Foreign direct investment
(FDI) into education sector from August 2018 – the time when Decree
86/2018/ND-CP takes effect – reached 97 million USD in October 2019, of which
M&A activities, in particular buying shares in education sector accounted
for 37%.
This figure shows that
foreign investors are more interested in a more collaborative strategy to
reduce risks in education investment.
Regarding the trend of
attracting foreign capital into Vietnam’s education market, FDI into this field
will continue to increase, in which the trend of cooperation is a key strategy.
In 2018, the education
sector had two important Decrees: Decree 135 and Decree 86. These two decrees
have simplified conditions for investment in the education sector for both
domestic and foreign investors.
In particular, Decree
135 has simplified the legal and operation requirements, shortened
administrative procedures, while Decree 86 has reduced the requirement for
personnel and increased the enrollment limit for Vietnamese students.
Overall, education
accounts for less than 2% of total FDI into Vietnam. High tax costs, personnel
requirements, minimum required capital for foreign investment, besides a
complex approval process are some of the significant barriers for foreign
investors.
It is still too early to
fully assess the impact of Decree 86, but it can be seen that the level of
foreign investors’ interest in Vietnam’s education market has increased
significantly.
Before the effective
date of Decree 86, foreign investors faced many barriers when investing in
education, such as limiting the percentage of Vietnamese students: 10% for
primary school and 20% for high school level. International schools in Vietnam
therefore depend heavily on the enrollment of foreign students.
After this Decree came
into effect, international schools took advantage of opportunities and promoted
the enrollment of Vietnamese students. This move has certainly affected the
attraction of foreign investors considering the attractive opportunities of the
international education market in Vietnam.
The number of
international schools in Vietnam with affordable tuition is quite limited, but
often, schools with small and old campuses and basic facilities will have a
modest tuition fee. ExpatFinder’s latest international school fee survey shows
that the average annual tuition of international schools in Vietnam is 17,940
USD, ranking 13th in the world and 5th in Asia. Countries with higher fees may
include China, Singapore, Hong Kong and Australia. However, there is always a significant
source of demand for international schools in Asia, because this is the
stepping stone for their children to apply for prestigious universities in the
Western countries.
In addition, the
recruitment needs of children from foreign experts in Vietnam are also
increasing. Vietnam will attract more FDI after the signing of trade agreements
and become an ideal alternative destination for multinational companies in the
context of the US-China trade war.
The number of foreigners
working in Vietnam will increase, bringing with them their families, thereby
creating a significant demand for international education, especially in cities
that attract a lot of FDI. In 2018, Vietnam had more than 320,000 foreign
workers, an average increase of 8% per year since 2008. A survey of HSBC’s
foreign workers in 2019 showed that Vietnam rose from the 19th position to 10th
on the ranking of countries with “attractive working and living environment”
because of low living costs and rising incomes.
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