UNIVERSITY OF NEW SOUTH WALES ASIA

UNIVERSITY OF NEW SOUTH WALES ASIA:

(Impact of pullout and related issues): 5.

Mr Inderjit Singh asked the Minister for Trade and Industry, in light of the recent pullouts by the University of New South Wales in 2007 and John Hopkins University in 2006, (a) if he will explain why Singapore has not been able to retain its foreign universities; and (b) whether he is confident that we will be able to continue to attract reputable universities to set up campus in Singapore.

6.

Mr Seah Kian Peng asked the Minister for Trade and Industry (a) how does the pullout of the University of New South Wales Asia affect Singapore as an education hub; (b) what were the considerations that led to this pullout; and (c) how much of this can be attributed to the expectations of the Economic Development Board in terms of student enrolment.

7.

Dr Lim Wee Kiak asked the Minister for Trade and Industry (a) what are the Ministry's plans to make Singapore an education hub; (b) how has the withdrawal of the University of New South Wales from Singapore affected Singapore's image as an education hub; (c) what are the reasons for the University's decision to withdraw from

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Singapore; and (d) what were the University's needs which the Economic Development Board was unable to accede to.

8.

Prof. Thio Li-ann asked the Minister for Trade and Industry (a) how much has been spent by the Government on the UNSW Asia project and what are our outstanding liabilities to third parties such as banks, construction companies and other service providers; and (b) what is being worked out with UNSW in relation to financial compensation payable to Singapore.

9.

Mr Siew Kum Hong asked the Minister for Trade and Industry (a) during the negotiations between the Economic Development Board (EDB) and University of New South Wales (UNSW), what safeguards were taken to mitigate the risk of UNSW pulling out from Singapore; (b) how were the interests of enrolled students protected; and (c) in view of UNSW's public statements on its liability and losses arising out of its pullout and its duty to report to the Australian Parliament, whether EDB remains bound by confidentiality obligations and, if so, why.

10.

Ms Eunice Elizabeth Olsen asked the Minister for Trade and Industry in the memoranda of understanding with foreign educational institutions setting up in Singapore, how is due emphasis given to secure adequate commitment to these projects so as to ensure that they are not easily abandoned.

The Minister for Trade and Industry (Mr Lim Hng Kiang): Sir, with your permission, may I take Question Nos. 5 to 10 together?

Mr Speaker: Yes.

Mr Lim Hng Kiang: Mr Speaker, Sir, I thank Members for their questions and interest in the UNSW project and the

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broader issue of what this means for Singapore as a global education hub.

Let me first give the background of the UNSW project. After one-and-a-half years of feasibility study, UNSW assessed in 2004 that it was viable to establish a private comprehensive university in Singapore. This meant that the university would offer a full range of programmes in Science and Technology, Business, Arts and Social Sciences, and at both the undergraduate and postgraduate levels. UNSW submitted its formal proposal to EDB in July 2004. Following discussions, EDB agreed to support UNSW's proposal.

When UNSW accepted EDB's support package in February 2005, it was on the basis that although UNSW would start off at an interim campus, it would eventually set up a new university campus here and enrol 10,000 to 15,000 students at the steady state. EDB saw a new campus as a clear demonstration of UNSW's commitment to the Singapore project, thus providing a good basis for its funding support. The acceptance of the EDB support package was signed off by the then Vice-Chancellor of UNSW, Professor Mark Wainwright.

Following the appointment of Professor Fred Hilmer as Vice-Chancellor of UNSW in June 2006, UNSW approached EDB to increase the support package. Professor Hilmer considered as inadequate the previous package which UNSW had agreed to. In August 2006, EDB agreed to increase the support package in return for UNSW's commitment to a ten-year student enrolment target of close to 5,000 students, the acceleration of the development of a new campus at Changi and additional R&D activities. In December 2006, Professor Hilmer signed off on the increased support package. UNSW proceeded to invite and accept student applications to the Singapore campus for its first intake in March 2007.

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It also continued to build up its staff strength.

But in March this year, UNSW found that the first intake for UNSW Asia was far below its expectations. It had enrolled only about 150 students, less than half of its business plans' projected intake of 300. UNSW also expected the second intake to be significantly below earlier projections. UNSW thus reviewed its operations in Singapore again, holding extensive discussions with EDB.

