Malaysia Needs to Focus on Domestic Needs and Regional Strengths” by Koh Sin Yee – ISEAS – Yusof Ishak Institute

EXECUTIVE SUMMARY

• Inbound international student mobility has been a consistent focus of the Malaysian government over the past decade. The Malaysia Higher Education Blueprint 2026-2035 (MHEB 2026-2035), launched in January 2026, articulated the aim for Malaysia to become a global education hub, attracting 500,000 international students by 2035.

• Malaysia’s ambitions must go beyond the matrix for global reputation (e.g., international student numbers and university global rankings). Attention must also be paid to domestic needs (i.e., the study of graduate employment needs of Malaysian students, and the country’s labour market needs) and regional strengths (i.e., Malaysia’s existing position as a regional education hub).

• Malaysia can leverage its unique market positioning as a bridge for Western and Eastern transnational education by developing branch campuses and joint degree programmes, including those with Technical and Vocational Education and Training (TVET) components. For example, educational cooperation between China and Malaysia can enhance Malaysia’s long-term attractiveness as a regional study destination for China.

• A balanced approach to higher education development is essential. This entails careful balancing of trade-offs between internationalisation and domestic priorities, quantity and quality, and the expansion of education and labour market absorption. This balanced approach can better ensure that policies are not overly skewed towards meeting global ranking indicators, but focused on addressing the real needs of students (local, regional, and international) and the labour market.

Koh Sin Yee was Visiting Fellow at ISEAS – Yusof Ishak Institute, and is Senior Assistant Professor at the Institute of Asian Studies, Universiti Brunei Darussalam.

ISEAS Perspective 2026/42, 5 June 2026

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INTRODUCTION

Inbound international student flow has been a consistent focus of the Malaysian government over the past decade. The Malaysia Higher Education Blueprint 2015-2025 (MHEB 2015-2025) had set an aspirational target of attracting 250,000 international students to the country by 2025.[1] Although the achieved total international student enrolment number in 2024 was around 137,000 (55% of the target),[2] the Malaysia Higher Education Blueprint 2026-2035 (MHEB 2026-2035), launched in January 2026, has set an even more ambitious goal of attracting 500,000 international students by 2035.[3]

The MHEB 2026-2035 has also articulated an aim to position Malaysia as a global education hub characterised by “academic excellence, impactful research, and international collaborations” in order to “attract diverse talent” and “solidify [the country’s] reputation as a competitive and trusted leader in the global higher education ecosystem”.[4] This suggests that the aim is to go beyond Malaysia’s current position as a regional study destination,[5] which has been aided by the growth of intra-Asian[6] and intra-ASEAN[7] student mobilities.[8]

An external orientation towards global reputation (e.g., international student numbers and university global rankings) is indeed important for achieving Malaysia’s aim of becoming a global education hub. However, what about corresponding domestic and regional orientations? For example, where and how should Malaysian students’ learning and post-study employment be featured in this aim, as articulated in the MHEB 2026-2035? Can Malaysia leverage its existing position as a regional education hub to achieve this aim?

To address these questions, this Perspective first examines the current state of higher education enrolment and graduate employment of Malaysian students, before reviewing relevant sections of the MHEB 2026-2035. It draws on available data to analyse three interrelated aspects. An understanding of the current situation – Malaysia’s outbound student mobility, enrolment of Malaysian students in local higher education institutions (HEIs) and Malaysian graduates’ employment status – can offer useful suggestions towards meeting Malaysia’s aim of becoming a global education hub.

MALAYSIA’S OUTBOUND STUDENT MOBILITY

There are two key data sources for Malaysia’s outbound international student mobility. The first is the UNESCO Institute of Statistics (UIS),[9] which collates and estimates data on outbound student mobility[10] from source countries (Malaysia in this case) as well as data on inbound student mobility from source countries hosted in study destination countries. The second is Malaysia’s Ministry of Higher Education (MOHE), which publishes annual statistical reports on Malaysia’s higher education,[11] including data on Malaysian students studying overseas.

Notably, these datasets may not capture the full extent of Malaysia’s outbound tertiary students. Some datapoints in the UIS dataset are based on UIS estimations. Furthermore, the “country of origin” category in the dataset may not necessarily reflect the country of citizenship.[12] Hence, the inherent limitations in the UIS dataset may lead to undercounting or overcounting of the actual numbers.

Data on Malaysian students studying overseas in the MOHE dataset is based only on those who are registered with Malaysian embassies or Education Malaysia Offices abroad, and those who are funded by scholarships sponsored by the Malaysian government, government-owned companies, public universities and private sector companies.[13] Thus, students who are not registered with these Malaysian overseas offices or who are not recipients of scholarships recognised or known by the Malaysian government may not be recorded in the dataset. Hence, the MOHE dataset may overrepresent (known) scholarship pathways and undercount non-scholarship pathways. Nevertheless, despite these data limitations, both datasets can provide an overview of outbound student mobility from Malaysia.

