Local universities should not just chase international rankings because they have a national and social mission that goes beyond grades, said Prime Minister Lee Hsien Loong on Thursday.

Unlike other elite institutions like the United States' Harvard or China's Beida which admit a very small percentage of students in those countries, Singapore's universities admit the bulk of its tertiary-bound students, he said.

Hence, while rankings bring good repute, universities' broader mission must be to develop a student's social conscience and imbue in them "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).

UTown is Singapore's first residential college, with students and professors living, eating and learning under the same roof.

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 currently to 40 per cent by 2020.

But Mr Lee 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 the situation in countries like South Korea, where unemployment among university graduates is higher than graduates of vocational high schools, even though more than 70 per cent of each cohort enters university.

"Other countries have found that having large proportions of students going to university does not necessarily guarantee happy outcomes," he said.