UNSW eventually proposed a significantly scaled-down plan of achieving an enrolment of about 2,000 students in 10 years, half of what UNSW had agreed to in the revised package of December 2006. Moreover, UNSW was now unable to provide the assurance that there would be a permanent campus in Singapore, even on a reduced scale. This called into question UNSW's ability to deliver on its original intent of about 10,000 to 15,000 students at the steady state. EDB and UNSW explored various scenarios and options but could not agree on a revised package.

On 19th May 2007, EDB informed UNSW that it could not agree to the revised support package proposed by UNSW. However, EDB made several counter-offers to help address UNSW's concerns. First, EDB was willing to give UNSW two years, until April 2009, to decide whether to develop the new campus at Changi. Second, EDB offered not to claw back the grant and loan incentives that it had disbursed to UNSW for the Singapore campus if UNSW agreed to carry on operations and meet a set of interim targets until it made its decision on the new campus in April 2009. Third, EDB offered that if and when UNSW should submit its campus proposal, EDB would assess afresh the proposal for a support package, with support commensurate with the benefits of the project to

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Singapore. In the end, UNSW decided to cease operations because of what it perceived as an unacceptable level of financial and operational risks. UNSW announced its decision on 23rd May 2007.

Before we come to any conclusion of the UNSW decision, let us step back and keep in perspective a few fundamental points. First, investors know their business better than the Government. In this case, UNSW - as the investor and the operator - is in the best position to assess the viability of its business plan and to decide whether to start a comprehensive university in Singapore. Second, Government's role is to facilitate and support investors in their decisions, not to second-guess or guide those decisions. In this instance, EDB's job was to facilitate UNSW's investment by providing it a level of support commensurate with the benefits of the project to Singapore and putting in place appropriate safeguards if the agreed milestones are not achieved. Since public funds are being used to support this investment, EDB is mindful that the project creates sufficient benefits to Singapore in terms of jobs and economic value. This is because we want to make every investment dollar count.

Mr Speaker, Sir, UNSW's decision is a business decision.

While we as Government can play a role in giving support to investors who want to set up operations in Singapore, we cannot issue a blank cheque. We must ensure that public funds are well utilised and yield strong benefits to Singapore. EDB's support package for UNSW was therefore premised on the basis that UNSW would undertake a long-term commitment to establish a university of significant scale in Singapore that will create new economic value. EDB's grants and loans are conditional on UNSW achieving pre-

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agreed milestones such as student enrolment, failing which they become recoverable.

To date, EDB has disbursed S$15 million in loans and S$17.3 million in grants to UNSW. As UNSW will not be able to meet the performance indicators that it committed to EDB in 2004 and 2006, UNSW is required to return the disbursed loan and grant to EDB. The disbursed loan is backed by a bank guarantee. EDB is currently discussing with UNSW on the recovery of the disbursed grant. The Government does not have any outstanding liabilities to third parties with regard to the UNSW project.

We regret UNSW's decision to pull out, but this is their business decision and we will have to respect it. The Government's bigger concern was the impact of UNSW's decision on the students. EDB therefore worked closely with UNSW and the Ministry of Education to assist the affected students. UNSW has assured us that it would mitigate the impact on the students. It has offered scholarships of between S$12,000 and S$22,000 per annum to the students who choose to go to the UNSW Sydney campus to continue their studies. This is to help with the living costs. To date, 116 students out of the 143 students enrolled for Semester 1 at UNSW in Singapore have opted to study in UNSW Sydney campus. For students who wish to remain in Singapore, EDB and the Ministry of Education have been working closely with UNSW to provide alternatives. NUS, NTU and SMU have helped by extending their deadlines for the UNSW Asia students to apply for admission. They have offered 24 places to the students who meet their admission norms and of these, 17 offers have been accepted to date.

Mr Speaker, Sir, the closure of UNSW Asia will not dampen our aspirations to become an educational hub. Not all

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investment projects will succeed. But that should not stop us from constantly seeking new investment projects that can add value to Singapore. We will continue to bring in new projects and build on the base that we already have. Today, we have more than 16 foreign universities and 41 preparatory and boarding schools (comprising 38 foreign system schools and three privately-funded schools) in Singapore.

