Shock closure of UNSW in Singapore
By Derrick A Paulo, TODAY | Posted: 24 May 2007 1005 hrs

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SINGAPORE: Its arrival here was hailed as a tremendous boost for Singapore’s education hub aspirations.

The University of New South Wales (UNSW) is, after all, one of Australia’s top universities.

At full capacity, the local UNSW campus would have spun off $500 million annually for the economy, Singapore authorities had said.

But, barely two months after classes began for its pioneer batch of students, the Australian university — citing bottomline concerns — is heading for a sudden exit. It will close its Singapore campus when the semester ends on June 28.

The shock announcement was made yesterday in separate meetings to staff, students and the media, and a notice was posted on the UNSW Asia website. It cited a lack of demand, leading to insufficient funds for its operations here, as reason for the closure.

The university had anticipated an initial intake of 300 students, but its current enrolment is only 148. And, based on applications for its second intake in August, the university projected that it would achieve just over half of its enrolment target of 480.

According to UNSW vice-chancellor Fred Hilmer, who flew in to Singapore to break the news, every 20 students fewer means A$1 million ($1.2 million) less in tuition fees. So, the firstyear enrolment numbers would equate to a shortfall of A$15 million. “An intensive review of our operations in Singapore clearly indicates that to continue would involve an unacceptable level of risk to our institution,” Prof Hilmer said.

The decision was reached after several rounds of discussions with the Economic Development Board (EDB), which had successfully wooed the Australian university in 2004 to set up the first foreign comprehensive university in Singapore.

But, this time, the two parties could not agree on proposals submitted by the university to restructure its operations.

At a joint press conference yesterday, Prof Hilmer identified the 20ha Changi campus that UNSW is designated to move into in 2009 as one of the key issues.

The university, which currently occupies temporary premises belonging to the Government at Kay Siang Road, will need to invest an initial A$140 million in the new site.

“We needed to ... have access to a campus without putting A$140 million of debt on our balance sheet, given that we only have less than A$200 million of uncommitted reserves,” Prof Hilmer said.

UNSW’s proposals will mean revising downwards its enrolment numbers to about 2,000 students in 2012.

But this is far from the target of 15,000 students by 2020, which was decided on when UNSW and EDB signed the initial agreement.

The agreement also provides for the extension of financial assistance to the university if some conditions are met.

Prof Hilmer said: “I respect EDB’s decision. They said from their point of view, the risk-return balance on making that kind of investment was not one they wanted to pursue.”

EDB assistant managing director Aw Kah Peng called the UNSW’s decision a “setback” and said: “In the end, decisions have to be made on what we both feel are our long-term interests.” She did not want to reveal how much EDB had invested so far in the project.

UNSW, which has already spent A$17.5 million in start-up costs, had underestimated the long-term financial demands of establishing an overseas campus, said Prof Hilmer.

“This venture was, perhaps in hindsight, a little bit too ambitious ... we didn’t have the balance-sheet strength to undertake the venture,” he said. “Geography is really important. When a student says, ‘I want an Australian degree’, what he really means is, ‘I want the experience of living in Sydney’ … The lesson we learnt is a student comes as much to a geographic destination as they do to a brand of a university,” he said.

While narrower niches such as business schools like Insead may travel well, he is doubtful about a comprehensive university. The loss of UNSW is not going to deter EDB from wooing other institutions to Singapore, though.

“We would still be more than happy to talk about a comprehensive private university,” said Ms Aw.

For now, there will be a number of loose ends for EDB and UNSW to tie up, such as what to do with the land for the Changi campus and how to proceed with proposed collaborations on research centres. - TODAY/fa