Bank Negara Malaysia (BNM) has no business getting into the business of education

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 1st of June, 2015

Bank Negara Malaysia (BNM) has no business getting into the business of education

It was announced in April 2015 that Bank Negara Malaysia (BNM) was entering into a 10 year business relationship with the Massachusetts Institute of Technology’s Sloan School of Management (MIT Sloan) to establish the Asia School of Business (ASB) in Kuala Lumpur.[1]

While it is laudable that Bank Negara has the vision to turn the Asia School of Business into a “premier business school that develops transformative and principled leaders who will contribute to a better future and advance the emerging world”[2], the business of education is not and should not be the business of the central bank. Indeed Act 5 (1) of the Central Bank Act of Malaysia 2009 states that the “principal objects of the Bank shall be to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy”. Act 5 (2) lists down the primary functions of the Bank including (i) formulating and conducting monetary policy in Malaysia (ii) the issuance of currency (iii) the regulation and supervision of financial institutions (iv) exercising oversight over the payment systems (v) managing our foreign reserves (vi) to act as financial adviser, banker and financial agent of the Government. Nowhere in this list or in this act does it say that Bank Negara should get involved in the business of education, especially when it has no direct implications on the financial and banking sector in the country!

While Section 48 (1) of the Central Bank Act of Malaysia 2009 allows Bank Negara to (i) establish a body corporate for the purpose of training, research and development of human resource in relation to banking and financial services and (ii) establish a body corporate for the purposes of providing financial counselling, debt management services and education on financial management, it must be noted that Bank Negara has already done this by establishing the International Center for Education in Islamic Finance (INCEIF) to develop academic expertise in Islamic Finance[3] and the Credit Counselling and Debt Management (CCDM) Agency[4] to increase public awareness of debt management.

Even in the area of developing leaders and inculcating leadership skills, Bank Negara has already established the ICLIF Leadership and Governance Center.[5] With the establishment of all these institutes and agencies, why is there the need to set up yet another entity, the Asian School of Business, which seems to have little direct relationship to the banking and financial services sector?

We have seen this script before. The Malaysian University of Science and Technology (MUST) had a collaboration with MIT in 2001 on post graduate programs. Once the government decided to stop funding full scholarships, the enrolment dropped significantly.[6] Ultimately the partnership was cancelled after a founding grant of RM100 million was given by the Malaysian government.

The Perdana University also launched a much publicized graduate medical degree with the renowned Johns Hopkins School of Medicine in 2010 by none other than the then Secretary of State, Hillary Clinton. The initial batch of students were fully funded by JPA scholarships which costs almost RM1 million per degree compared to less than RM500,000 for a medical degree in a local private university. The collaboration with Johns Hopkins collapsed in 2014 arising from disputes over payments from Perdana University to Johns Hopkins.

Bank Negara will most definitely face similar challenges in having to stump up generous scholarships in order to attract the initial batch of students, and this could create a vicious cycle which will be unsustainable.

Starting a business school is not a cheap endeavour especially when one has to pay the salaries of high profile and highly qualified foreign academics who will comprise the faculty at the Asian School of Business (ASB) in Kuala Lumpur. The fact that Bank Negara has deep pockets should be even more worrying since this means that more money can be spent on this endeavour over the course of the 10 year collaboration.

I call upon Bank Negara to cease this collaboration immediately rather than to invest millions of ringgit of its reserves in an area which it has no business being part of in the first place.

Dr. Ong Kian Ming
Member of Parliament for Serdang




[4] Agensi Kaunseling dan Pengurusan Kredit (AKPK)