Deputy Higher Education Minister Mustapha Sakmud has rejected the term deficit used in the Auditor-General’s report on public universities.

He said the shortfall is due to insufficient operational grants and self-generated income, not financial losses.

“Universities are not businesses but educational institutions,” he said when met by reporters in Kota Kinabalu on Sunday. 

Three public universities—Universiti Malaysia Sabah (UMS), Universiti Putra Malaysia (UPM), and Universiti Sains Islam Malaysia (USIM)—were among five federal agencies with the highest consecutive financial shortfalls from 2021 to 2023.

The report said their losses stemmed from operational grants and student fees being insufficient to cover expenses.

UMS recorded a shortfall of RM141.41 million in 2023, up from RM89.31 million in 2021 and RM89.47 million in 2022.

UPM reported a shortfall of RM127.71 million in 2023, compared to RM81 million in 2022 and RM118.7 million in 2021.

USIM recorded a RM44.02 million shortfall in 2023, RM2.62 million in 2022, and RM14.21 million in 2021.

Mustapha said the gap is expected as universities rely on government grants for 80% of their funding while generating the remaining 20%.

Some institutions succeed, but others, including UMS, struggle to meet targets.

“This isn’t a loss, but a gap between income and expenses,” he said.

The issue was debated in Parliament, with additional allocations approved for universities in need, including UMS.

Mustapha also addressed corruption cases linked to UMS but said they were not the main cause of the financial gap.

“We take governance seriously, and anyone involved will face legal action,” he said.

The Auditor-General’s Report 2024 has reignited discussions on the financial sustainability of Malaysia’s public universities. – March 9, 2025