SINGAPORE MANAGEMENT UNIVERSITY BILL

Order for Second Reading read. 2.33 pm

The Minister for Education (RAdm Teo Chee Hean): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Rationale for Third University

Since the early 1980s, the Government has been expanding capacity at the universities to meet the increased need for highly trained manpower in the economy and to meet Singaporeans' aspirations for more opportunities for higher education.

The two state universities, the National University of Singapore and the Nanyang Technological University, together admitted 8,600 local students in the academic year 1999, including some 900 local polytechnic graduates. This represented a 231% increase from the 2,600 students admitted in 1980. University participation rate has risen from 5% of the cohort in 1980 to 21% of the cohort in 1999.

As Singapore competes in the first league of world economies, we need a population that is skilled, innovative and entrepreneurial. The Government has therefore decided to further expand university educational opportunities. The cohort participation rate will increase from the current 21% to 25% when the three universities have eventually reached their capacities.

Instead of expanding NUS and NTU, which are already the size of large state universities in the United States, we decided to start a new university specialising in business and related disciplines. The intention is for NUS, NTU and SMU to develop their own unique characteristics and niches. NUS will continue to develop as a comprehensive university; NTU will have a distinctive engineering, professional and business bent; and SMU will focus on serving the business and services sectors of the economy. This model provides for competition and yet avoids wasteful duplication. Each university has enough room to develop its own areas of excellence, and enough competition to spur it on to greater heights.

Building a new university also gives us the opportunity to make a fresh start.

The Singapore Management University has been conceived to be innovative and pioneering.

Approach of the SMU Bill

To provide SMU with the flexibility and autonomy to innovate and break new ground, SMU will be structured in a different way from NUS and NTU. While NUS and NTU are statutory boards each governed by an Act of Parliament, SMU will be structured as a private company limited by guarantee. There will be a two-tier approach. SMU's daily operations are governed by the Memorandum and Articles of Association (M&A) of the company which was incorporated on 12th January this year. The company called The Singapore Management University is also subject to the provisions of the Companies Act. This gives SMU as much operational autonomy as possible to innovate and to pursue excellence.

At the higher level, SMU's activities will be governed by the SMU Bill. This is necessary because of the wider national role played by SMU as an institution of higher learning in Singapore, and the fact that SMU will receive significant public funding. The SMU Bill will therefore provide the necessary mechanisms for the Government to guide SMU's strategic development in the public interest, and safeguard the use of public funds.

Because of this two-tier approach and the desire to give SMU maximum flexibility, the SMU Bill is a minimalist and relatively short Bill.

The SMU Bill

The SMU Bill aims to serve four key functions:

First, it gives SMU the right to confer and award degrees, diplomas and certificates, including honorary degrees and other distinctions;

Second, the Bill allows for Government funding to be provided to the institution. This will help ensure that SMU develops successfully, especially in the start-up phase, and signals to the public governmental support for SMU;

Third, it permits the Government, when necessary, to influence the strategic development of SMU; and

Fourth, the Bill permits the Government to monitor the use of public funds.

Permit me to highlight the key clauses in the Bill:

Clause 3 sets out the function of the university company, which includes the conferring and awarding of degrees, diplomas and certificates;

Clause 6 makes provision for Parliament to provide funding for the university. Clauses 3 and 6 therefore signal the Government's support for SMU;

Clauses 4, 5 and 7 provide safeguards in the public interest. These clauses grant the Minister for Education the power to appoint and remove Trustees and to give his consent for:

(1) The admission of members of the company;

(2) The disposal of the University's undertaking or property;

(3) The voluntary winding-up of the University; and

(4) Any alterations of the University's constituent documents.

Clause 8 clarifies that the Societies Act applies to any student body in SMU unless otherwise exempted by the Minister responsible for societies.

Development of SMU

Mr Speaker, Sir, to reflect the country's endorsement and support of this major undertaking, I am pleased to announce that the President of the Republic of Singapore has agreed to be SMU's Patron. The Patron of SMU will encourage and support SMU in the fulfilment of its mission.

I am also pleased to inform the House that Mr Lim Kim San has agreed to accept the appointment of the Chancellor of SMU. Mr Lim, who has distinguished himself as a Cabinet Minister and in the private sector, is eminently suited to be the Chancellor of SMU, especially since SMU seeks to be a premier institution of higher learning dedicated to the high ideals of scholarship, research and entrepreneurship.

