University's privatisation bill 'too high'
Gary Cheung and Alex Lo
The Chinese University's demand for a $100 billion fund to finance any switch to private status has been rejected by education chiefs.
Sources have told the South China Morning Post that Secretary for Education and Manpower Fanny Law Fan Chiu-fun described the sum as too much for the Government to shoulder.
Speaking at a discussion panel at the World Economic Forum's East Asia Economic Summit yesterday, Mrs Law said private universities could better use resources and become more flexible in admitting students and developing courses.
'Privatisation is an international trend,' she said. 'But once a university goes private, there would be no government funding and it must take care of its own financing and fund-raising.
'Privatisation involves a whole range of issues and funding is only one of them,' Mrs Law told the Post. 'Universities may also have difficulty in raising money at this time.'
A Chinese University source told the Post that Mrs Law discussed the feasibility of privatising the university six months ago.
'We made it clear that it's essential for the Government to set up an endowment fund to finance the switch and future development,' the source said. 'The amount of the fund must be big enough to generate returns higher than or comparable to our current annual expenditure.'
The university receives about $3 billion a year from the University Grants Committee.
Currently all seven universities and the Institute of Education are public institutions and receive funds from the committee.
The source said Mrs Law had rejected the demand, saying the amount was too high.
'She said there was no room for discussion,' the source said.
'We have divergent views on the estimated rate of return of the endowment fund.
'We estimate it can be about five per cent, but the Government is expecting 11 or 12 per cent.'
The source said the Government's estimate was optimistic.
It is understood that education officials also have discussed the issue of privatisation with the University of Hong Kong, whose vice-chancellor Professor Ian Davies could not be reached for comment yesterday.
Mrs Law did not specify a time frame during yesterday's discussion panel, saying privatisation would remain a long-term goal and some of the eight tertiary institutions must remain public.
University of Science and Technology president Professor Paul Chu Ching-wu said he was in favour of privatisation, but estimated it would cost a research university about $60 billion to make the switch.
He urged the Government to help finance the transition and pay more scholarships to poorer students because any private university would charge higher tuition fees.