Thu, 17 Jul 2003

Subsidies for universities

There has been a heated public debate lately about the introduction of a special procedure for entrance into four state universities. Fearing that this special procedure will make it more difficult, if not impossible, for high school leavers from badly-off families to get a seat in a state university, many people have suggested that the government increase its subsidies for state universities.

Unfortunately, this public debate has failed to mention the role of private universities in raising the intellectual level of the nation. Private universities are set up with loans obtained from banks at high interest rates, just like the commercial loans for businesses.

To build a campus, for example, the university management must buy a piece of land for the building and educational equipment. It must spend more money for the salaries of lecturers and administrative personnel, the land and building tax and so forth.

The government does not extend any financial help but only sends lecturers to help the teaching staff. The presence of these lecturers often triggers conflict in a private university because they earn more than private university lecturers. The lecturers sent by the government get paid as civil servants and then receive remuneration from the private university where they are assigned.

Given the above, I support the introduction of a special procedure for admission into state universities. I'm sure even without a subsidy a state university can compete with a private university. It gets virtually everything free from the government: The land, the building, lecturers and administrative personnel and educational equipment. Besides, it does not have to pay the land and building tax and enjoys a good reputation.

Parents of students of a private university must spend a lot of money for entrance fees and must subsidize state universities through the taxes they have to pay such as the value-added tax, the income tax (Articles 21 and 25) and the land and building tax.

I'm sure private universities can lower the entrance fee and the tuition fee rates if the remaining Rp 10 trillion demanded by state universities is handed over to private universities, bank interest rates are lowered and private universities are exempted from the land and building tax.