Mr Lawrence Leow

President, Association of Small and Medium Enterprises

Mr Peter Tan

President, Rotary Club of Singapore

Mr Samuel Tsien

Global Head, Group Business Banking

OCBC Bank

Mr Sng Seow Wah

Executive Vice President, Head, Enterprise Banking of OCBC

Ladies and Gentlemen

Enterprise and Education - Will providing more places in Higher Education mean less entrepreneurship?

1          At the National Day Rally this August, Prime Minister Lee Hsien Loong set a target for the number of publicly funded university places in Singapore to increase to 30% of a cohort by 2015.

2          This is a huge expansion from where we were in 1980 when just 5% of a cohort went to university.  Minister of State Lui Tuck Yew, who is leading a Committee to study how this can be done, said on Friday 5 Oct 2007 that in the interim, by 2009, the number of publicly funded places will increase to 25% of a cohort.

3          We all cheer in the belief that more places in higher education can only be better for Singapore and Singaporeans.  But since we are in the company of top entrepreneurs tonight, let me pose a question: Will providing more places in higher education mean less entrepreneurship?  

4          Why this question?  We often delight in stories about how individuals who did not go to university, or who dropped out, have made it big as entrepreneurs and ground-breaking captains of new industries – Bill Gates comes to mind.  Singapore too has its entrepreneurial heroes who did not have the “advantage” of a university education.  A good number of our early entrepreneurs came here penniless and under-educated, but made good.

5          Of course there are many examples of entrepreneurs who did go to university and became great successes.  But we ought to ponder over whether there might indeed be some validity behind such a belief.  I offer two possible reasons.  I am sure that among such an inventive and creative audience you can think of more.

6          First, some argue that those who have not had the advantage of a university education are more hungry.  Without a university education, the “easy” path to success – climbing the corporate ladder in some big company or in the public service – is not open to them.  Hence they have less to lose, are more driven, and more prepared to take the risks and venture out as entrepreneurs.  I think there is more than a grain of truth in this.

7          Second, and perhaps a more serious reason if true, is that a university education could be training a person in a structured way of thinking which prepares him to be part of a system, to be a cog in a machine, rather than to think out of the box at new possibilities, and to venture out on his own.

8          Both these observations have some validity.  Let me take the opportunity this evening to share some of my thoughts as we expand our publicly funded university places to 30% of a cohort.

9          Any development in the university sector must uphold university standards and quality.  Programmes and courses must be rigorous, relevant and of high repute – the 3 “R”s of university education.  And these fundamentals must be the starting point of any discussion about the university system.  A number of questions will then follow naturally. 

10        First, how do we expand university participation rates and maintain standards in the university sector?   Our school system as a whole is already a very strong one, and the latest innovations announced two weeks ago by Minister for Education Tharman Shanmugaratnam will strengthen it further.  We also have a strong Polytechnic sector.  A larger proportion of each cohort of our students is therefore better prepared to proceed on to and benefit from a university education.

11        Some students, perhaps 10% of a cohort  will want to experience study abroad, or do courses our publicly funded universities do not provide.  So the overall percentage of those proceeding to university will exceed 30% of a cohort.

12        What we should aim for is a university sector, which when taken as a whole, is best of class.

13        California is often cited as an example of a state with a good university system.  The UC or University of California campuses take in the top 12.5% of the high school cohort.  Certain campuses like UC Berkley are even more selective.  UC provides undergraduate, professional and graduate education up to the masters and doctoral level.  The Cal State or California State University takes in students from the top one third of the high school graduates and offers degree programmes up to generally the masters level.  The Community Colleges will accept all student applicants who are capable of benefiting from instruction, and offer a range of associate degree and sub-degree programmes.  In addition there are a number of private higher education institutes, some like Stanford, of a very high quality.

14        In Singapore, the higher education sector consists largely of state funded universities and polytechnics, catering to some 60% of a cohort, with ITE providing another 25% of cohort with a high quality technical education.  This is one of the most comprehensive higher and further education systems in the world, with high quality institutions in each segment.

15        Our university sector itself should have different types of institutions and programmes, each of which is best of class. 

16        NUS and NTU are very large universities, but within the two universities, they have created niche programmes to cater to students of very high ability in particular areas, to stretch and challenge them.  We should continue to do more of this, because such niche and high-end programmes can attract high ability students and maximize their potential.

17        But such programmes will not cater to the larger expansion of capacity that we are looking for.  For this we need to look at how to expand the structure of our system.

18        Our three state-funded universities – NUS, NTU and SMU – will take in 25% of a cohort by 2009.  Their entry model is designed to minimize errors on entry.  They have high admission standards and intake quality is high.  Hence the graduation rates are high, easily over 90%, with very low drop out or failure rates. 

If you are admitted, you are in all likelihood going to graduate. 

19        This selection process is no different from what is used in most good universities in Japan, the UK or US.  Among those not admitted, there will be some who could have met university graduation standards.

