Restructuring Higher Education and the New Modes of Governance and Finance

Traditionally, the higher education sector in all SEA countries was mostly small, inward-looking, with government playing a significant role. The vast majority of HEIs in each of the countries were government-owned; private HEIs were few or non-existent in some countries. Not only governments owned and funded HEIs, they also operated them as government agencies, exerted direct control over policy and procedural matters.

This pattern has changed in the recent past as the massification trend swept the higher education sector. The expansion and diversification of the system have caused tension to the traditional model of higher education. Governments can no longer keep up with increasing demands to provide free or highly subsidized education; new ways of financing and additional financial resources must be sought to meet the expansion.

In addition to enlarging the number of HEIs, another key policy has focused on responding to challenges of governance and finance. Most governments have shifted from a direct control approach to a regulatory approach by transferring certain policy, and operating authority and responsibility to state-owned higher education institutions in the form of increased institutional autonomy. Two general approaches to institution restructuring have been employed—(1) by transforming universities from a bureaucratic government agency to an autonomous body and

(2) by granting greater authority on certain operational matters to universities, while retaining them as government agencies. The level of university autonomy varies among the countries, from Singapore with highly independent universities to a centralized system in Myanmar. Thailand and Indonesia have a mixture of public autonomous, government-managed, and private universities.

From the experiences of higher education development in South-east Asia, five observations can be made on the variations in the way reforms have taken place in different countries, which reflect the diversity in the essence and process of change. First, reforms arrived at different times in different countries, depending on the socio-economic readiness and sometimes with clear link to the national political direction. For example, in Vietnam the doi moi reform started in 1986 subsequently pushed a significant expansion and development in the country's higher education as part of the policy to boost human resources for economic development. In Myanmar, the recent introduction of greater openness in its political system, following its general election in 2010, is bringing a new sense of urgency to reform its higher education sector, which has placed a number of restructuring plans on the policy drawing board.

Second, the pace of change also differs greatly. Some significant policy shifts take longer, while others happen more swiftly, even within the same country. For example, the move to transform teacher colleges and technology colleges into universities in Thailand in the mid-2000s was brief compared to the attempts to convert its public universities into autonomous organizations. The ease of change for the former was due to the fact that the legislation changed the colleges' organization status, and by extension the status of their personnel upgrading them from college to university, while keeping the status quo of the personnel as government employees. By contrast, the attempts to create autonomous universities faced far greater degree of bureaucratic resistance, as the initiative at the time demanded that the civil servants be converted to contract university employees, depriving them of the job security and benefits associated with government officer status.

Direction of change sometimes proceeds in twists and turns. The reform in Indonesia presents an example of this third observation. An Indonesian Government Regulation was issued in 1999 which provided the legal basis for selected public universities to become non-profit “legal entities.” The status of seven public universities was changed into this class and became “State Owned Legal Entity (SOLE) Universities”, with their own governing board and authority for major administrative and academic decisions. According to the reform plan, all university staff would become university employees instead of civil servants, as they formerly were. In 2008, the Law on Education as a Legal Entity was passed by the Parliament to expand this reform to the entire university sector. All public and private universities would become autonomous “educational legal entities” by 2012 and 2014 respectively. However, this new Law was revoked in 2010 by the Constitutional Court. In response, the government then issued a new regulation concerning the status of the university, returning each to a state university as a government agency under the direction of the Department of National Education. Then in 2012, the House of Representatives enacted the Higher Education Law allowing universities that met “Financial Management Code” to become “Public Service Agency” with conditional autonomy on financial management. Subsequently, in 2013, the government changed the status of seven public universities from “Public Service Agency” to a “Public University-Legal Entity,” similar to SOLE (Kusumadewi and Cahyadi 2013; Varghese and Martin 2013).

Thailand provides another example of a long and winding process of change. The initiative to transform public universities, with the legal status as government departments, into autonomous organizations was proposed as early as 1964. A proposal was approved in principle by the cabinet in 1974, but was met with resistance from many universities. In 1991 the Cabinet submitted Bills to transform 16 out of the 20 public universities at the time into autonomous entities. The attempt again failed. Due to strong resistance, the idea had not been materialized until a condition set by an Asian Development Bank (ADB) loan agreement gave the policy a new momentum. In 1998, because of the need for financial injection to ease an economic crisis, Thai government sought help from international organizations. The ADB loan agreement set clear conditions for Thailand to transform all of its public universities into autonomous ones by 2002, with at least one university to change within the year the agreement was signed. Since the levels of resistance to change differed among the universities, the course of action taken then was to allow each university to manage its own academic community to determine when it would be ready for transformation. In 1998, one university was converted to autonomous status, fulfilling the initial requirement set by the ADB loan. However, it took another decade to achieve the transformation of the next public university. Between 2007 and 2008, seven more public universities became autonomous. The rest have remained government agencies until today (OHEC undated; 2012).

Forth, within a country, changes brought about by reforms have not always taken place across the board. This is apparent in a number of countries. While Singapore government has adopted policy to transform, and to form all public universities to be autonomous entities, many other countries have decided to start with a small, selected number of universities.

The Singapore Management University was established as the country's first autonomous government-funded university in 2000 (SMU 2014). Five years later, the Singapore Government moved to transform the other two existing universities

—National University of Singapore (NUS) and Nanyang Technology University— into autonomous institutions (Ministry of Education, Singapore 2005). These two universities were then corporatized in 2006, into not-for-profit, autonomous organizations registered as company limited.

Some countries chose to give a selected few of their HEIs—those with adequate capacity and potential—the autonomy first, rather than across the board structural change. That means that, while some HEIs are allowed more authority to make policy decisions, the remaining continue to operate in the traditional way—within bureaucratic management. For example, in Cambodia, a 1997 Royal Decree granted increased autonomy to selected higher education institutions by giving them special status as Public Administrative Institutions (PAI) with the expectation to increase administrative efficiency in a resource constrained situation. Indonesia, in the 1999 policy initiative described above, also converted a few selected public HEIs into autonomous bodies as pilot institutions (Varghese and Martin 2013).

Finally, the focus and extent of these changes differ as well. Reforms in different countries have focused on different areas, and allowed different levels of autonomy. Some changes are substantial, while others are more procedural. Autonomous universities generally enjoy greater freedom in setting their own policies, managing finance and human resources, as well as determining academic structures, programs and courses.

As the general trend of higher education reforms in all the SEA countries involves movement towards granting greater autonomy to HEIs, the discussion in this section focuses on the governance structures of the new forms of HEIs, and the scope and level of institutional autonomy. Four key areas of autonomy are discussed below with examples from different countries in the region—governance structures, finance and budget, personnel management, and academic matters.

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