Overseas students must be targeted and educational tourism promoted if progress is to be made towards a fully fledged University of the Highlands and Islands, according to a new strategic plan.
The UHI Millennium Institute, designated a higher education institution in April 2001 by the Scottish Parliament, has set itself the target of achieving university status by 2007.
Since the project was launched in 1992, it has raised almost £100 million to improve resources in its partner colleges and research institutes as well as to underpin its high-tech network.
But its new four-year plan warns that it has no strategic reserves. And it believes it is suffering a £2 million annual shortfall while it remains on transitional funding pending a Quality Assurance Agency audit.
The strategic plan says it must boost external funding, given the costs of serving widely dispersed communities. A spokesperson said a likely first target for overseas recruitment was China.
The UHI network can offer further and higher education packages. It is also set to target North American students and expects interest in its cultural and environmental courses.
It plans to offer short courses for tourists in, for example, archaeology in Orkney and Gaelic culture on Skye, and sees opportunities in continuing professional development and research degrees. Its curriculum focuses on the character and industries of the region - courses include forestry, marine science and rural development.
Jim Hunter, chairman of development agency Highlands and Islands Enterprise, said: "The creation of a new university is the single most important project currently under way in the Highlands and islands. One thing which all successful economic regions have in common is the presence of a university, delivering learning, undertaking research and producing spin-off businesses."
Bob Cormack, UHI director and chief executive, said: "We passionately believe that the date of achievement is not as important as delivering a university worthy of the name which meets all the aspirations of the people of the Highlands and islands. That is the real core of our mission."
UHI has some 4,500 students, studying university-level courses across 15 partner institutions and more than 50 local learning centres.