More recently, we have also successfully attracted a range of reputable foreign educational institutions to set up their campus in Singapore. Recent additions include institutions such as the University of Nevada Las Vegas, the New York University Tisch School of the Arts, Duke Graduate Medical School, and foreign system schools such as the Bhavan Indian International School, the Delhi Public School and the Chinese International School. These institutions are doing well here. In all, there are currently 80,000 international students in Singapore today.

The market for international education, especially in Asia, is growing rapidly. Singapore is well placed to seize a strong position in this market: we have high education standards, a secure environment and good quality of life, and a unique East-meets-West cosmopolitan environment. These will stand us in good stead, as EDB seeks to bring in more reputable foreign institutions and enrich the education landscape in Singapore.

Mr Inderjit Singh (Ang Mo Kio): Sir, I have two supplementary questions. First, on the issue of 10,000 to 15,000 students at the steady state. My question is: when did we expect them to achieve that level of enrolment? My second question is: how realistic has EDB been to expect a foreign university to achieve an enrolment of 10,000 to 15,000 students, especially if you look at it in the light of

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how long it took our universities to achieve that kind of enrolment rate? Were we unrealistic in expecting any university to achieve that kind of rate?

Mr Lim Hng Kiang: Mr Speaker, Sir, as I mentioned just now, it is not our job to evaluate the business plan of the investor. In this case, UNSW came to Singapore and they had a very unique and bold plan to set up a private comprehensive university. So, they were not looking for setting up a small niche area. They wanted to set up a comprehensive university, including science, engineering, arts, and social sciences. So, it was a unique proposition. And to make that work, they had to build up a critical mass - because it is an expensive endeavour to build up a comprehensive university, and you need the scale - and, therefore, they proposed an eventual enrolment of 10,000 to 15,000. Of course, we realise this would not be achieved overnight, and the intermediate target was about 5,000 to 6,000 within the first 10 years, and then they build it up gradually. But they must show the commitment, build up the campus, recruit the staff, and meet the milestones, building up to this eventual target of 10,000 to 15,000.

Dr Lim Wee Kiak: Mr Speaker, Sir, I would like to thank the Minister for the very comprehensive answer. I understand surely that it is not the Ministry's role to evaluate the business plan. But, however, I understand that all business plans must have contingencies before the Government itself gives out any funding or grant. I am sure the Government has evaluated in terms of their plans and any contingency if the enrolment drops below the projected numbers. So, I am wondering whether these contingency plans were evaluated and, if they were, why these contingency plans were not implemented.

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Mr Lim Hng Kiang: The support package that EDB provided for UNSW was, essentially, in two parts. One was loan to help build the campus, and that loan was backed by a bank guarantee. So if they do not build, of course, we can recall the loan. The second support package was a set of grants to help them build up their capabilities, particularly in the science laboratories. So, of course, if they do not build the science laboratories, the grants are not disbursed. We also gave out some grants to help them build up the initial capacity, and they were the grants that were disbursed at the early stages, so that they could start up their operation and build up initial capacity. So, the grants were given for different milestones, and for those which were given at the startup to help them come in, those were the grants that were disbursed, and that is the S$17 million that we have to recover now.

Dr Lily Neo (Jalan Besar): Mr Speaker, Sir, two supplementary questions, please. May I ask the Minister whether there is enough synergy between MTI and MOE in dealing with all educational issues, be they educational hub, foreign universities or students? Secondly, will the Minister consider setting up a one-stop centralised controlling authority among the stakeholders - MTI, MOE and ICA - to advise, implement and regulate policies?

Mr Lim Hng Kiang: Our plans to promote Singapore as an education hub is a whole-of-government plan. We work very closely between MTI, Ministry of Education, Ministry of Home Affairs and all the other agencies. As Members will hear later from Minister Tharman, we worked very closely in helping UNSW to set up its operations here and, also, we worked very closely when they decided to pull out. There are different roles by the different agencies and this is to be expected. We do have a one-stop coordination of all the various plans

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involving all the various Ministries and agencies.

Mr Seah Kian Peng (Marine Parade): I want to ask the Minister concerning the 143 students who are affected. From his answer, I am happy to hear that 116 are going to Sydney, and he mentioned that 24 have met the criteria and are being offered places by NUS, NTU or SMU. If my mathematics is right, there are three unaccounted. I want to ask what is happening to these three and whether special efforts can be given to these three students who are unaccountable.

