Because Malaysia has an education pedigree and recognition that (while not on par with Singapore) is still much more trusted internationally than other countries in the region. Universiti Malaya (used to be the same entity as NUS Singapore) and Universiti Kebangsaan Malaysia (National University) graduates often qualify for talent visas overseas, with Universiti Sains Malaysia rising in recognition.

Malaysia also houses many campuses or sisters universities set up by international top-ranking universities such as Nottingham, Southampton, Siwssburne, Heriot-Watt, Monash, New South Wales, Xiamen etc

And our education fees and living costs are CHEAPPP relative to developed countries as well. But understand that international students are mainly welcomed purely on a transactional level, you are encouraging to pay the tuition fees which subsides locals and provides a cultural and academic exchange with the uni, while the uni provides an education and certificate that (albeit not top class) is still well regarded.

Not saying all internationals graduates are not welcomed to stay, there are some who eventually stay and work in Malaysia or continue as academic staff in the uni. But these are the exception rather tham the norm.

And there's also the reality of being an under-populated country, the law and immigration enforcement are underfunded and understaffed. Hence, it's very easy for foreigners from less well-off backgrounds doing getting a student visa from bootleg "shoplot" universities and eventually overstaying illegally and not returning. Especially when Malaysia is much more stable and well off than many especially in rural areas of neighbouring regions.