This paper examines institutional governance for a cross-border higher education program, focusing on the effects of introducing a new form of program. The paper analyzes the case of the Higher Education Loan Fund Project between Malaysia and Japan, in which the form of cross-border higher education has evolved from student mobility to program mobility through a twinning arrangement. Although academic staff sent from Japanese universities continued to play important roles and be involved in decision-making, the partner institution in Malaysia began to replace some of them with Malaysian teaching staff, had their initial part of the twinning program accredited as a diploma course, and used this experience to develop a fresh diploma course for engineering. Japanese universities successfully responded to the evolution of the project by adapting the existing curriculum, transferring credits and students, and developing new systems of staff training and quality assurance. By creating a consortium which has gradually become more formalized, the Japanese universities followed common procedures for placement and student support, thus reducing transaction costs. Certain universities have developed new cross-border programs by themselves. A program mobility model of cross-bordering is strengthening the governance and capacity of participating higher education institutions, but the sustainability of the program will depend on the commitment of the institutions and continued financial support by governments.