The government intends to give corporations double deduction for sponsoring students. While it is great to encourage the private sector to give out scholarships to students so that there are fewer reasons for government to do so, I think the double deduction is a bad idea. There two reasons.

First, I am with the idea that the government is spending too much money on sending undergraduates abroad. When the destination countries are developed countries like United States and the United Kingdom, the scholarship program as a whole will be awfully expensive. If you are to attend the University of Michigan as a government-sponsored student in a typical 4-year undergraduate program for instance, the tuition alone can surpass half a million ringgit, just like that.[1]

Of course, Michigan is not your typical university and there are of course cheaper universities out there in the US but most of those cheaper universities do not bring value to public money when there are better alternatives closer to home. You do not want to pay half a million ringgit to send something to a school like, oh, I don’t know, Ohio State University maybe?

Okay, that is uncalled for but you get my drift. OSU is a good university, only that Michigan is way better, in every single way. Including, thank the heavens, in football too!

I prefer the government to use the money on improving the local tertiary education instead. Money of course can only do so much. There are other factors like freedom on campus (Malaysian public universities seriously lack this) to develop a free inquiry culture but money does matter.

There are exceptions to my opposition to public scholarship to abroad, but these exceptions are so small that even putting them up while drastically reducing the program will free up tons of money for other uses. In the double deduction policy, since awards for places abroad is costlier than local spots, companies have the incentives to send students abroad, at taxpayers’ expense.

Secondly, the double deduction reduces government tax revenue only to do what the government is doing in the first place. It is only fee-shifting or paper-shifting so to speak. It does not matter who spends it because in the end, it will use taxpayer money. If the number of awards—for local and overseas spots—stays the same, then this policy will only increase the cost, explicitly or implicitly, of maintaining the policy, explicitly or implicitly. When the result is the same, why do it convolutedly? Such an accounting trick will add more cost than necessary to the government.

If the government is reducing scholarship award, then the money will flow out anyway before it gets in. It will show lower revenue and lower spending and then, maybe, smaller government. That is only because of that accounting trick. Like all accounting tricks, it is superficial.

At the very least, I think the double deduction should come with a caveat: only for sponsorships at local schools. If anybody wants to send somebody abroad, they should use their own money entirely.

Or otherwise, maybe just reduce corporate and service tax altogether so that this problem with double deduction would not be a problem to start with. That would truly be more substantial than that particular 2012 budget provision.

Or yet another or-case, the government should only give out less than 100% deduction while reducing the number of public scholarship awards to abroad.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved
[1] — [Office of the Registrar. Full Term Tuition & Fees. University of Michigan. Accessed October 9 2011]

3 Responses to “[2440] Opposing double deduction for scholarship abroad”

  1. on 10 Oct 2011 at 10:31 Bobby

    You missed a point.
    I agree that the measure should have been aimed at encouraging the students studying locally, but until one of our unis actually get inside the top 400, perhaps it is better for our graduates to get their education overseas.
    I see a marked difference between those who studied at let’s say, UUM, and someone who has studied in Berkeley.
    Same course, but different end product.
    I’m sure you would be able to tell the difference as well, for someone who can hold a sensible discussion at The Diag, compared to others who sit around mamak stalls discussing the latest Harian Metro headline.

  2. on 13 Oct 2011 at 00:09 Kai

    I guess the private sector won’t do this for free. There must be clauses to bring them back once they graduate overseas.

    Can slightly mitigate the brain drain maybe?

  3. on 13 Oct 2011 at 08:42 Hafiz Noor Shams

    @Bobby At what cost? That’s the question. Besides, if Malaysia sends all of its brightest abroad, it’s inevitable the local level will drop. It’s quite likely the difference in quality is due to the selection problem in the first place. Add also the entitlement culture that the scholarship creates, the readjustment of scholarship policy is overdue.

    @Kai I don’t see how this is related to the brain drain problem.

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