The Dispatch
Building Upon Solid Foundations
Malaysian International Education
A solid couple of decades has placed Malaysia in a strong position to become a significant player in international education, but there’s still further to go.
By Seb Murray
In Brief
- Malaysia is aiming to become a significant regional higher education hub, setting an ambitious target of 250,000 international students by 2030.
- While low tuition, English-language courses, and a Muslim-friendly environment attract students, the country faces challenges. Concerns remain regarding uneven standards and significant skill mismatches leading to graduate underemployment.
- To narrow the gap with regional competitor Singapore, Malaysia must ensure its universities focus less on academic theory and more on delivering the practical skills demanded by technology and advanced industries.
Malaysia has positioned itself in recent years as an aspiring higher-education hub in Southeast Asia. Official policy documents present universities as engines of research and soft power, not just places of teaching. In line with that, attracting students from abroad is a major plank of the government’s higher-education strategy.
International enrolments bring in substantial tuition fees and everyday spending, such as on living costs. A 2021 study estimated that international students contributed RM7.2 billion ($1.5 billion) to Malaysia’s economy in 2019 through tuition, plus living costs and related spending.
They also offer a potential soft-power dividend: scholars from countries like China, the Middle East and Africa who study in Malaysia may return home carrying professional and cultural ties that could support trade and diplomacy.
Much of this influence rests on Malaysia’s strengths in Islamic finance and halal studies. This gives the nation a clear niche, but relying too much on these fields could narrow its appeal to students from other backgrounds. A 2024 study found that although demand for halal expertise is growing, graduates face limited employer recognition of their qualifications.
Malaysia’s hopes may hinge on whether its universities can appeal to global students while drawing on local strengths. That might allow it to narrow the gap with Singapore, the more established hub for higher education in Southeast Asia.
"Solutions to sustainable development goals require close Sino-US cooperation, especially in higher education."
“The very presence of a US Secretary of State at NYU Shanghai in 2024 underscored the soft diplomacy value of these institutions, even during periods of strained relations."
Growing Aspirations
The government in Kuala Lumpur has set a target of 250,000 international students by 2030, but uneven standards across public and private universities remain a challenge.
Still, the campaign is beginning to show results. In the second quarter of 2025, official data show the country logged almost 12,500 applications from East Asia, alongside more than 8,000 from South Asia, plus about 5,000 from the Middle East and North Africa combined.
On a country basis, Chinese demand dominated, with close to 11,000 applications in the period, far ahead of Bangladesh, Indonesia, Pakistan and India, the next largest sources.
Education Malaysia Global Services, the government-linked agency handling international enrolments, says overall applications have risen by roughly a quarter in the past two years. A new one-year graduate work permit is a key draw.
International education experts say Malaysia offers a cheaper alternative to Western study destinations, with lower tuition, English-language courses and a Muslim-friendly environment all attracting students from both Asia and the Gulf.
Michel Fay, Special Advisor to the ASEAN University Network, said at an event: “It’s at the crossroads of Southeast Asia. It has a commitment to quality. It has many existing partnerships with universities from all over the world. It’s multicultural, it’s safe, it’s secure and it’s value for money. The world is already here.”
Skills Drivers
Universities form part of the Anwar Ibrahim government’s reform agenda. The Malaysian Prime Minister has pledged to raise productivity and reduce inequality, and education is presented as a key lever in those goals.
Malaysia’s policy documents present universities as a source of skills and innovation, with graduates expected to join technology-led industries. They are also seen as a path to upward social mobility, particularly Universiti Malaya, a public university in Kuala Lumpur.
“Our country cannot rise if the quality of our education cannot progress and improve,” Ibrahim said last year.
The numbers tell the story. Student enrolment has risen by 70 percent, to about 1.2 million, in the time since Malaysia set up a dedicated higher education ministry, in 2004. Over the past decade, the ministry says, the country has also recorded one of the fastest growth rates worldwide in research output and quality.
To that end, Malaysia has built research parks linked to universities, such as Technology Park Malaysia, to bring academics and industry closer together. It has also welcomed foreign branch campuses, including Australia’s Monash University Malaysia, which are seen as a way to share knowledge and strengthen international ties.