SMU has been making good progress in its development. It has established strong links with the University of Pennsylvania's Wharton School - the top business school for undergraduate programmes and the MBA programme in the United States. Professor Janice Bellace, formerly Deputy Dean of the Wharton School, has been appointed the President of SMU. In addition, the Wharton-SMU Research Centre has been established to advance research relating to business and management in Asia.

In August 2000, SMU will be admitting its first intake of 300 students into its Bachelor of Business Management course. I am heartened to note that there were more than 1,000 applications for about 100 places when SMU opened the course for early admission this year. Some of the applicants, I am told, are of very high quality and could have secured places in the best universities anywhere in the world. This augurs well for SMU.

Modelled after the Wharton School's innovative undergraduate curriculum, SMU's curriculum is broad-based. In addition to the core studies, students will be able to choose from a wide range of subjects such as IT and the Law, Political Science, Music and Interpersonal Dynamics.

In the longer run, SMU may expand its course offerings to related disciplines. There will also be a strong postgraduate and research focus in management and business issues related to Asia.

SMU will be located temporarily at NIE's Bukit Timah Campus until its city campus at Bras Basah vicinity is ready around 2005. We can then expect SMU to become an integral part of the business and financial community and life of the city.

Conclusion

Mr Speaker, Sir, it is my hope that the Singapore Management University, as Singapore's new university founded at the start of this new millennium, will become known throughout the world for the innovativeness and quality of its academic programmes, management philosophy, research and entrepreneurship. The SMU Bill, together with the university company's M&A, will provide the necessary framework that will give SMU a high degree of autonomy and the required measure of public accountability that will allow it to excel as the first major university of the 21st Century.

Question proposed.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.10 pm.

Sitting accordingly suspended at 2.45 pm until 3.10 pm. Sitting resumed at 3.10 pm

[Mr Speaker in the Chair]

Debate resumed.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, compared to the Acts establishing the NUS and the NTU, this SMU Bill is a very simple Bill indeed. As the Minister says, it is a minimalist Bill. The two Acts are very comprehensive covering many aspects of the operation of the University, including addendum schedules listing University Constitution which specifies exactly how the University is to be governed, including the roles and responsibilities of the officers of the University from the Chief Executive Officer all the way down to the Bursar. In contrast, the Bill simply established a company operating the University. Although this company is termed as the university company in the Bill, for all intents and purposes, it looks like a regular private company. It feels like a private company, and it is indeed a private company. Other than a few clauses empowering the Government to safeguard the assets, the Bill is silent on how the University is to be run. So comparing the two tiers of statutes, it is indeed a very significant contrast.

As the Minister has said, the Government has chosen to grant SMU as much freedom as possible. In the light of recent announcement that the Government is giving the two established universities, the NUS and the NTU, greater latitude when it comes to self-governance, this is indeed the right approach at this juncture in time.

The question I have in mind is this. Since this is a better way to run university, should the Government not also consider repealing the current statutes governing NUS and NTU and re-enact similar Bills for these two universities as well, if not now but maybe sometime in the future? Otherwise, are there any other reasons that those two universities need to be better safeguarded?

Mr Speaker, Sir, another impression that is left in the public mind is that the establishment of the SMU does not seem to have received a thorough deliberation as it rightfully deserves. From the press report, it seems that various proposals for the SMU were tabled in the past and were seriously considered. For instance, it was reported earlier that the NUS Business School would henceforth concentrate only on the graduate programme as the undergraduate programme would be transferred to SMU. Obviously, that is not the case now. And I believe my colleague, the hon. Dr Tan Boon Wan, who is most familiar with the circumstances, will elaborate on this. In view of this change at a relatively late stage, one gets a sense of see-sawing in decision making. So the question I have is: Is the current arrangement among the three universities truly the best for Singapore?

Mr Speaker, Sir, having said that, let me assure the House that I support the establishment of the SMU at this juncture when we are rethinking the whole education philosophy and adapting the education scene to the demand of the knowledge-based economy. For a new university, an Act of Parliament gives it an aura of permanence and stability. It gives the SMU a stamp of approval, ensuring public recognition and support. More importantly, graduates of the University will be assured that their degrees will be recognised by the Government and their employability by the civil service and the statutory boards will be assured. In this aspect, I am indeed very glad to learn that our President has agreed to be appointed to the position of the Patron and Mr Lim Kim San has accepted the appointment of the Chancellor. This will indeed give SMU greater status.