UIS data show that, from 2000 to 2023, on an annual basis, around 46,000-65,000 Malaysian students engaged in outbound international tertiary student mobility (Figure 1). The linear trend over this period is on a moderate incline, although during the post-COVID years (2021-2023) the numbers have dropped by more than 20% compared to the numbers during the mid-2010s’ peak. Similarly, MOHE data also shows a drop in numbers since the mid-2010s’ peak, with 2020 seeing the lowest dip (Figure 2). The MOHE dataset shows that the average annual number during the post-COVID years of 2021-2024 was 55,520.

Figure 1. Outbound Internationally Mobile Tertiary Students Studying Abroad, from Malaysia, 2020-2023

Source: UIS[14]

Figure 2. Number of Malaysian Students Studying Abroad (Sponsored and Self-Sponsored), 2013-2024

Note: No comparable data prior to 2013.

Source: MOHE (various years)[15]

Both datasets show that the UK (including Ireland) and Australia have been the top study destinations. From 2013 to 2024, both destinations received an annual average of 14,000-15,400 outbound Malaysian students. Other popular destinations for outbound students from Malaysia include Taiwan, Egypt, the USA, China, Indonesia, Jordan, Japan, the Russian Federation, and South Korea. Student numbers in these study destinations are not comparable to those of the UK and Australia, with the exceptions of Taiwan (prior to 2024) and China (after 2023/24).

According to data from Taiwan’s Ministry of Education reported by Lu and Yip (2026), Taiwan has been hosting around 10,500-17,500 Malaysian students annually from 2015 to 2023, until the number dipped to below 10,000 in 2024 (Figure 3).[16] Indeed, Malaysia was Taiwan’s top source of international students for years, until it was overtaken by Vietnam and Indonesia in 2019 and 2020 respectively.[17] The decreasing trend in Malaysian students studying in Taiwan has been attributed to the rising appeal of China as a study destination compared to Taiwan, as well as the availability of affordable local study options in Malaysia[18] – a point that will be further discussed below.

Indeed, China is noted to have been hosting growing numbers of Malaysian students (estimated to be 10,000 in 2023), a trend that has been facilitated by the growing prestige of Chinese universities, the availability of full or partial scholarships, and the strong bilateral relations between China and Malaysia.[19] The Belt and Road Initiative is also said to have strengthened educational cooperation between China and Malaysia, facilitating educational exchanges and mutual recognition of degrees.[20] Such educational cooperation initiatives include short, medium and long-term vocational training in China for Malaysian students enrolled in Technical and Vocational Education and Training (TVET) programmes.[21] While China may pose short-term competition to Malaysia as a study destination, the close China-Malaysia educational cooperation serves to enhance Malaysia’s long-term attractiveness as a regional-to-global study destination offering transnational education opportunities with China. This is a regional strength that Malaysia can leverage upon in achieving its aim as a global education hub.

Figure 3. Number of University Students in Taiwan from Selected Southeast Asian Countries, 2015-2024

Source: Adapted from Lu and Yip (2026)[22]

Overall, the trends reviewed in this section indicate the development of segmented student pathways and geopolitical influence on outbound student mobility from Malaysia. As will be detailed below, the development of Malaysia’s local higher education landscape constitutes another segment of student pathways. Taken together, these trends (external and internal) hold implications for Malaysia’s aim to become a global education hub.

ENROLLMENT IN LOCAL HIGHER EDUCATION INSTITUTIONS

The post-COVID drop in outbound student mobility from Malaysia observed above could be due to a few reasons. These reasons include factors associated with the global shift in demand for overseas study and shifts in student preferences for study destinations (i.e. external factors), as well as the increasing availability of diverse, affordable and internationally recognised tertiary study options in Malaysia (i.e. internal reforms). These factors include: (1) decreasing attraction of popular overseas study destinations due to restrictive immigration policies; (2) decreasing attraction of overseas study due to the availability of remote and transnational education; (3) decreasing attraction of overseas study due to the depreciation of the Malaysian ringgit; and (4) changing youth preferences regarding higher education and employment. Importantly, these factors do not exist in isolation. Rather, they interact to present a shifting landscape of higher education options for Malaysian students, where increasing enrolment in local HEIs can be observed.