20        When we increase cohort participation to 30%, this entry model may have to be re-visited.  It might be worthwhile to find a system that maintains graduation standards but also provides more opportunities for people to try to meet those standards. 

21        To complement NUS, NTU and SMU, which should remain highly selective, we may need a university which exercises more flexibility at admission, but still maintains progression and graduation standards.  This allows us to develop those who might otherwise have missed out on a university education.  But the implication is that the graduation rate will be lower.  The shape of the student body will be like a pyramid instead of cylindrical.  There will be attrition among those who enroll and try, but do not meet pre-requisites for progression.

22        Here, we need to be mindful of going too far and avoid what the French and Germans have done, and are now trying, with difficulty, to correct.  Anybody who merely passes the high school exam can be admitted to university.  The Economist magazine of 5 July 2007 quotes French President Nicolas Sakorzy asking “Why in France are there no campuses worthy of the name…?”  The article points out that not a single French University makes it to the top international rankings.  The French do have a separate system of grandes ecoles, which are highly selective but these cater to just 4% of the students.  According to the International Herald Tribune dated 24 May 2007, Jean Robert Pitte (the Sorbonne President) says that forty-five percent of Sorbonne students do not complete their first year, and 55 percent do not finish their degrees.  Without entrance standards, there is a "selection-by-failure" that squanders resources and professors' time on weak students who "have no real chance of success," he said.  The Economist again: “Unsurprisingly, lecturers are half-hearted about teaching in overcrowded amphitheatres filled with half-motivated …. students.”   There is excessive wastage of time, energy and resources, on the part of the student, the professors, and the state.  We should provide more access, but maintain appropriate entry standards, and good progression and graduation standards.

23        Our university entry model could also encourage a wider age range among entrants.  Some of our people may work some years before they feel ready to return to get their degrees.  The university system therefore needs to keep access to tertiary education open regardless of age, to give those who are able the chance to move into higher value areas when they are ready.  We should encourage a pattern of interspersed learning in-employment.  University education can be more modular in structure so people can have different entry routes, picking up qualifications as they go, for progression to each higher rung.  UniSIM, a private university which has been granted university status by MOE, is one institution which aims to achieve this through an open university approach, organised around part-time study in the evenings.

24        Having a more “open” entry model, while still maintaining standards, will have funding implications.  In an open system that allows more people to try to meet progression and graduation standards, the current funding model where subsidies are provided to everyone who enrolls may not be workable.  Funding may still have to be pegged to some entry criterion, or perhaps given only retro-actively upon progression to the next level of the course, with a limit on the number of semesters of study in the institution.  These issues will also need to be addressed. 

25        Second, what programmes should the universities offer, so that we preserve the relevance and rigour of a university education?  This is an important question.  A university education in a generic field or that does not meet rigorous standards, and consequently does not equip a graduate with the skills and competencies for work will result in rapidly rising numbers of unskilled and unemployed graduates.

26        The popular debate over whether an education in the humanities or in science and technology is more useful, presents a false choice.  An educated person should have grounding in both.  He should understand technologies that drive human progress, and the broader societal context in which those technologies are applied. 

27        It would be a very positive outcome if we were to also have somewhere in our overall university system a world class programme in the liberal arts.  In America, their liberal arts colleges are top institutions and centres of learning.  While publicly funded universities do have liberal arts programmes, the liberal arts colleges in America are privately funded.  A number of small niche programmes or institutions in specialised areas would add to the diversity of our system.

28        The real issue is where to channel limited public funding.  In Japan and South Korea, 75% of university places are privately funded.  However, most of these privately funded places are not in science and technology.  The majority of places in science and technology are in the publicly funded university sector.  By current policy, to meet the needs of the economy, and because we feel that an education in the hard sciences gives our people an advantage, we have provided more than 50% of our publicly-funded university places in the hard sciences.  This is among the highest percentages in the world and a huge competitive strength for Singapore.  No other country in the region has this.  Even developed countries are seeing their base in science and technology being gradually eroded.  Recently, it was reported that foreign nationals, mostly from India and China, make up close to 60 percent of the Ph.D. degree graduates in engineering in the US.  This caused a great deal of concern in the US over too few Americans with advanced engineering degrees.

29        Science and technology is important because it permeates every aspect of modern life.  We live in an age of constant scientific discovery.  The world is continuously shaped by technology.  It drives jobs and the economy.  All the major public issues of the day – climate change, energy, healthcare, food security – also require some level of scientific literacy.  People need to be scientifically literate to engage in intelligent public discourse and make informed choices for the public good.

30        A good grounding in science and technology also provides the widest career flexibility for graduates, who can find challenging work in fields as diverse as civil engineering and financial engineering, or digital electronics and digital media.  Science and engineering programmes have to recognize the diverse demands and wide career choices of their graduates, and provide a fresh approach to attract and enthuse students.