Mr Speaker, Sir, the Ministry has also disclosed earlier that it will be exploring the use of SAT as a supplementary measure for university admission. This is so because it feels that its sole dependence on 'A' level examinations has encouraged certain study habits of our youths and neglected creativity and innovativeness which are important in the KBE. I am glad to note that SMU, with its stronger emphasis on the American curriculum, is using SAT in its initial recruitment of 100 students out of close to 1,000 applicants. Selection will be done through personal interviews, review of essays written by the applicants as well as the SAT scores. Judging from the press reports of the students seeking admission, they are very impressive indeed. There is even one young lady with a SAT score of close to 700 which is very outstanding.

If SMU were able to attract the better students, it will signal to the other two universities that they too need to enhance their attractiveness. It will be no longer business as usual as there will be competition for students. As we all know, a certain measure of competition is healthy in all fields of human endeavours. We can see that in the development of our polytechnics. With four polytechnics competing to attract the better students, our polytechnics have become more innovative in the course offerings and indeed more responsive to the changing time. I believe SMU will have a similar impact on our local universities as well.

Mr Speaker, Sir, with all the flexibilities of a private company, SMU will have the maximum freedom to attract the best faculty through a better remuneration package. Already, it has attracted several staff from NUS and in response, the staff in NUS Business School have been offered better compensation. However, I would like to sound a note of caution here that the universities do not engage in a bidding war for staff, especially undergraduate teaching staff. It would seem to be a zero sum game if most of the SMU staff were recruited from the other Singapore universities and few from overseas. We should also bear in mind that what makes universities excellent and famous has less to do with their undergraduate programmes and everything to do with their research and graduate programmes. It is a fact that in the American universities, research talent is valued greater than teaching ability when it comes to the granting of tenures. I studied at Stanford University in the late 70s. I still recall many Stanford University faculty members who were great teachers, well beloved by students but were denied tenure because their research ability was judged to be below par even though their teaching abilities were outstanding. It seems to be the culture in NUS and NTU today as well. In this respect, Sir, I am heartened to learn that SMU has already acquired close to $22 million in its research fund and is collaborating with the Wharton Business School to establish the Wharton-SMU Research Centre.

Mr Speaker, Sir, at the current enrolment of 400 students per year, SMU will still have a total population of no more than 2,000 students when it is fully established. By all measures, it is indeed a small university and will remain so unless it has ambition to develop into a comprehensive university. The Ministry of Education typically funds the operation of the universities on a fixed dollar amount per student per year. So if you take the total number of 2,000 and multiply it out, it seems to be that the total budget for SMU would be rather small compared to the other two universities, probably no bigger than the engineering faculties of the two universities. I am concerned that SMU's small size will pose a hindrance to its attractiveness as a centre of scholarship. Furthermore, to restrict to the field of management would seem to be detrimental to the emergence of a truly great institution as many fields of research are multi-discipline in nature. In my opinion, SMU would have to grow beyond the field of business and management studies to evolve into a university of high esteem.

In conclusion, Mr Speaker, Sir, I support the establishment of SMU. I wish SMU great success and look forward to its contributions towards making Singapore a world-class centre of academic excellence.

Dr Tan Boon Wan (Ang Mo Kio): Mr Speaker, Sir, thank you for permitting me to join in this debate.

First, let me declare that I teach at the National University of Singapore. Sir, I support this Bill. Our future is a world of information and knowledge. To be relevant in this new world, our people must be even better educated and trained. The new university will provide more opportunities, as mentioned by the Minister, for our young to be educated. Many who now have to go abroad at great expenses to study may no longer need to do so. The new university will also make the market for academics more vibrant.

However, Sir, I would like to raise some issues and concerns. In future Singapore, our people have not only to be just trained and educated, but they need to develop qualities, values and skills that are now not yet emphasised, things like creativity, innovativeness, being entrepreneurial, being thinking and problem-solving oriented, a willingness to take risks and adapting to lifelong self-learning. Our existing education system has strengths much admired by the world, but it must change to develop the future Singaporeans we need. The Prime Minister has identified that this is one of the crucial and critical tasks for the nation. The Ministry of Education has embarked on this difficult and crucial task. Many changes have been made in the education system - in the curriculum, governance, testing and measurement, teachers' training, etc. The changes have taken place throughout the education system, from the pre-primary level to ITE and polytechnics. Our universities must also change. Since the future represents a paradigm shift, significant changes would be needed in our universities. Can our universities meet the challenges? Can they change? How should they change? How can we ensure that the needed changes are made? We know where we want to go, but how to get there is less easy.

