As education is a top priority in terms of attracting foreign investment, Vietnam is making great progress with its education policies to meet the expectations of foreign investors, helping the sector to become more attractive.

In response to recommendations made by foreign investors, the Ministry of Education and Training (MoET) is revising several regulations on foreign investment and co-operation projects in the education and vocational training sector.

Pham Chi Cuong, deputy head of the ministry’s International Co-operation Department, told VIR that “The revision is focusing on the limitation on the percentage of Vietnamese students, licensing-related issues, and the legal framework to extend the operation terms of educational institutions.”

This move demonstrates the MoET’s determination to improve the business climate in the field and help to clear significant barriers to entry for foreigners wishing to invest in higher education in Vietnam.

In fact, obstacles in the country’s education policies are among the main reasons that deter foreign direct investment (FDI) in the sector over recent years. Education remains in the bottom tier of sectors that receive foreign investment.

As reported by the Ministry of Planning and Investment’s Foreign Investment Agency (FIA), as of June 13, 2016, Vietnam attracted over US$735.84 million in FDI via 276 projects in the education and training sector.

The US topped the list with US$179.3 million, followed by Japan with US$98.37 million, and Singapore US$80.42 million. Taking this into consideration, education is still ranked 17th among the 18 sectors receiving FDI in Vietnam.

Challenges remain

The complexity of many existing regulations on education investment has been fiercely discussed at business workshops and forums since 2012. At this time, Decree No.73/2012/ND-CP took effect in November 2012, governing FDI and co-operation projects in the education and vocational training sector in Vietnam.

During a conference titled “Hanoi 2016 - Investment and Development Co-operation” held early this month, these issues were once again raised when Christopher Jeffery, vice chairman of British Business Group Vietnam, said that licensing, facilities, and the development of new programmes were the three key issues that Vietnam should focus on.

“In order to exist, foreign institutions are required to obtain three licences. Although these processes are similar, they must be pursued independently and sequentially. This can be quite a challenge. Additionally, Decree 73 is ambiguous, resulting in varied interpretations which often contradict one another,” Jeffery stated.

The other concern is the development of new programmes that would fit the Vietnamese and/or international model. Again, the issue at hand is a slow process made even more complicated by sometimes ambiguous and inconsistent interpretations.

This results in fewer options for students, which in turn makes recruitment more difficult and investment less attractive. The ultimate outcome is fewer well-rounded, qualified graduates. Jeffery believes it is critical to offer a diverse range of disciplines.

According to Jeffery, one of the greatest contributions that foreign institutions can offer is the development of world-class facilities that attract students who would otherwise consider studying abroad to instead stay at home.

This would provide them with the incentive to enjoy the same experience at a fraction of the cost, while maintaining cultural and family ties.

The support of the central and Hanoi government in land allocation to foreign investors for development of world-class facilities is a pre-requisite for development of the sector, both in direct investment projects such as British University Vietnam (BUV) and public private partnership (PPP) projects.

Brian O’Reilly, head of the Vietnam Business Forum’s (VBF) Education and Training Working Group, complained that the cap of 10 to 20 % of Vietnamese students allowed to join international schools is unreasonable because the demand of Vietnamese students in international schools is rapidly increasing.

“With the present limitation, the foreign investment in education is closed in second-tier cities of Vietnam because the enrollment percentage of 10 to 20 % of Vietnamese students allowed to join international schools is based on the number of foreign enrolled students.

The fact is, almost all second-tier provinces besides Hanoi and Ho Chi Minh City have a very limited number of foreign enrolled students. As a result, a very limited number of Vietnamese students are allowed to attend,” he added.

The other unsolved issues include limited invested capital, the inspection of facilities of foreign-invested institutions,  the lack of a legal framework to extend the operational terms of educational institutions, and high requirements for teaching staff.

A promising land

Statistics from the FIA showed that Ho Chi Minh City continued to be the most attractive destination for education investors, with 128 projects worth US$267.7 million. The runners-up were Hanoi with 102 projects worth US$215.5 million and Danang with 11 projects valued at US$158.11 million.

Over past years, many foreign investors have succeeded in education investments in Vietnam. One of the most successful is Singapore’s KinderWorld Education Group.

The other big brands are American Pacific University’s US$150 million project in Danang, BUV’s US$70 million project in Hung Yen province, and the US$68.9 million Nagai Vietnam Centre and Oasis Development Management’s project in Hanoi.

The country has also welcomed brands from the UK, the US, Japan,  Australia, and Germany.  This  also includes the Republic of Korea’s Chungdahm Learning, which signed a co-operation agreement with Egroup last week to invest US$10 million in creating English learning products in Vietnam.

“Investing in education is not a business to make huge profits but a labour of passion. It is a commitment to excellence and to the future. What we really need is an opportunity to come together and go into greater detail of Decree 73 as partners, with a shared vision for opportunity creation and educational excellence,” Jeffery noted.

For now, the efforts and actions should be made by the Vietnamese government, especially the MoET to unblock capital flows into the education and training sector.

VIR