First, in recent years, stricter border controls and immigration policies implemented by the previously popular big four study destination countries (Australia, the UK, the USA and Canada)[23] may have caused prospective Malaysian students to change or delay their study abroad plans. For example, Australia has introduced international student caps and more stringent entry requirements since 2024.[24] These stricter policies, alongside what has been called “a stop-start approach” concerning inbound international student mobility,[25] has produced mixed messages for prospective international students. Similarly, Canada introduced a study permit cap,[26] and the USA implemented heightened scrutiny of international students.[27] Faced with such student visa and immigration uncertainties, prospective Malaysian students may have changed their study abroad plans. In this regard, some may have pivoted to enrolment in local HEIs. The rising trend of Malaysian students enrolling in local HEIs presents an opportunity for achieving Malaysia’s aim of becoming a global education hub (e.g., through the enhancement of the quality of education and graduate employability).

Second, the rise of remote and transnational education options[28] may have diluted prospective Malaysian students’ interest in pursuing in-person overseas study. This could also be part of the broader post-pandemic trend of global waning of enthusiasm for studying abroad.[29] Indeed, MOHE data show an increase in the number of Malaysian students enrolling in private HEIs in Malaysia during the post-pandemic years of 2021-2024 (Figure 4). These institutions include branch campuses of Australian, British and Chinese universities where students can access foreign university qualifications with more affordable tuition and costs of living without needing to undertake in-person overseas study. The private HEI category also includes private universities (including TVET universities), university colleges and colleges, offering a variety of courses at the degree, diploma and certificate levels.[30] As mentioned earlier, some of these courses include exchange and overseas training opportunities as part of the curriculum, thus offering students a cost-effective higher education option without compromising on overseas experiences. In this regard, the expansion and development of Malaysia’s higher education sector may have contributed to the attractiveness of local HEIs and studying in-country for Malaysian students. As mentioned earlier, this is a market strength that Malaysia can leverage upon in achieving its goal as a global education hub.

Figure 4. Malaysian Students Enrolled in Private and Public Higher Education Institutions (HEIs) in Malaysia, 2015-2024

Note: No comparable data prior to 2014.

Source: MOHE (various years)[31]

Third, the expansion and development of Malaysia’s higher education sector occurred alongside the depreciation of the Malaysian Ringgit since the 1997-1998 Asian Financial Crisis. From 1997/98 to 2024, the Ringgit has been in a slow depreciation trend against the US dollar.[32] During 2022 to early-2024, it was one of the worst-performing currencies in the Southeast and East Asian region.[33] The depreciation of the Ringgit has contributed to higher costs of overseas study, causing some Malaysian students to choose enrolment in local HEIs, which is perceived to be a cost-effective option without compromising on the quality of education.[34] Indeed, research conducted in 2023 suggested that Malaysian students studying overseas typically incur tuition and education costs (excluding accommodation and costs of living) of about RM 65,665-130,470 per year if they studied in the UK, Canada, Australia, New Zealand and the USA.[35] By contrast, tuition fees in Malaysian HEIs are significantly lower: about RM 6,500-16,000 for the entire degree course in public HEIs, and about RM 46,000-200,000 (excluding medicine) in private HEIs.[36] Within a rapidly shifting higher education market globally, regionally and locally, affordability may not be the only consideration for prospective students. Thus, Malaysian HEIs may be able to remain competitive on the basis of their relevance to market needs, even if the Ringgit strengthens. 

Finally, amidst the broader issues of graduate un(der)employment,[37] the decline in the availability of permanent and full-time jobs,[38] and the emergence of alternative employment options such as entrepreneurship[39] and participation in the digital economy,[40] higher education and/or overseas study may not be some Malaysian youths’ priority or preferred pathway into the market economy. It has been noted that Malaysian youths prefer entrepreneurship over salaried employment,[41] and youth-owned establishments and their economic contributions to the Malaysian economy are on the rise.[42] Indeed, alongside the increase in the number of Malaysian students studying locally (Figure 4), the proportion of Malaysian graduates reporting “self-employment” or “entrepreneurship” in the Graduate Tracer Study (GTS)[43] have been on an increasing trend over the past decade for graduates from public HEIs, private HEIs and vocational colleges (Figure 5). This emerging trend is also in part the result of the inclusion of entrepreneurship education in Malaysia’s education system, as will be detailed below. 

Figure 5. Graduates Reporting “Self-Employed” or “Entrepreneurship” in the Graduate Tracer Study, 2015-2024

Source: MOHE (various years)[44]

TOWARDS BECOMING A GLOBAL EDUCATION HUB

Overall, there is a rising trend of Malaysian students enrolling in local HEIs, and a corresponding decline in students from Malaysia studying overseas. Malaysia’s aim of becoming a global education hub must go beyond a focus on international student numbers and HEI global rankings. Beyond an external orientation towards global reputation, Malaysia must meet the country’s human capital and labour needs, on the one hand, and the strategic development of the higher education sector, on the other hand. Crucially, emphasis should be placed equally on addressing the current and near-future study and graduate employment needs of Malaysian students, as well as Malaysia’s labour market needs. At the same time, Malaysia could leverage on its existing position as a regional education hub and offer relevant transnational education options that meet students’ demands.

