Penang able to handle the heat

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Good planning, flexibility and a diversely qualified staff ensure the success of Penang’s private colleges and universities.

It is widely known that Penang aspires to become a regional education hub. In addition to Universiti Sains Malaysia and Universiti Teknologi Mara, the state is home to a further 28 private higher education institutions. In 2012 alone, more than 12,000 students were enrolled in these private institutions1.

However, the recent closure of the Allianze University College of Medical Sciences shows that Penang-based institutions are by no means exempted from the current volatile private higher education scene plaguing the country. This particular case alone resulted in the reallocation of more than 2,000 students and the loss of around 500 staff.

Nevertheless, long-established private institutions have defied these worrying financial trends. Among those with a sterling financial record are Disted College, Equator Academy of Art, Han Chiang College, INTI International College Penang, Penang Medical College (PMC) and SEGi College. Collectively for the year 2013, they made nearly RM7mil in profits-after-tax 2.

Curious about what led to their ability to not only survive, but thrive amid the difficult operating environment, Penang Monthly chats with the leaders of some of these institutions to find out what they are doing right, how they differentiate themselves from the rest of the pack and their insights on Penang's future direction as an education hub for the region.

Effective business model is key

A unifying thread shared by the leaders of these institutions was their shrewd and socially responsible outlook towards management. While financially sustaining their institutions is of primary importance, profits or surpluses, as one leader puts it, are secondary to providing quality education – with graduates attaining employable skills.

In this respect, Datuk Chuah Kooi Yong, principal of Equator Academy of Art, says that it is important to look to labour market needs. He cites his own institution’s efforts in pioneering popular 3D animation and fashion design courses that are currently in serious demand in the creative industry.

Karen Lai

all students at SEGi College Penang go through a professional and personal development course every Saturday. The principal there, Cheah Teong Keat, emphasises that each course is meant to cater to the individual needs of students so that when they graduate, they acquire more than just a piece of paper; more importantly, the students have professional and personal competencies that enable them to be competitive in the job market. This, he claims, gives SEGi its “personal touch”.

Syerleena Abdul Rashid

3D animation lab at Equator Academy of Art.

Being frugal, efficient and lean are the three key management objectives that we try to attain to ensure that Han Chiang has a sustainable business model.

Of equal importance to good management is the management’s adopted business model. Here, Cheah elucidates the importance of identifying the institution’s target segment of the market. SEGi for instance targets lower and middle income students, who represent a sizeable portion of the market in Penang. Due to the scale of this market segment, SEGi is able to accept students at a lower cost than its competitors, in addition to awarding scholarships based on merit, and needs to attract worthy students.

As a not-for-profit organisation, Han Chiang College has a different business strategy, in part thanks to the generosity of its donors. Dr Chow Yong Neng, principal of Han Chiang College, says, “Having our own campus which is provided via our Board of Directors means that Han Chiang has a lower operating cost structure compared to many for-profit private higher education institutions. This allows us to offer tuition fees that are much lower than the market rate to attract students who may be constrained by the fees charged by our competitors.”

“Being frugal, efficient and lean are the three key management objectives that we try to attain to ensure that Han Chiang has a sustainable business model,” adds Chow. “The long-term and continued development of relationships with industries to ensure that our graduates’ knowledge is relevant, is perhaps the most important factor for Han Chiang’s long-term sustainability.”

Role of diversity and women in senior management

Each institution highlighted the diversity of its top management, which helps bring different perspectives to the table when important decisions need to be made. The diversity may be in terms of the team’s background, nationality, age or past work experiences, which allow the institution’s management to have a broad and crucial overview needed for adapting to different challenges.

Karen Lai

Han Chiang College campus.


The market is shrinking. Year on year, the number of students sitting for public examinations is declining. In the past the figures used to be around half a million; then it dropped to 490,000.

