Vietnam Seeks to Attract Higher Foreign Investments to Increase Quality of Education

Features of Vietnam’s Emerging Education Investment and Market

• Investment: Vietnam is ranked 69 among 190 economies in the World Bank Group’s Ease of Doing Business Index. Education is one of emerging markets in Vietnam and attracting the foreign investment. As of October 2018, Vietnam has about 437 Foreign Direct Investment (“FDI”) projects in education with total registered capital of US$4.3 billion. A number of merger and acquisition (M&A) activities are taking place in the field.
• Population: 95.5 million. Approximately 23 million people is under the age of 15 and 15 million people between the ages of 15 and 24.
• GDP Growth: at 6.5%-7%
• Number of International Schools: 119 schools. Growth for Vietnam’s International School Industry is likely to double in the next five years
• International School Demand: increasing every year with the current total enrolment of more than 40,000 students. In addition, number of Vietnamese students going abroad are more than 130,000 Vietnamese students and even more, paying about US $5 billion every year for oversea education with 90% self-funded
• The Annual Tuition Fees for Full-Status International Schools: From VND 200,000,000 (US $9,000) for preschool through to VND 400,000,000 (US $17,400) for Year 6 and VND 700,000,000 (US $30,000) for high school

The Recent Changes of Regulatory and Its Impact on the Foreign Investment in Education in Vietnam

The caps of Vietnamese students enrolling to a foreign-owned school has increased to 50%

In the year 2000, the Government of Vietnam issued Decree No. 06. This is the first time a decree governing the foreign investment in education was made. Interestingly, the foreign investment forms for education were quite open. The foreign investors even are allowed to set-up foreign invested company with 100% ownership in education sector. However, the notable point is the foreign invested schools were only allowed to teach children of foreigners who were working in Vietnam, not Vietnamese students. In other words, Vietnamese students were not allowed to register to a foreign-owned school in the year 2000s. Vietnamese students were only permitted to join foreign invested schools from senior level upward and this was only piloted in Ho Chi Minh City and Hanoi. This limitation caused concerns for foreign investors and created a lot of considerations in terms of investment decision-making.

On 26 September 2012, after 12 years from the date of the first Decree on foreign investment in education (Decree No. 06), the Government of Vietnam reviewed and issued Decree No.73 to replace Decree No. 06 which was no longer suitable to the new economic and investment conditions of Vietnam.

Amongst other changes, a significant change in Decree No. 73 is that Vietnamese students were then permitted in a foreign-owned school from primary level upward with a limit to the percentage of 10% at primary and junior levels, and 20% at the senior level. The first time Vietnamese students were permitted in a foreign-owned school– a positive take-up step of the Government of Vietnam. However, Vietnamese students below 5 years old were not allowed to participate in a foreign-owned kindergarten.

This limit has, again, raised a big concern to foreign investors and created a lot of challenges in terms of promoting and attracting foreign capital in education in Vietnam. Therefore, the Government of Vietnam decided to replace Decree No. 73 by Decree 86. This Decree has increased the percentage of Vietnamese students in a foreign teaching program of a foreign-owned school up to 50%. Vietnamese student under 5 years old are also now able to participate in a foreign-owned kindergarten. This is a significant relaxation of the former limitations. There will be a notable increase in enrolment for those schools with the capacity to now accept.

Curriculum offering by a foreign-owned school

Another significant change in Decree No. 86 is permitting a foreign-owned school to teach the National Curriculum issued by the Ministry of Education and Training without limitation of Vietnamese students. With this change, foreign-owned international school is able to take in Vietnamese students into this programme as much as they can.

In the past, Vietnamese parents did not know/have information about international schools and foreign teaching program option, but now many more parents do. They are recognizing the value of international program more, but the school choice will be influenced by their income. Many families will not be able to afford an international school, but they may be able to afford bilingual education where some of the learning are in English. So a pure international school, particularly in tier 2 cities is unlikely to attract many local families because of the high fees. But a diversified product; a school that offers both international and bilingual campuses, could be a popular solution. Studying a Vietnamese curriculum on a bilingual campus within an international school, and with affordable school fees would be more preferable for many parents than a national school for the reason that their children can then benefit from the international education environment and interaction with international students.

This change helps Vietnamese parents to have more smart choices now in terms of selecting a school for their child. This is also positive news for investors when Vietnam is predicted to see significant growth of bilingual medium international schools in the mid-market outside Hanoi and Ho Chi Minh City in the next few years. This rising competition between international schools and between the private schools and the state-owned schools are unavoidable.

Author:

Phan Manh Hung
Director
Legal KinderWorld Vietnam JSC
www.linkedin.com/in/phan-manh-hung-46ba7170