He explained that this is because they have a national and social mission that goes beyond grades.
Unlike institutions like Harvard University in the US or China's Peking University, which admit a small percentage of students in those countries, Singapore's universities admit the bulk of its tertiary-bound students, said the PM.
So, while rankings bring good repute, the universities' broader mission must be to develop a student's social conscience.
Universities should also imbue in students "a sense that they have a responsibility to take Singapore forward", said Mr Lee at the official opening of the National University of Singapore's University Town (UTown), reported The Straits Times online.
UTown is an educational hub complete with residential spaces, teaching facilities and study clusters. It is part of a wider effort to improve the tertiary education sector, with the Government also committed to increasing the number of university places from 27 per cent of each cohort now to 40 per cent by 2020.
But the PM cautioned that the expansion must not come at the expense of churning out degree-holders without jobs that fit their training or fulfil their aspirations.
He pointed to countries like South Korea, where unemployment among university graduates is higher than graduates of vocational high schools.
"Other countries have found that having large proportions of students going to university does not necessarily guarantee happy outcomes," he said.
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