Mr Lim Hng Kiang: Mr Speaker, Sir, I want to assure the Member that his arithmetic is right. But, in fact, there could be more than three unaccounted for because there could be double counting. In fact, the students have no obligations to report to us. So, even though we try to reach out to the students and collect the statistics, not all the students will tell us what they have been offered. So, our statistics are not complete. Out of the number, there could be double counting and, in fact, there could be more than three not accounted for in the numbers that I have given out.

Mr Siew Kum Hong (Nominated Member): Sir, I have two supplementary questions. Firstly, I would like to ask the Minister, of the grants that were already disbursed, how much was disbursed where the milestones have already been reached, which will make them non-refundable to Singapore. My second question is: in the course of the various negotiations and discussions with EDB, I would like to ask the Minister what pre-emptive measures and steps were taken to minimise the impact on students. Because, at the end of the day, I think these students stay in Singapore to study in UNSW and those plans have been fundamentally changed. So, I would like to know when we negotiated with the university, how much consideration was given to their interests.

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Mr Lim Hng Kiang: Mr Speaker, Sir, as I explained just now, the grants were disbursed, essentially, as startup grants to build up the capacity and, because they have not met the required commitments, these grants can be clawed back. So, we are discussing with UNSW Asia to see how they can return us the grants that were disbursed to them.

As for the students and the very sudden closure, this is something unfortunate. Even up to May, we were still discussing with the UNSW Asia how to continue the operations. But, at the same time, we cannot provide them with a blank cheque. Obviously, they must show commitment to undertake the milestones and the projections as indicated to us. As I said in my reply, we were prepared to give them two years to let the operations settle down. Then, they can give us a new plan with the scaled-down projection and we will support them commensurate with the benefits that the new scaled-down plan will give to Singapore. But the university decided that they are taking on a high level of operational and financial risks, and so they decided to close down. Once they had made the decision to close down, both sides worked very closely to try and mitigate the impact on the students. I must say UNSW Asia went out of its way in providing the scholarships, in talking to the students, to make sure that the students' welfare was taken care of. On our side, EDB and the Ministry of Education also worked closely with UNSW Asia to make sure the students were looked after.

Mdm Cynthia Phua (Aljunied): Can the Minister clearly let us know what is his assessment of the recovery of the amount of $17 million that has been granted? I note that the sum has been spent. But how can you recover it? The second question is this. We know that there are many Singaporean students who have

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taken the foundation course, and I understand that the university is still continuing with this foundation course. Would our own universities recognise these students who have undertaken the foundation course for the next year's university entry as well?

Mr Lim Hng Kiang: We are still in the process of discussing with UNSW Asia on the recovery of these grants. So, I cannot give an estimate of how successful we will be. As far as the foundation course and the future admission to our local universities are concerned, I think this can be better answered by Minister Tharman later on.

Mdm Ho Geok Choo (West Coast): I would like to ask the Minister, in view of this incident and the experience that we have gained, how else and how differently would EDB and MOE be engaging future foreign universities to come to Singapore in our pursuit of making Singapore an education hub.

Mr Lim Hng Kiang: Mr Speaker, Sir, our strategy to build up Singapore as an education hub covers a wide spectrum. Today, we have about 80,000 foreign students in Singapore. 25,000 are, in fact, enrolled in our primary or secondary schools and junior colleges. Another 25,000 foreign students are in our universities and polytechnics. The third 25,000 are in our private educational organisations - those private schools run by the private companies. Another 5,000 are in the foreign system schools catering for the expatriate children. So, we have a comprehensive approach. We are also marketing and targeting another group, which is really executive training for those in the different professions and careers. So, with this wide range, we will continue to build up on making Singapore attractive, not just in our own public and private schools but also in the foreign

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universities that may set up

niche areas that can be very successful in Singapore in the graduate programmes and in other specialised areas. UNSW came in with a very unique proposition, and that is, a totally private comprehensive university with a big campus. If another university comes in with that plan, with a well-thought out strategy to develop that, I think that would add to the menu of our options in Singapore and we will consider it very seriously. But, at the same time, I do not think our education hub strategy is lacking because of the absence of a private comprehensive university. We will still go for the other areas that we have shown to be very successful and continue to build on these areas.