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$45m needed to set up foreign university in Vietnam, says draft decree

A decree has been drafted in Vietnam which will require foreign investors to have a higher amount of capital to set up universities in the country. It will also uncap the proportion of Vietnamese students able to enrol in foreign-invested institutions below higher education level, and raise the degree prerequisites of university lecturers.

The draft decree will also require university lecturers to hold a master's degree, with at least half obtaining a doctorate. Photo: Roger Harris Photography.

Foreign investors will be required to have a minimum investment capital of around US$45m, or one trillion dong

The draft decree is expected to replace the existing decree 73 on foreign investment and cooperation, originally implemented in 2012.

“The draft decree is simply responding to current market conditions”

Foreign investors who wish to set up universities in Vietnam will be required to have a minimum investment capital of around US$45m, or one trillion dong, according to the draft decree. This is an increase from 300 billion dong under the current decree, and excludes the land value for construction of the university.

Projects in the pipeline, however, will remain under the current regulations.

This increased amount of money, according to Nguyen Xuân Vang, director of the international cooperation department and the Ministry of Education and Training, is a reasonable raise in order to ensure the quality of the university training.

Brian O’Reilly, managing director of Vietnam-based SEA Management Consulting Company, which provides services to domestic and overseas tertiary educational institutions, said raising the bar of the capital needed is to ensure that “reputable investors and educational institutions enter the market”.

“There have been some issues with institutions in the past,” he told The PIE News. “It is not seen as being overly excessive by prospective investors.”

And Mark Ashwill, managing director of Capstone Vietnam, said increasing the minimum investment capital for establishing a university is “more in line with reality”.

“In that sense, the draft decree is simply responding to current market conditions,” he commented.

Tung Bui, faculty director of the Vietnam Executive MBA programme, at the University of Hawaii Shidler College, which offers courses in Hanoi and Ho Chi Minh City through partnerships with Vietnamese public universities, said he hopes to recruit more students to its programmes as a result of the new decree.

“Generally speaking, raising the minimum investment capital for setting up a foreign-owned university in Vietnam to VND one trillion would dramatically set higher barriers to entry for smaller private foreign education institutions,” he said.

“However, as there is a plethora of licensed private education institutions in Vietnam, the draft decree would allow international schools to partner with local institutions.”

“Raising the minimum investment capital … would dramatically set higher barriers to entry for smaller private foreign education institutions”

Another arm of the decree in place at the moment caps the number of Vietnamese students permitted to study at schools built through foreign investment, to 10% for those at primary level, and 20% at high school level.

Under the new draft decree however, each individual school will be able to decide on the proportions of international and domestic students by themselves.

This has the potential to increase enrolment, said O’Reilly.

“It will also provide an opportunity to establish institutions in smaller regional centres where the numbers of foreign students would not have been that great,” he added.

The decree will also permit foreign investors to hire local education facilities already in place in the country, rather than having to establish them from scratch before recruiting students, under decree 73.

And lecturers of foreign-invested universities will be required to hold at least a master’s degree, and around half should have a doctorate. This is up from around 35% who have been required to hold a doctorate.

This new framework has overall been welcomed by stakeholders in the country.

“I see it as a step in the right direction,” said Ashwill. “And a recognition that decree 73 was outdated and needed to be replaced with a framework more attuned to the realities of contemporary Vietnam.”

Bui said the focus of this decree seems to be encouraging only legitimate investors.

“There have been problems in the past with higher education institutions closing down under dubious circumstances,” he said.

“The new decree should help to ensure that this does not reoccur.”

Additional reporting by Matthew Edward 

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