In this regard Prof Amir Khir, president and dean of PMC, notes the contributions of Prof Kevin Nolan, an Irishman with a doctorate in Chemistry, and Salmah Aspari, the senior administrative manager. “Nolan is not clinically trained, and his purview is to look into academic structures and procedures and research,” says Amir. “He is a chemist and a research scientist first, and he has been dean of postgraduate medicine at the Royal College of Surgeons in Ireland. Salmah had been with the Penang Development Corporation, so she understands the state and governmental mechanism. As for me, I am an academic. My lack of business acumen is compensated by the chief operational officer who has been in the corporate world. Being diverse, we fit in to what is needed.”

Karen Lai

Prof Amir Khir, president and dean of PMC.

On the role of women in top management, Chuah points out that his institution has more women than men in management and on the teaching staff. To him, women in top management help ensure a balance of ideas. As a fun fact, he tells me that the longest serving member of staff at Equator is a woman; she has seen the school grow from seven students to what it is today.

In fact, a cursory view of the higher education industry shows many women in top management positions. Just to name a few, Hew Moi Lan spearheads SEGi International Berhad, the Sunway University group has Elizabeth Lee at its helm and Taylor’s University group has Stella Lau as its chief operating officer. Han Chiang College’s Chow opines that women’s involvement in top management in Malaysia is going to be more prominent; he says he sees it happening in the private higher education sector and civil service. Given that women in Malaysia are becoming better educated than their male counterparts, he is optimistic that, casting aside cultural bias, Malaysian women will take over the corporate world in under 20 years.

Future challenges and prospects

In both Penang and Malaysia, Cheah views the market as becoming flat. He bases this on a number of factors, chiefly the observable decline in the number children per household in urban areas. “The market is shrinking. Year on year, the number of students sitting for public examinations is declining. In the past the figures used to be around half a million; then it dropped to 490,000. Now it is only 420,000. This is a challenge we face,” he says, adding that more will be competing for an ever smaller slice of cake with the arrival of the University of Hull, scheduled to open in 2017 in Batu Kawan.

The 15% cut in National Higher Education Fund Corporation (PTPTN) loans announced during last year’s budget is another factor the institutions agree will impact their enrolment numbers – the effects of which are yet to be felt. Chuah also brought to attention the current economic situation with the onset of GST and a depreciating currency adding to the financial burden of families supporting their child’s education. He adds that Equator Academy of Art is counteracting this cut in student funding by offering more financial aid to students who are in need. Likewise Han Chiang College, PMC and SEGi College Penang have also said they will continue awarding scholarships to attract a diverse student base; with that, enrolment for the moment remains stable. Han Chiang College even plans to increase its enrolment for the next few years as it moves towards attaining university college status.
For the time being, it is business as usual for these private institutions of higher learning, as their effective business plans, healthily diverse body of staff and timely improvisations allow them to weather volatile market conditions and pave the way for Penang to become a regional educational hub.

International students are a segment of the market that continues to elude Penang’s institutions. The main reasons attributed are not quality of education or recognition of the institution; rather, the consensus is that international students frequently prefer the cosmopolitan lifestyle that bigger cities like those in the Klang Valley have to offer. Even the Asean Economic Community (AEC) being achieved at the end of the year will have little impact on their international enrolment numbers, it is contended.

One institution that is optimistic and is actively exploring the possibility of attracting international students is PMC. Prof Amir discloses that the college is looking at prospective students from international schools in Medan, Jakarta, Southern Thailand, Yangon and as far away as Ireland. This will hopefully add to the good reputation that Penang already enjoys, partly through its success in medical tourism.

Syerleena Abdul Rashid

On the other hand, Chow states that even with the AEC promising a free flow of skilled labour, it is likely to take time before Asean nations produce legislation along the lines of the EU’s Qualifications Framework, with each country standardising the recognition of degrees and qualifications awarded. “For Malaysia, the integration of vocational and academic pathways in the Malaysian Qualifications Framework is still murky at present; it will take at least five to 10 years for Asean nations to work out their differences for this to have any impact on foreign student numbers in Malaysia.”

For the time being, it is business as usual for these private institutions of higher learning, as their effective business plans, healthily diverse body of staff and timely improvisations allow them to weather volatile market conditions and pave the way for Penang to become a regional educational hub. 

 

Educated at pioneer Lasallian institutions in Malaysia and Singapore, Matthew Tan Kiak Hin is currently a research analyst at Penang Institute



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