Malaysia has promised students who study in local universities priority in the queue for scholarships and study loans.

The move will hit intakes in Britain and other countries which enrol large numbers of Malaysian students on courses that are also available in local institutions or at local branches of foreign universities. Assistance will still be available to students opting for foreign institutions on courses which are not offered in Malaysia.

Education minister Datuk Seri Najib Tun Razak said the move was designed to discourage private and public agencies from funding students for overseas study.

By enrolling students at local colleges and universities and branches of overseas universities much of the M$2.5 billion (Pounds 650 million) spent annually on overseas education can be diverted to other nationally important developments and projects.

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Facilities in Malaysia will be much enhanced in the near future, he said. Universities could set up local branches, following the 1996 Private Higher Educational Institutions Act passed in January.

The act allows foreign universities to set up branches in Malaysia. It also provides for qualifying private colleges to be upgraded to university status.

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The Public Service Department, Petronas Telekom, Mara and other companies that award scholarships were required to give serious attention to the matter.