Unlocking Opportunities in Vietnam's Higher Education Market

Vietnam is rapidly becoming a prime destination for foreign investment in Southeast Asia, particularly in its burgeoning higher education sector. The demand for high-quality education is reaching new heights, creating favorable opportunities for foreign investors. Decree No. 86/2018/ND-CP (“Decree 86”), introduced in August 2018, is expected to ease regulations and allow foreign-funded schools to enroll more students, opening new avenues for investment.

A Thriving Market for Higher Education

The landscape of higher education in Vietnam is characterized by a strong push toward reform and investment. The Vietnamese government has committed approximately 15 to 20 percent of public expenditure to education since 2000, one of the highest rates in ASEAN. This commitment reflects the growing importance of education as a driver of economic success.

As a result of this commitment and a rising local middle class that favors private education for its perceived quality, Vietnam has seen a robust market for private institutions and vocational schools. Approximately 408 joint training programs exist between Vietnamese higher education institutions and foreign partners, with 103 transnational education (TNE) programs allowing students to study in Vietnam while receiving degrees from international universities.

Key Drivers of Investment in Higher Education

• Growing Middle Class: A rapidly emerging middle class is fueling the demand for higher education. According to the Boston Consulting Group, the middle and affluent classes (MAC) in Vietnam are projected to double from 12 million to 33 million between 2014 and 2020. This demographic shift has led to increased confidence among families, with 90 percent of MAC respondents believing their children will enjoy better living conditions.
• Demographic Advantage: Nearly 60 percent of Vietnam's population is under 35 years old, creating a substantial demand for educational services. Young Vietnamese are eager to gain skills that meet the evolving demands of the labor market, particularly in high-growth industries.
• Talent Shortages: Vietnam faces significant skill gaps, and local qualifications are often not well recognized. As parents prioritize education, many are seeking international learning environments that provide higher-quality educational experiences, making the market more attractive to foreign investors.
• Government Support: The Vietnamese government continues to support initiatives aimed at improving education quality and accessibility. Following Vietnam's entry into the World Trade Organization (WTO), the government has emphasized education as a national priority essential for economic development.

Conditions for Investors

To invest in the education sector, foreign investors must meet several conditions:

• Investor Eligibility: The investor must be a person with full civil act capacity. If an organization, it must have a business registration certificate certified by a consular office and be a citizen of a WTO member country.
• Field of Study: Investments can only be made in specific fields, including technical, natural sciences and technology, business administration, economics, accounting, international law, and language training. Educational content for higher education services must be approved by Vietnam’s Ministry of Education and Training.

Investment Capital Requirements

Investment projects on the establishment of higher education institutions must adhere to the following capital requirements:

• Total Investment Capital: A minimum of 1,000 billion VND (excluding land-use costs) is required. Foreign-invested economic organizations acting as project investors must demonstrate their financial capacity by the Law on Investment. By the time of appraisal for the establishment of the university, the investment value must exceed 500 billion VND.
• Branches of Foreign Higher Education Institutions: For projects establishing a branch of a foreign-invested higher education institution in Vietnam, a minimum investment capital of 250 billion VND (excluding land-use costs) is mandated. By the time of appraisal for allowing the establishment of a university branch, the investment value must be greater than 150 billion VND.

Navigating Regulatory Requirements

Despite the potential for growth, investment in higher education can be challenging due to complex regulatory environments. Investors must carefully study these regulations before considering market entry. To establish an educational institution in Vietnam, investors must obtain an investment registration certificate (IRC) and an establishment registration certificate (ERC), followed by a decision to approve the establishment of the foreign-invested educational facility and a license for educational activities.

Establishing Educational Institutions

Investors can set up various types of educational institutions in Vietnam, including public and non-public institutions, the latter of which includes private and semi-public schools. All institutions must adhere to Vietnamese laws and utilize a standardized curriculum.

Facilities and Equipment Requirements

Educational institutions must also meet specific facilities and equipment requirements :

General Education Institutions: Must have adequate space per student (6m2 in urban areas), appropriate classrooms, libraries, and facilities for extracurricular activities.

• Higher Education Institutions: Must have at least 25m2 of land per student, adequate lecture halls, functional rooms, and facilities for research and student services.

Personnel Conditions

Personnel qualifications are crucial for maintaining educational standards:

• Lecturers: Must have at least a master’s degree or higher, with the proportion of lecturers holding a doctorate degree not less than 50% of the total number of lecturers, except for specific training disciplines considered and decided by the Minister of Education and Training.
• The maximum student/faculty ratios are:
• Educational institutions must have a sufficient number of permanent lecturers to undertake at least 60% of the program volume of each training discipline.
• Foreign lecturers teaching at foreign-invested higher education institutions must have university teaching experience in the same teaching field. Native speakers teaching foreign language skills must possess a university degree or higher and an appropriate foreign language teaching certificate.

Conclusion

Vietnam’s higher education sector presents an array of opportunities for foreign investors looking to capitalize on a growing market. By understanding the regulatory landscape and the unique demands of the Vietnamese populace, investors can establish successful educational institutions that contribute to the nation’s educational reform and economic growth.