Sir, concerns have been expressed regarding the quality of degrees to be conferred by the new university. This concern has arisen especially in the wake of the discussion in the Forum page of the Straits Times on the acceptance of the OUDP degree by the Ministry of Education for a teaching career. Questions have been asked if the Public Service Commission would state openly the acceptance of SMU degrees for a civil service career.

Regardless of how you call SMU, that it is a private institution as opposed to NUS and NTU as State institutions, like the OUDP, the public sees the SMU as a Government institution. If the SMU degree runs into any problem, the Government will be blamed.

The new university will raise the competition for students, especially for the good ones. As GPC Education Chairman has stated, ideally the new institution should raise national academic standards. Good students would want to go to better institutions. But studying is hard work. Even good students can be persuaded by promises of a quality degree with less effort. Eventually, institutions that use such tactics will be found out, but the damage would have been done and would endure. This would be compounded by the fact that talents, especially for a small nation, are a scarce yet crucial resource. Furthermore, our needs are varied and wide. We must also ensure that in the competition, we also do not end up producing more graduates in any areas with corresponding scarcity in other areas. If the tertiary education market should develop into a highly competitive one, we must pro-act to minimise this undesirable fallout.

Sir, the development of the university sector has increased in pace. Explosion is perhaps a more apt description. Besides NUS, NTU, we now have OUDP, SMU, INSEAD, Chicago Graduate Business School, John Hopkins, etc, and other long distance learning outfits. All these institutions would increase the demand for academic manpower. Do we have enough of such manpower to go round? Will the demand for such manpower raise the spectre of job hopping whose attending ills are well known from experience in other sectors?

Sir, the quality of an academic institution depends much on its staff. In fact, a large proportion of the recurrent expenditure of a university goes to staff pays. Human beings work best when they are committed to what they are doing. Since the capability of an academic lies in his brain, his commitment will reflect the efforts that he will put in to make available the potential of its upstairs grey matter. Therefore, how can we ensure that committed spirits rather than mercenary bodies roam the corridors of our universities, or for that matter, our educational institutions? To get the best out from the academic staff and researchers, universities should put more efforts in this area of human resource management.

We must also ensure the proper use of staff. We should avoid the use of academic staff for administrative duties that are not related to academic matters. If academic staff are so used, this is surely a case of misuse of manpower resources and funds, especially with regard to senior academic staff. Academic staff are promoted and rewarded on the basis of their teaching and research, as professional and administrative staff are trained, promoted and rewarded based on their professional and administrative duties. Each is better suited and appropriately equipped for his tasks. The use of academic staff for non-academic related functions not only misallocates resources but the practice also demoralises professional and administrative staff who see their promotional prospects curtailed. The good ones may choose to leave. This will set in a destructive cycle.

Sir, research is all important to top universities in the developed countries. We would also like to emphasise research in our universities, but we must not go overboard and inadvertently run down the importance of teaching. Our universities are unlike top overseas ones. With many universities in the country, the top ones take in only the best and can afford to focus on research. This is a luxury that our universities do not have. For our universities, producing manpower across the board will remain a major role. We neglect this role to our national and long-term detriment.

Sir, we are also moving towards using the market to price the value of academic staff. This approach has its merits, but the question is the extent to which we should allow the market to dictate prices. The market is an ideal mechanism of a rational and perfectly competitive environment. But the real world seldom fits this description. A small market also has its own constraints. There are academic disciplines with less apparent or immediate market value, but the nation may have need of such expertise at some later time, perhaps unexpectedly. How do we ensure that we have such expertise at our call? Will we be able to do so by relying on the market?

Some of the issues that I have just raised may appear to contradict. They may be so over the long-term, or if the market is perfect. But the short-term effects are real, and a market is seldom perfect. Some issues already exist. In any case, I hope the concerns can be looked into and addressed, or disposed of.

In an uncertain future which increasingly portends a paradigm shift, we must take risk. But we must also not abandon caution to the wind. We should calculate our risk. Moderation and balance may still be relevant words, especially in the midst of euphoria and earnesty.

Mr S. Iswaran (West Coast): Sir, the advent of the Singapore Management University augurs well for university education in Singapore. It adds an additional dimension to the landscape of management training and education in Singapore. As the Minister has said, it expands university opportunities and no doubt the collaboration with renowned institutions from abroad will act as an additional spur to domestic competition in the area and that should lead to higher quality all round. Sir, for all these reasons and many others, the Bill is worthy of this House's support and I fully endorse it.

