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This paper presents general aspects of funding system at higher education sector. Funding is not simply a mechanism to allocate funds to finance HEIs but an instrument for the government or public authorities to ensure that the HEIs administration has the same goals with them, other than that the funding adopted by the government to influence the behaviours of agents. In response to the development of society and economy, the pattern of distribution of public funds in the education sector particularly HE, experiences a change in the context of increasing competition for public funds because of pressure from the community to enhance the quality of education.

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