Sound macroeconomic and human resource development policies have underpinned Malaysia’s strong economic performance in recent years, making it one of the most rapidly developing economies in the world. The Government of Malaysia fully recognized the need to sustain its growth prospects in the long-term, to maintain its competitiveness and move up the technology chain to produce higher value-added technology-intensive products. Noting their important contribution to producing future leaders and developing high-level technical capabilities, Malaysia has successfully invested in universities and other institutions of higher learning. The Government of Malaysia is considering new policy directions to make the country an even more competitive player in the world economy. Such a strategy will require bold innovations in many sectors, including the university system whose contribution to greater value-added production should come from the generation and diffusion of relevant knowledge and the production of a critical mass of graduates with appropriate skills.  alaysia is thus attempting to transform its universities into dynamic and responsive institutions which can hold their place internationally.In this context, the study Malaysia and the Knowledge Economy: Building a World Class Higher Education System was prepared at the request of the Economic Planning Unit to help develop a strategic vision for the evolution of the country’s universities towards becoming world class. This work was co-financed by the Economic Planning Unit. The study, which seeks to add value by sharing international experience with relevant strategies and policy measures, provides practical recommendations for the government’s consideration, and served as an input into the Ninth Malaysia Plan (2006-2010).

In responding to the request to contribute to an analysis of the higher education sector, we sincerely hope that this report will help facilitate the ongoing policy debate and the development of Malaysian university system. Published in March 2007. Human Development Sector Reports, East Asia and the Pacific Region, The World Bank