Vietnam Education Fertile Land for FDI

According to the Law on Investment, investment in the education sector is to be encouraged. WTO commitments and other guidance documents also allow a ratio of foreign ownership in the sector up to 100 per cent. However, as stipulated in article 24 of Decree 73/2012/ND-CP on foreign cooperation and investment in the field of education, foreign education institutions may receive Vietnamese students but the number of students in primary and secondary schools does not exceed 10 per cent of the total number of students and high school does not exceed 20 per cent. And issue that foreign companies encounter is that the percentage of Vietnamese students allowed to study in international schools is calculated based on the number of foreign students enrolled.

This provision means that, of the 10 students enrolled in an international institution, only one Vietnamese student is allowed to study. If foreign institutions do not have sufficient numbers of foreign students, Vietnamese students are also not allowed to enroll. Mr Fred Burke, Head of the Trade and Investment Working Group of VBF said, this provision makes it difficult for some foreign investors in the educational environment outside the big cities, because there are very few foreigners living and working outside Hanoi and Ho Chi Minh City. Consequently, foreign investment in primary education and secondary education in other provinces is limited. "Demand for international study programme of students is growing rapidly. With this regulation, the investment in the provinces outside Hanoi and Ho Chi Minh City for all levels is almost impossible, “said Mr Phan Manh Hung, Legal Director of Kinderworld Group.

Many investors said that to build schools in Vietnam, they must apply for three licences including investment, establishment and operation licences. Among them, the biggest concern is the establishment permit because it has to go through the process of review and approval of the various departments and agencies. The special issue worrying investors is that in the application for establishment license, they have to write expected number of teachers and the expected number of employees, but enforcement and legislation agencies have completely different interpretations, requiring them to submit teachers’ profiles including legal work permit at the time of licensing. That means businesses must hire teachers, sign contract, pay salaries and apply for labour permit for the teacher before the institutions are active.

In addition, some institutions also complain that Vietnam lacks a legal framework to build a practice facility. Foreign investors recommend Ministry of Education and Training allow a university to operate a restaurant or commercial hotel so that students can experience reality and be ready for work after graduation.

We must change the mindset
Facing many views that opening education services under the commitments of integration will be "double-edged sword" because foreign investors would penetrate the domestic market causing negative impact, many experts say Vietnam may consider and choose fields to open. For example, Vietnam cannot open education for primary schools but it should open in the grades where students have sufficient awareness. Vu Thanh Huong, Lecturer at the University of Economics (Vietnam National University) said: "Vietnam should not be too shy in opening education but needs to make good use of integration opportunities, which is from ASEAN economic community to change, increase service quality, enhance the competitiveness of the education sector. Education sector has geographical balance, Vietnam should make use of it as a prerequisite to grow when integration,” she said.

It is recognized that receiving the wave of FDI in education also means that domestic education faces stiff competition. However, competition has forced education in the country to change in order not to be left behind such as through transfer to credits learning mode, or reforming foreign languages teaching methods in schools. "Invest in education – training” means investing a huge amount of capital for a relatively long time. Thus, Vietnam needs to further promote foreign direct investment to develop the education sector," said Mr Do Nhat Hoang, Director General of Foreign Investment Agency, MPI.

M.T