Purpose: The principal goal of the article is to examine how Singapore, one of the East Asian tiger economies, has attempted to diversify its higher education system by developing "transnational education" in the island state. Design/methodology/approach: With particular reference to the most recent education reforms and changing higher education governance in Singapore, this article focuses on how the Singapore government has changed its higher education governance models in enhancing the global competitiveness of its higher education system by adopting more pro-competition policy instruments and allowing the growth of transnational education in the city state. Findings: The findings suggest the choice of policy tools (the choice of market forces in higher education and the rise of transnational education in the present case) is highly political and governments should pay particular attention to the particular socio-economic and socio-political contexts of their countries when making such choices. Originality/value: The paper shows that the role of government in East Asia is still important, especially when there is a strong need for government to set up appropriate regulations, social protection and welfare, hence, governments in East Asia are very much conceived as a complement to the markets.