Fact Sheet:

On background of scholarship system, scholars career path and choice of

scholarship
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Current scholarship system is based largely on the British Colombo Plan scholarships
which was designed to provide education grants to citizens of former colonies for the
express desire to build up a professional workforce.
Where Singapore diverged somewhat with the public scholarship was that we wanted
to build a professional and highly competent civil service and to bring high caliber
individuals into the policy making and policy execution process. As we started out as
a socialist lite country, there were a number of elements of the economy that was
essentially run by the government and you needed highly talented individuals to make
them successful.
Returned scholars are put on fast track career paths and good performers rise through
the system quickly. Government scholars who display good management capability
could in time get assigned as senior executives in one of the numerous companies
under the two sovereign investments funds, Temasek and GIC.
It has also been common for returned scholars, after a number of years at their jobs,
to be selected as PAP (or even opposition party - a new phenomenon in the 2011
election) parliamentary candidates with some joining the cabinet soon after.
Given these past experiences, it therefore was a surprise to see the following survey
result undertaken by Brightparks.
o The main sponsor for government scholarships, Public Service Commission, is
only six on the list of scholarship awarding organizations, behind the two local
universities and Singapore Airlines. Another major sponsor, the defence
ministry (both for military officer scholarships and defence science scholarships)
is not even on the top ten list.
o Only a few years ago, the universities were far down the pecking order, but
suddenly rose to the top in just the last couple of years.
o The list does not indicate that the top Singapore students no longer want to
work for the government. Among the numbers 3-10, six are government
organizations, and Singapore Airlines and Keppel Corp are both in the
Temasek stable so within the government orbit despite their listed status and
substantial private share ownership.
o However, the list certainly indicate a preference for greater diversity rather than
the past, rather focused government scholar experiences.

Muses about scholars

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Already, in the face of recent infrastructure breakdowns and a spate of government

mistakes, a section of the population appears to be losing confidence in scholars
doing the job.
o So when former Rear Admiral Chew was appointed the PUB chief, what had
been a traditional matter of unconcern started raising some hackles. "What,
another military man? Where are the professional engineers?" "I think floods
are best left to engineers to solve rather than an elite army-man." Were
common comments made.

A major flaw of the system has been "mismatched" scholars who are from a totally
different discipline doing a crucially important leadership task that he had never been
trained for.
o Eight years ago, the government employed known retailer Saw Phaik Hwa to
become its CEO, bypassing people with strong public transport and
engineering backgrounds. Saw was headhunted because the authorities
thought she could rake in profit, rather than for her ability to serve rail
commuters.
o Even the PM's wife Ho Ching, CEO of the multi-billion dollar Temasek
Holdings, was not spared criticism in the wake of her ill-timed global
investment and large losses. When she appointed a military officer in 2007,
one critic wrote: "It is bad enough when we have an engineer with no fund
management background running our US$100bil national wealth fund.
There is a history behind it. The system's architect, ex-PM Lee
believes that academic excellence is the best tangible assessment of
human intelligence and leadership potential. If you are intelligent, you
can shine in any work or position after some training. To some
Singaporeans, there are few common features between running the
military and large-scale world investments; they consider it a
"mismatch" of tasks and talents.

Rationale for the scholarship system

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Government is maximizing the economic welfare of the country by offering bonded

government scholarships to attract and lock in talented Singaporeans into the public
sector for a stipulated period of time, so as to ensure the continual growth of the
Singapore's economy.
The Singapore government is the sole employer for the public sector, and it made
the deliberate choice to pay approximately the same entry-level salaries for all
graduates, with some variations.
o However, in the global labour market, overseas Singaporean graduates from
the top ranking universities and the few top local graduates often command
higher pecuniary compensation as compared to most of the graduates
(mainly local graduates) in Singapore. For example, the monthly entry level
graduate government salary is in the region of $1200 to $2000, while the
average monthly graduate entry level salary for global investment banking or
consulting companies (whom often hire mostly overseas graduates) in
Singapore is in the order of $2500 to $4000.
o The government will have to raise the entry-level salaries for all graduates
(due to its current entry-level salary policy) if they choose to pay a higher
compensation for overseas Singaporean graduates and the few top local
graduates to compete with the global labour market. This can lead to wagepush inflation as the government employs a significant proportion of the
graduates in Singapore.
In addition, the government will not want to differentiate wages between the overseas
and few top local graduates with the rest of the local graduates, because it will
implicitly discount the value of the local tertiary education, which is not socially
optimal nor politically viable. As the potential government scholars can arguably be

the overseas graduates from the top overseas universities and the few top local
graduates, the scholarship award ($150,000) paid to the overseas (US and UK)
government scholars is actually an implicit wage increase (around $1500 per month)
discounted over the scholars' bond period of six years.
o However, 75 percent of 1977 and 1978 cohorts of AO resigned, and 50
percent of 1983 cohort, which justified the need for 1989 salary revision
o Proportion of politicians who have had experience in the private sector: 22
percent in 1959, 50 percent in 2006 (MICA 2003, 2007)
o While paying competitive public sector salaries is more important to ensure
good government in Singapore, the lack of a fixed ceiling can also indirectly
affect the country's competitiveness if private sector salaries rise as a result
Legal issues of scholarship
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The damages for breaking the scholarship contract without any approved reasons is
the liquidated damages of 10% per annum compounded interest on the total
expenses (Tang, 1999). However, the government waives liquidated damages if the
scholars break their bonds in certain circumstances such as medical ones. The 10%
compounded interest rate does not appear to be deliberately pegged above or below
the market interest rate. For example, United Overseas Bank, a major Singapore
bank, is offering overseas study loan at 7% per annum, up to the maximum value of
$27,000 (UOB, 2001). The higher 10% interest rate for the liquidated damages is
likely due to the larger amount of the scholarship, which can come up to $150,000.
Moreover, the government had not change the 10% interest rate for the past 5 years,
even though market interest rates have fluctuated.
With regard to specific performance, it is impossible to compel scholarship recipients
to serve, if they have made up their minds not to do so (Posner, 1998). The
fundamental principle of law is that the courts will not compel specific performance of
personal service contracts (Lee, 1998). It is beyond the powers of any court or
anyone else to force a scholar to fulfill an obligation that the person does not want to.
Therefore the remedy for non-performance of scholarship contracts is the payment of
contract damages (Lee, 1998). Also, the liabilities for the scholarship contract is
prorated, meaning that the scholar will pay a lower pecuniary amount to break the
bond, in inverse proportion to the amount of time he had served. Prorated contracts
make economic sense, as they prevent windfall gain by either side (Posner, 1998).
For example, a prorated contract will not allow the government to benefit from a
windfall gain from obtaining the full value of the scholarships, plus damages from the
scholars if they break the bond, when they had already served a large part of the
scholarship bond.