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Official Gazette

Friday, October 7, 2022

Foreign investment in education

Updated: 15:49’ - 25/09/2009

In furtherance of Party and State policies on accelerating international cooperation in the educational sector, the Government issued two decrees in 2000 and 2001. Decree No. 06/2000/ND-CP of March 6, 2000, on foreign investment in the domains of healthcare, education and training and research, and Decree No. 18/2001/ND-CP of May 4, 2001, on the establishment and operation of foreign-invested cultural and educational institutions in Vietnam, gave a green light to the opening of foreign representative offices and the establishment of foreign-invested educational institutions in the country.

Under Decree No. 06/2000/ND-CP, investors may establish joint venture or wholly foreign-owned educational institutions and institutions operating under business cooperation contracts to provide education at all grades and levels to foreigners working for a given term in Vietnam; professional secondary education and foreign language and vocational training to foreigners and Vietnamese; and higher education in the domains of technical sciences, technology, natural sciences, economic administration and language to foreigners and Vietnamese.

However, investors were only permitted to set up on a trial basis upper secondary schools in the form of joint ventures or business cooperation contracts in Hanoi and Ho Chi Minh City.   

Under Decree No. 18/2001/ND-CP, investors were allowed to open foreign representative offices and independent or associated educational institutions for the development of non-profit preschool, general, professional secondary, and higher education.

Since the promulgation of these two decrees, 127 foreign-invested projects have been licensed nationwide, 58% of which were short-term training institutions, 27% international general schools, 9.5% job-training establishments and 6% preschool establishments, including two universities (RMIT International University and Apollo University) and two colleges (Kent College and Cetana PSB Intellis International College).   In addition, about 250 training associations with foreign parties have been carried out at universities and colleges, making great contributions to the training and improvement of foreign language and professional skills for Vietnamese students, entrepreneurs and laborers.

However, after some years in effect, the two decrees revealed several limitations which could be attributed to the existence of different understandings about the legal status of educational institutions set up under investment and education laws as well as the lack of specific provisions on conditions for their establishment. Furthermore, as these two decrees were based on the 1996 Law on Foreign Investment in Vietnam, they automatically terminated after the 2005 Investment Law took effect. 

For the above reasons, the Ministry of Education and Training was assigned by the Prime Minister to draft a decree to replace decrees No. 06/2000/ND-CP and No. 18/2001/ND-CP. The new decree would guide the Investment Law, the Education Law and the Vocational Training Law regarding investment in the educational sector, aiming to create a clear and transparent legal foundation to further attract foreign investment in, and enhance the state administration of, the sector.

According to the ministry, the draft decree was formulated on the following principles: (i) adherence to an unified principle that the legal entity of an education institution, regardless of whether it is domestic-invested or foreign-owned, will be identified under its establishment decision or permit; (ii) compliance Article 50, Clause 1, of the Investment Law on procedures for investment associated with the establishment of economic organizations, which stipulates that investors wishing to set up educational institutions will comply with business registration procedures for establishing enterprises under the Enterprises Law (except foreign diplomatic representative missions and international organizations establishing not-for-profit kindergartens and general education schools); (iii) compliance with Article 22 of the Investment Law on economic organizations under which educational institutions will be considered for-profit economic organizations but not enterprises organized and operating under the Enterprise Law; and (iv) an enterprise set up by an investor for execution of a first investment project may carry out additional investment projects (Article 50, Clause 2, of the Investment Law). 

Under the draft decree, sectors in which foreign cooperation and investment are encouraged include training of technical human resources specialized in information technology, industrial technology, telecommunications, electronics, mechanical engineering and industrial maintenance, food technology, e-commerce, environmental protection, agriculture, tourism, energy and construction; and training of technicians, scientists, managers and teachers in natural and technical sciences, technology, healthcare, environment, agriculture, tourism, business administration, accounting, finance, international law and language.

