia, private universities introduced direct stop-gap measures for their students — such as extended payment terms, gadget provisions, lower internet fees, and tuition and miscellaneous fee waivers. Direct financial assistance through loans, subsidies and scholarships to qualified students has been initiated. In the Philippines, private universities offered student loans backed by startup private equity firms, such as Bukas.ph and InvestEd. Further south, The Jakarta Post reported the Indonesian government’s allocation of Rp1 trillion (U$70.6 million) to help 410,000 students mostly in private universities to pay their tuition fees. However, such concessions are still deemed inadequate. In Vietnam, big internet providers pledged free data charges for the education sector.


As early as 2012, the Asian Development Bank has recommended critical indirect actions to ensure the future of private universities. These indirect, political and economic mechanisms include tax incentives, minimal regulations on profits and returns, and funding for research and other grants. After all, the outlook for private universities is contingent on the political and economic incentives for all private enterprises in a post-pandemic context.

A rationalised higher education development plan can better delineate the parameters of complementarity between public versus private universities and avert needless competition between them.

Private Universities at a Crossroads
Across Southeast Asia, a post-pandemic context presents an uncertain and undefined future for private universities. Steady market expansion, population growth and a rising middle class may assure the future of private universities. Private universities need to re-imagine education as flexible learning to ensure learning continuity and sustainability. It might be possible that as prolonged school closures persist, students will prefer private universities that prove their distinct capacity to deliver innovation. Private universities will need to invest in digital infrastructure, leading to long-term returns and targeted increases in student enrolment. However, for cash-strapped private universities in developing economies, investments in digital technologies may not be feasible to begin with. Indirect government incentives must then allow for recovery and generation of capital for technology investments and re-tooling faculty for innovative and responsive pedagogies.


Private universities must be agile and imaginative to trends in the job market and instructional delivery. ASEAN private universities can form partnerships through distance, transnational education. Online faculty exchanges and regional research collaborations open growth prospects for private universities; through these partnerships, private universities might gain long-term leverage.


A rationalised higher education development plan can better delineate the parameters of complementarity between public versus private universities and avert needless competition between them. Policies must enable autonomy in fees and curricular options, but restrict opening new or substandard HEIs from offering oversubscribed programmes. Quality standards even for hybrid learning must be laid down, and HEIs that prove their worth can then be awarded incentives.

 

In developing economies, public HEIs at best should focus on priority programme gaps that are: critical to national sustainable development goals, capital-intensive, and high-risk that substantial government funding can sustain. In the Philippines, public HEIs can focus on relevant and critical degree programmes such as: agri-fisheries to ensure food security; scientific research; disaster risk reduction; community development; and social work.


Across Southeast Asia, a policy environment beneficial for private universities must be in place, particularly in developing economies. Legal barriers must be revisited to allow private universities to receive direct and equitable government subsidies similar to public HEIs. Government student subsidies for low-income families that prefer to attend private universities must be expanded.


The volatile and uncertain pandemic renders a bleak outlook, as many private universities remain vulnerable to the economic downturn in a post-pandemic context. Private universities are now at a crossroad and where the road turns remains to be seen.

MARIA ALICIA BUSTOS-OROSA

Maria Alicia Bustos-Orosa is a Professorial Lecturer of the Department of Counseling and Educational Psychology at De La Salle University Manila and Consultant for research and institutional assessment at Baliuag University.

FEBRUARY 2022 | ISSUE 11

Riding the waves of change

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Leaders and changemakers of today face unique and complex challenges. The HEAD Foundation Digest features insights and opinions from those in the know addressing a wide range of pertinent issues that factor in a society’s development. 

Informed opinions can inspire healthy discussions and open up our imagination to new possibilities. Interested in contributing? Write to us at info@headfoundation

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