Sir, the Explanatory Statement that accompanies this Bill asserts that the main object of the SMU is to provide undergraduate business education in Singapore and it is with regard to this objective that I have certain issues of public policy to raise.

The fundamental question that I have is whether we indeed might be over-providing or over-allocating public resources in the provision of business education at the undergraduate level. It is a point that my colleague, Dr Wang Kai Yuen, has also alluded to, but allow me to elaborate.

Sir, the SMU would be the third institution with public funding to provide such undergraduate business education in Singapore. NUS has traditionally done so and NTU is already doing so. This, in addition to the plethora of private outfits that provide the same courses of a range in quality, also in collaboration with overseas universities, and in addition, Singapore students are known to go abroad to take up post-graduate management courses. So, one could infer that both in absolute and, most probably, in relative terms, the number of places available for university education in management has increased.

The attendant concern that I have is that pertaining to the allocation of scarce talent, a perennial question that this House and, in general, Singapore policymakers address. If we have three credible institutions with resources competing aggressively, then it is undeniable that the quality of the faculty and the quality of the courses must rise and with it, their ability to attract talented students to their courses. So, will we end up with a disproportionate number of young, talented Singapore students being drawn to undergraduate management degree programmes?

Sir, I have in principle no problem with a management degree but I have always felt, and I believe that many others in this House would agree, that a management degree is perhaps best applied when it is accompanied with another degree or some other foundation in a core science, engineering or other content-based subject. Especially in this era where we emphasise a knowledge-based economy and the need to acquire core knowledge in areas that would generate creativity and innovation in the future, would our resources be better applied to create additional opportunities in engineering, in the sciences and in other basic core content subject areas and allowing more private sector provision of management courses?

In the light of these issues, I have a few questions to raise. The first, as I have already alluded to, is whether there is a plan for the Ministry to scale back the provision of undergraduate business programmes, if not in SMU, since it is a new institution with this stated objective, then certainly the so-called state universities, NTU and NUS. As was mentioned earlier in this debate, at one point in the deliberations leading to the establishment of the SMU, it was suggested that in fact undergraduate business education may be discontinued in some of the state institutions.

Second, if indeed that is not the case, then is there going to be a policy to help NUS and NTU differentiate themselves from SMU? One thought that comes to mind is whether NUS and NTU could provide business degree programmes in conjunction with a content-based programme leading to twin degrees, in other words, a business degree would not stand on its own but together with a content degree, such as in engineering or in science, and bio-chemistry. This would naturally contribute to creating the kind of technopreneurship that we are talking about and these individuals would have both core skills that we deem necessary.

Third, if that is not the case, could greater emphasis instead be placed on post-graduate management training, particularly in our state universities, allowing for undergraduate training where it occurs to be largely taken up at the SMU level?

Fourth, this is a point that my colleague, Dr Wang, has raised and I would like to reinforce. If we believe that the private company model might better serve the development of university institutions like SMU, then perhaps we should go further down that path with other business faculties in Singapore. If we take the analogy of the United States, the business course is probably one of the few courses where you can put almost at the start of the course the value you would accrue as a student or as a graduate of the programme. It is one of the most likely courses to be provided on a private basis because students can do their numbers at the outset.

Sir, moving on from these general public policy questions, I have some specific questions pertaining to the funding for the SMU which is mentioned in clause 6 of this Bill. I welcome the Minister's statement that SMU would be given considerable autonomy and flexibility in order to provide management training and education creatively. But it still begs the question of accountability, given that public funds would be deployed. And the questions I have on the funding principles are, first, I presume the funding formula would be pegged to that used for the Business Faculties of NUS or NTU in order to ensure some degree of a level playing field. Second, as I listened to my colleague, Dr Tan talk about the competition for talent to teach management courses, my immediate concern is one of an inflationary spiral. We are privatising the wage rates for those faculty staff for whom there is a reasonably comparable market equivalent and if we also add on to that the notion that there is going to be competition across institutions for limited talent, then some degree of wage increases is inevitable. The question then is: would funding to SMU be somehow capped, or would it rise in tandem with any projected wage increase that we can anticipate or not anticipate?

The final question I have is whether, in the spirit of keeping SMU a private institution with considerable flexibility and autonomy, there is a timeframe after which such funding from the public sector would be phased out so that the institution can indeed function, as it should, as an independent, autonomous and flexible institution providing quality management education in Singapore.

I support the Bill, Sir.