SCHOLARSHIP BONDS

Dr Lily Neo asked the Deputy Prime Minister whether the Government will consider giving (i) more varieties of scholarships in terms of varying years of bonding and amount of pecuniary involvement; (ii) prestige or acknowledgement scholarships with no monetary involvement; and (iii) scholarships with flexible terms like deferment of bond service for further postgraduate courses and/or training.

BG Lee Hsien Loong: Government scholarships today already vary in terms of the years of bond, as well as in the pecuniary amount involved. The number of years of bond associated with a scholarship depends on the type of award and country of study. For PSC, for example, the bond is 6 years for US and UK, 5 years for France, Germany, Japan and the PRC, and 4 years for the local scholarships. The amount of sponsorship also varies across countries, depending on the cost of the university education as well as the cost of living. Hence, the liquidated damages vary.

All Government scholarships are given for the purpose of identifying, inducting and grooming talent for the public sector. Thus, the Government is not in favour of awarding prestige nor acknowledgement scholarships without the scholar making a commitment to serve in the public service (Since 1993, President Scholarships have not been awarded on a nominal basis to individuals. The last time it was awarded nominally, was to a scholar to pursue Medicine at the University of Cambridge in 1992.).

There is already much flexibility in the treatment of Government scholars. First, scholarship bonds have been shortened from 6-8 to 4-6 years to keep up with the times. Scholars are now encouraged to pursue a much wider range of disciplines. Many scholarships also allow scholars who meet the criteria to go for postgraduate studies. For example, those on the SAF, SPF or PSC's Overseas Merit Scholarships or OMS, have a Master's programme worked in as part of their scholarship terms, as long as they complete their studies in 4 years. There are also about 10 PSC scholars who are pursuing doctoral programmes. On getting their PhDs, their bonds may be transferred to the local Universities or to one of our public sector research institutions. Government scholars also go for industrial and research attachments locally and overseas with our blessings.

Mr Noris Ong Chin Guan asked the Deputy Prime Minister (a) whether there is a rising trend, over the last five years, of Government scholars who broke their scholarship bonds; (b) whether the scholar's parents and guardians should be required to sign a performance bond for a specific sum, on the basis that they can exert their moral influence on the scholars; and (c) whether fiscal deterrent measures can be imposed by requiring the bond-breakers' prospective employers to recompense the bond on a non-tax deductible basis and requiring the bond-breakers to be taxed in full for any reimbursement made by their employers towards the bond payment.

BG Lee Hsien Loong: As the PSC is the largest scholarship provider, I asked them for their statistics. The figures show that over the last five years, the number of PSC scholars who have broken bond each year, as a proportion of the total number of scholars currently in service under bond, has fallen from 5% in 1995 to 2% in 1999. In PSC's experience, the bond-breaking rate rises when the economy is doing well, and our salaries get out of line with the private sector. Conversely, the rate falls when the economy is not doing so well. This is only natural.

The point is that the proportion of bond-breakers is low. The newspaper debate that followed the Sunday Times front-page article had created an exaggerated impression of the severity of the problem. We should see this issue in perspective, otherwise we would be unfair to the vast majority of scholars who did not break their bonds and who do not intend to break their bonds.

A Government scholarship deed requires two sureties. The scholar accepts the scholarship with the full knowledge, consent and approval of the two sureties. The sureties are usually the parents, immediate relatives and close family friends. Thus, when a scholar is thinking of breaking his bond, he not only has to consider his moral obligation to serve, but also the trust and expectations his parents and sureties have of him.

Our tax system is set up for a larger purpose. It should not be used per se to deter bond breakers.