Vietnam: New education investment regulations

Author: | Published: 11 Dec 2018
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Among the variety of investment areas in Vietnam, the education sector is becoming one of the most appealing. Consumer expenditure on education continues to rise in Vietnam. According to the British Council, consumers spent $8.6 billion on education in 2015, which is forecast to increase to $12.8 billion by 2021. According to statistics provided by the Ministry of Planning and Investment, for the first half of 2017, Vietnam attracted over $701.69 million in foreign direct investment via 336 projects in this sector.

To support this trend, the government has enacted Decree 86/2018/ND-CP on foreign cooperation and investment in education (Decree 86), which came into effect on August 1 2018, with the key features mentioned below.

Increased enrolment of Vietnamese students

Previously, the maximum rate of Vietnamese students permitted to enrol in a foreign educational programme was 10% or 20% of the total number of students, respectively, for primary/secondary school and high school. The remaining 80% to 90% of foreign students was not achieved in practice. Decree 86 has increased that maximum rate of Vietnamese students to less than 50% of the total number of students in those programmes in educational institutions, creating more advantages for foreign investors.

In addition, the prohibition against Vietnamese children younger than five years old enroling in a foreign educational programme has been abolished. However, Vietnamese students are required to study mandatory subjects specified by the Ministry of Education and Training.

Simplified procedures

The procedure of approving the establishment of short-term foreign-invested training/education institutions has been simplified. Foreign investors now need to follow only three procedures, rather than the four previously required, saving at least 40 working days. In the past, the competent authorities hesitated to provide direct permission for M&A activities, as the law was unclear. Decree 86 clearly stipulates that foreign investors may engage in M&A activities such as share acquisition and capital contribution in a domestic educational institution or a foreign-invested business entity that has already established an educational institution. Thus, the authorities' permission should be more timely and precise in practice.

Limitations

Investment in education still remains challenging since the government's control over the sector is quite strong and complicated (such as prohibited activities in national security and defence, the political and religious sectors, and approval of the authorities with respect to the curriculum or subjects). Additionally, there are numerous requirements on investment capital, curriculum, teachers, and infrastructure, among other things. Therefore, investors are advised to carefully study Vietnam's complex regulatory environment when considering cooperation and investment in this field.

Kazuhide
Ohya
Tran Quoc
Dat
Nguyen Bao
Linh