The intensity of internationalization has increased with an escalation in internationalization activities, leading to increasing student, program, and institutional mobility. In Malaysia, the internationalization of higher education in terms of student mobility has changed tremendously in the last two decades as the country has shifted from a sending to a receiving country. Policy-wise, the government has targeted to be a regional hub for higher education. The objectives of this article are to examine government policies, their rationales, and the response of public and private institutions toward these policies. The findings show that while there is also a new emphasis on research and knowledge generation, government policies essentially focus mainly on increasing inbound students to increase export revenues. Institutions’ response vary between public and private as the former have access to research funding from the government while the other is much more fee-dependent and therefore tend to focus on international students as an additional source of revenue but both view internationalization targets set by the government as an end by themselves.