But for all that, studies show a gap in the labour market: Malaysia is producing more degree holders than there are high-skilled jobs, leading to under-employment. Research by academics from Universiti Tunku Abdul Rahman found that between 2016-2020, the number of graduates grew by more than a quarter, from 4.28 million to 5.36 million.
However, the surge has not been matched by better job outcomes, with many graduates facing skill mismatches in the labour market. According to the Department of Statistics Malaysia, about 33.9 percent of employed graduates in 2021 were doing jobs below their qualifications.
“The hiring of graduates depends more on their ability to multitask, take on responsibilities and apply practical and soft skills,“ said Datuk Syed Hussain Syed Husman, President of the Malaysian Employers Federation.
Specialised Education
Malaysia’s universities do not rank as highly as Singapore’s, but the country has built recognised strengths in niche areas. For one, Malaysia is widely regarded as a leader in Islamic finance. That stems from Bank Negara having established the International Centre for Education in Islamic Finance in 2005 to train professionals and conduct research.
On top of that, many Malaysian universities offer courses in halal science, certification and logistics to support the country’s role in the global halal market. Halal — products and services that comply with Islamic law — is now a multi-trillion-dollar industry.
Malaysia’s halal certification and Islamic finance regulations are often used as benchmarks by other Muslim-majority economies developing their own systems. Supporters argue this strengthens the country’s influence.
But relying too heavily on these niches raises questions about whether Malaysia can broaden its appeal enough to become a global education hub.
The Malaysian Employers Federation warned this year that most graduates are ending up in semi- or low-skilled jobs. Its President, Syed Husman, said universities focus too much on theory and do not give students the practical skills needed in sectors such as technology, green energy and advanced manufacturing.
He added that Malaysia produces too many business and social science graduates, while demand for engineers and data scientists goes unmet.
Stiff Competition
Southeast Asia’s higher education sector is crowded. Singapore remains the benchmark: its two leading universities, the National University of Singapore and Nanyang Technological University, consistently rank among the world’s best by QS.
But elsewhere in the region, Vietnam has added more courses taught in English, Indonesia is expanding universities to serve its huge student population, and Thailand has promoted medical programmes to draw foreign students.
These nations do not have Singapore’s global profile, but their growth reflects rising demand for Asian study options as alternatives to Western universities.
For their part, policymakers tend to present Malaysia’s role as complementary rather than competitive. Novie Tajuddin, Chief Executive of Education Malaysia Global Services, said the government’s strategy was not just to bring students to Malaysia but to make the country a base for study routes across the region.
“We need different strategies for different people. If we make Malaysia an education hub, parents can send students to study in India, Indonesia, or elsewhere by going through Malaysia. That’s important,” he said at a recent event.
Still, the country possesses a few key pull factors. ICEF Monitor, which tracks global trends in international education, notes that affordability, English-language teaching and cultural familiarity are among the main reasons Malaysia attracts students who might otherwise choose costlier Western destinations.
Universities note strong interest in fields where Malaysia already has a solid track record, especially Islamic finance and halal-related studies.
Establishing a Global Higher Ed Sector
For now, though, Malaysia’s international education sector has become large enough to register in broader economic policy. The government has set a goal of hosting a quarter of a million international students by 2030, up from about 104,000 recorded in 2023.
Private universities, which now enrol more than half of foreign students, according to the Penang Institute, are particularly reliant on attracting them. But uneven standards remain a challenge. Public universities benefit from stronger research funding, while studies note that the quality of private institutions is mixed and often shaped by market pressures.
Nevertheless, the government has backed its higher-education push with new measures, such as a fresh Graduate Pass visa, which allows international students to remain in Malaysia for a year after completing their degree.
However, earlier this year the government added a 6 percent tax on private education for international students. The British Council, the UK’s international education body, warned that the move could reduce enrolments in UK transnational education programmes run with Malaysian partners.
“This could also impact Malaysia’s attractiveness as a study destination, especially amongst students from developing countries who can be price sensitive,” the British Council said.
Overall though, Malaysia has made progress in attracting international students, helped by government incentives and its recognised niches in Islamic finance and halal studies.
But Singapore still dominates regional rankings, and questions remain about whether Malaysia can broaden its appeal beyond these specialisms.
For now, the country is positioned as a cheaper option with cultural appeal. The question is whether, in the years ahead, it can turn that base into something broader.