The results are based on scores on 6 variables, namely, peer review (40%), employer review (10%), staff- student ratio (5%), citations per staff (20%), international staff (5%) and international students (5%).
Though I am not sure about the other variables, I am totally sure of two where Malaysian Universities will always have low scores: international staff and international student ratios. I guess it is related to the education policy there. Unlike universities in the US, UK or even Australia, majority of the Malaysian Universities are not profit orientated. They do not target foreign students for the undergraduate programmes. Most of the foreign students there are not in the Universities but rather in the various private colleges (many of them now with a unique Malaysian terminology - College Universities) scattered across the Klang Valley of Malaysia.
As for foreign academics, Malaysia is not exactly an attractive destination due to uncompetitive salaries and tough immigration laws. I know of some highly qualified academicians who had worked for more than 10 years in the country but were not given the permanent resident status, don't even talk about citizenship. Totally opposite of policies in the developed countries including Singapore.
Of course the most important factors are peer review followed by citations per staff. The universities definitely need to look at what's keeping the Malaysian academicians from publishing in top rated journals. However, I have no idea how they calculated the peer review thing, so I can't comment.
The report does mention a possible reason behind the fall:
But we suspect that some Malaysian and Singaporean institutions have lost out because of our increased rigour over voting for one’s own university, and there are no Malaysian universities in this top 200.According to Ben Sowter, QS head of research, “nowhere has keener interest been taken than in Malaysia”.
"National shame" cries the opposition. It has become a political issue and I am sure that some heads will roll.
Read The Star's report: Whither rankings?