Regarding graduate employability, self-employment and entrepreneurship (including engagements in the gig economy) may be seen as positive indications of youths being job creators for themselves and others. However, this trend may also have been an outcome of a rapidly shifting graduate employment landscape posing challenges for graduates securing jobs matching their skills, preferences and expectations. Moreover, entrepreneurship is not, and should not be, the easy solution to the issues of youth/graduate unemployment and underemployment. This is because entrepreneurship may not constitute a sustainable form of livelihood in the medium and long term. For example, Abu Rahim and Suhaimi (2022) found in their analysis of the 2010-2020 GTS data that self-employment was viewed by self-employed graduates as “a temporary form of work while searching for more stable employment”.[45] Indeed, the sustainability of entrepreneurial activities depends to a large extent on the existence of infrastructural and policy support, as well as an active and robust market. Thus, the development of higher education and of a supportive ecosystem for entrepreneurship needs to go hand-in-hand.

The MHEB 2026-2035 has identified eleven main gaps and challenges in Malaysia’s higher education (Table 1), as well as ten strategic shifts to address these challenges (Table 2). Among the challenges (Table 1), items 2, 3, and 6 directly address the identified shift from producing “industry-ready job seekers” to cultivating “present and future ready job seekers and job creators”.[46] This shift is expected to be achieved through “equipping graduates with entrepreneurial and innovative skills”.[47] A complementary shift is from equipping students with “technology literacy” to advanced TVET competency (item 3, Table 2).[48] Correspondingly, TVET is to be introduced at primary and secondary stages under the 2027 school curriculum.[49] This approach somewhat addresses previous critiques on the supply-driven approach of the government’s TVET policies[50] by encouraging demand for such education amongst Malaysian youths from an early age. It also reflects a strategic appreciation of the need to implement structural refinements to human capital development across primary, secondary and tertiary education. Indeed, this recognition is reflected in the identified shift towards “agile and resilient governance” (item 5, Table 2) that is to be implemented through the establishment of the National Education Council (MPN) to ensure continuity and cohesion between the education (primary and secondary) and higher education (tertiary) sectors.

The strategic shifts identified in the MHEB 2026-2035 do suggest an awareness of the need for a comprehensive perspective towards making Malaysia a global education hub. MHEB 2026-2035 has outlined areas that need targeted refinement or transformation in order to elevate the state of Malaysia’s higher education sector towards one that is recognised internationally, meets the demands of students and graduates, and incorporates agility in meeting the rapidly shifting demands of the labour market and the economy. Additionally, the articulated foci on diversity, equity and inclusion (DEI) (Table 1; Table 2) suggest an appreciation for the diverse learning and skills development needs of various student groups – including international students. This awareness is important for the development of a robust higher education sector that addresses student access and human capital development for the future labour market.

Table 1. Issues and Challenges in Malaysia’s Higher Education

Source: Summarised from MOE (2025)[51]

Table 2. Ten Strategic Shifts in Malaysia’s Higher Education

Source: Summarised from MOE (2025)[52]

CONCLUSION

The MHEB 2026-2035 has articulated an ambitious aim for Malaysia to become a global education hub. Although attracting international students is important for achieving this goal, attention must also be paid to the extent to which Malaysia’s higher education sector meets the current and near-future study and graduate employment needs of Malaysian students, as well as Malaysia’s labour market needs. With the rising trend of Malaysian students enrolling in local HEIs and the corresponding declining trend of Malaysian students studying overseas, Malaysia’s higher education sector needs to be prepared to cater to the education and graduate employment needs of these students.

A balanced approach to higher education development is essential, covering the entire spectrum of student attraction, human capital development and support for graduates’ education-to-work transition rather than solely focusing on any one aspect. This involves careful balancing of trade-offs between internationalisation and domestic priorities, quantity and quality, and the expansion of education and labour market absorption. In this regard, Malaysia can leverage its unique market positioning as a bridge for Western and Eastern transnational education, through the development of branch campuses and joint degree programmes (including those with TVET components).

In sum, Malaysia’s aim of becoming a global education hub must go beyond an external orientation towards global reputation. It must also focus on domestic needs and leverage on Malaysia’s regional strengths. This balanced approach can better ensure that the policy orientation is not overly skewed towards meeting global ranking indicators, but instead is focused on addressing the real needs of students (local, regional, and international) and the labour market.

ENDNOTES

For endnotes, please refer to the original pdf document.