Opportunities and challenges when investing in education in Vietnam
Education is an area that the State pays special attention to and is also an attractive field for foreign investors. However, when choosing to invest in education, investors need to consider and be cautious about the opportunities and challenges that this field brings.
- Opportunities when investing in education sector in Vietnam
First, Vietnam’s commitment to the WTO on opening up the education sector has created great opportunities for foreign investors. In the context that Vietnam is in dire need of international-standard learning environments, the education business has the potential to bring great profits to investors.
Second, when establishing an educational institution, not in all cases the foreign investor has to carry out the construction of facilities and complete them before putting them into operation. For educational institutions registered to operate for less than 20 years, it is unnecessary to build their own facilities, but rather investors can rent schools, classrooms, workshops and other suitable and stable areas for at least a period of time of 05 years.
In the case of registration of operation for 20 years or more, the construction of new facilities is mandatory, the first phase is a maximum of five years. These establishments must have a contract or agreement on the principle of leasing necessary and stable facilities for training and teaching and must ensure the investment in building facilities according to the project’s schedule.
Third, in addition to the main academic institution foreign investors can also open more branches in the same province or city or in other provinces and cities.
Last but not least, with the growing economy and increasing quality of life, parents tend to let their children study in an environment of international standards, so that their children can develop comprehensively. best in all respects.
2. Challenges when investing in education in Vietnam
First, education is hyper-competitive in all segments, ranging from high school, university to continuing education. In recent years, many foreign enterprises have invested in this market with strong financial potential and international management experience. Hence, it will be difficult for domestic “small” enterprises to compete, except in the college and university segment.
Second, institutions may face policy risk, due to many types of sub-licenses that are under the management of the Government to ministries, departments, and even district education departments. In recent years, the promulgation of the State’s education policy has been more open, but there are still some shortcomings. For example, if an investor wants to establish a university, must guarantee the capital of not less than 1,000 billion VND.
Third is that it is not easy to compete with the public education model since the facilities are invested by the State and subsidized for annual operation, although this problem may be easy to deal with due to the tendency of eliminating subsidies in education.
Fourth, the trend of an aging population may have a long-term effect on the profitability of the enterprise.
Fifth, the scarcity of high-quality teachers makes it challenging for institutions to expand. The quality of foreign teachers is also a matter of concern. Not to mention the compliance and long-term stability of a large number of foreign teachers due to the common narrative of not wanting to be attached to the job. This is especially evident in the group of English teachers.
Sixth, because this market is still young, it is difficult for parents as well as students to assess the difference in quality between educational providers.
The above article has outlined the opportunities, risks and challenges when investing in the education sector in Vietnam. Hopefully, through the article, investors will have more useful information and come up with the most suitable investment plans.