31        Entrepreneurs in many fields also depend on technological innovation to survive and thrive.  It is not just the Intels and Microsofts, or GlaxoSmithKlines of the world.  The oil rig builder, the curry puff or poh piah skin manufacturer, needs marketing savvy, but he also needs technology if he wants to expand in scale and to conquer new markets with new products.

32        A solid science and technology base in education is costly, and hence state support is needed.  Few countries can afford to provide a high quality, cutting edge, science and technology education to a large proportion of their populations; or have a large proportion of their populations who have the aptitude and ability for science and technology.  We give a great deal of value to our people through public funding of science and technology in university education.  They enjoy a skill and knowledge premium over others who do not have the benefit of such education. 

33        This is also why it is important that our polytechnics remain an established part of our higher education landscape.  They provide a practice-oriented tertiary education that equips our people with the technical skills they need in the economy.  The UK and HK have regretted doing away with their polytechnics.  They lost an important educational pathway that served the needs of both the individual and the economy.  Having science and technology as the centre of gravity of our tertiary system is a huge advantage we should preserve.

34        Third, apart from skills and knowledge, what values and attitudes are important for university education to remain relevant?

35        At one time, it was enough for university education in Singapore to provide a set of skills that would enable a graduate to fit into a well-defined job in the public service or a corporation.  This is no longer true.  Every job now requires the person to seek out opportunities, to create value.

36        You will be familiar with the Japanese term “salaryman”.  It describes a person who comes out of college, starts working for a company at a lower level administrative job, serves a life-time in the company, and eventually retires perhaps 30 or 35 years later in a middle or upper-middle management level job in the same company.

37        “Salarymen” are to be found not only in Japan, but in large bureaucracies everywhere in the world – in the civil service, in large multi-national manufacturing companies, in banks and financial institutions.

38        They perform a key function in an industrial-age economy where efficiency comes from economies of scale, superior organisation, discipline and adherence to rules and procedures. They collate and collect information, carry out inspections, write reports and pass them up the chain of command.  Decisions get made, usually near the top of the system, based on the thorough and systematic hard work of the people in the system.

39        This system of industrial production has produced high efficiency, profits for companies and high economic growth.  It has provided many salarymen with good, steady jobs, and a life-long career with a good salary.  This was the traditional, safe route to success for the university graduate.

40        This paradigm of industrial and economic organization has changed.  Organizations have become flatter, with fewer layers.  Companies re-organize themselves into business units, each with their own bottomlines.

41        The change is driven partly by technology.  IT and a good enterprise information system can provide the reports, analyses and visibility that an army of salarymen used to provide.

42        But more importantly, to respond to the market, successful companies have re-organised themselves to get closer to the customer.  Small companies and start-ups which are more flexible and nimble are eating the lunch of companies that are bigger and slower to respond.

43        Companies want to shorten the distance – not just the physical distance but the sociological and psychological distance – between where the product and service is made, and where it is delivered to the customer.

44        A higher percentage of employees will be directly involved in interfacing with the customer; conceiving, designing, developing and making new products and services; and making real decisions that impact on the company or business unit bottom-line directly.  They will have to take risks and accept responsibility for their decisions.  Fewer will be required in the collation, coordination, inspection and reporting role.

45        In short, the salaryman is an endangered species.

46        Our education system should not be geared towards producing salarymen, but towards graduates who will thrive in the new world.

47        Our graduates, whether from our ITEs, Polytechnics or Universities, must not only have the foundation and the factual knowledge that our education system is so good at equipping them with.  They must also have the customer orientation, creativity and innovation, flexibility, and risk-taking mindset that they will require to succeed in the new world.

48        Whether they are running their own businesses as entrepreneurs, working in a corporation, or in the public sector, they must have this entrepreneurial mindset.

49        Our educational institutions recognize this and have taken steps to promote entrepreneurship in their programmes, through mentorships, incubators and innovation funds.  Students, and their parents must make the mindset shift too.

50        This returns us to the theme of this evening’s award presentation - entrepreneurship.  In the emerging economy, success turns more on skill, motivation and creativity than on elite credentials.  For an education to be any good, it must nurture people who are venturesome, resilient and able to define things for themselves.  Not everyone will run his own business, but we must produce people with an entrepreneurial mindset.

51        I’ve taken the opportunity tonight to raise a number of questions that a serious discussion on expanding the university sector should address.  Thoughtful answers to these questions will lay the foundation for a more robust university sector that produces the enterprising and resourceful graduates the economy needs.

52        I am heartened that such individuals and the qualities they embody are being celebrated tonight.  The Entrepreneur of the Year Award is a wonderful way to showcase and promote the spirit of enterprise in Singapore.  I wish to commend ASME and Rotary Club of Singapore for their efforts in organizing this event and encouraging an entrepreneurial culture.   

53        In closing, before the Overall Winner and Sub-Category Award Winners are announced, may I congratulate all the Top Entrepreneurs of 2007.  Tonight, we pay tribute to your success and dynamism.  Thank you.

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