Training associations

Although training associations are a growing trend in international cooperation in education, especially at the tertiary level, they are not yet governed by any regulation.

To address this, the draft decree devotes a separate chapter (Chapter II) to training association with foreign parties, specifying conditions for entering into such associations; competence to approve training associations; order of and procedures for approving training associations; and responsibilities of associating parties.

Allowed to enter into training associations are Vietnamese and foreign vocational or tertiary educational institutions which are lawfully established and operating under law and are accredited by competent authorities. In addition, they must satisfy other conditions regarding teaching staffs, material foundations and training programs and contents.

Training associations, under the draft decree, would take several forms. The first form would require associating parties to jointly organize training under foreign programs or programs jointly elaborated by themselves. Associating parties may choose another form under which foreign educational institutions would transfer their training programs to Vietnamese partners and supervise conditions to assure training quality. In these two cases, diplomas and certificates would be granted by either the Vietnamese or foreign educational institution. Training associations may also take the form of online training under foreign programs for the grant of foreign diplomas or certificates.

The operating duration of a training association program would not exceed five years from the date it has been approved. This duration would be extendable, but each extension would not be able to exceed five years. 

Establishment of institutions     

Compared to Decree No. 06/2000/ND-CP, the draft decree broadens the types of education institutions which investors, both domestic and foreign, may establish.

Six forms of education institutions would be permitted: foreign-invested short-term training institutions; domestic- or foreign-invested preschool institutions providing education under foreign programs to both foreign and Vietnamese children; foreign-invested preschool institutions providing education under Vietnamese programs to both Vietnamese and foreign children; domestic- or foreign-invested general education institutions providing education under foreign programs and granting foreign diplomas to both foreign and Vietnamese students; foreign-invested general education institutions providing education under Vietnamese programs and granting Vietnamese diplomas to both Vietnamese and foreign pupils; and foreign-invested vocational and tertiary institutions.

The grant of permission to establish a university, college or vocational college must go through a four-step process, i.e., approval of the investment policy, grant of the investment certificate, issuance of an establishment permission decision and grant of a certificate of satisfaction of operating conditions. For other educational institutions, approval of the investment policy is not required.

Worthy of note, the draft decree would strongly decentralize the power to license investment projects in the educational sector to ministries and localities. At present, these projects, regardless of their capital level, are considered group-A projects that must be submitted to the Prime Minister, leading to a long appraisal process.  Under the draft decree, the Prime Minister would decide on the establishment of foreign-invested universities while foreign-invested colleges and vocational colleges would be subject to approval and permission from the Ministry of Education and Training or the Ministry of Labor, War Invalids and Social Affairs, as applicable. The authority to permit the establishment of other educational institutions, including short-term training institutions, preschool institutions, general education schools and vocational institutions would belong to provincial-level People’s Committee chairmen. 

The draft also specifies conditions for the establishment of educational institutions. With regard to investment capital, an investment project on the establishment of a university or a Vietnam-based branch of a foreign university or college must have minimum capital of USD 15 million, with an average investment of at least USD 7,500 per student. For projects on secondary schools, these figures would be USD 2.5 million and USD 2,500 per trainee and for vocational schools except job-training centers USD 10 million and USD 5,000 per student. Meanwhile, investment in preschools and job-training centers would be subject to no requirement on investment capital level, but would be required to reach an average investment (excluding land-use costs) of USD 1,000 and USD 3,000 per student, respectively.

Under the draft decree, foreign education institutions or organizations may open representative offices in Vietnam to promote cooperation with Vietnamese partners, provide educational counseling services and organize seminars and exhibitions. 

To receive permission to open a Vietnam-based representative office, a foreign educational institution or organization would be required to have its training quality accredited by competent authorities, prove its financial and operational capacity, and have cooperation and research programs and projects meeting Vietnam’s educational development requirements.

The maximum operating duration of a representative office would be 10 years from the date of licensing.-

VNL_KH1 

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