Viet Nam's World Trade Organisation commitments on opening up the education sector have, in fact, created opportunities for foreign investors. — File Photo

Education is an attractive sector for foreign investors. However, investors should be aware of the opportunities and the challenges in investing in the sector.

The education sector is being facilitated

Viet Nam's World Trade Organisation commitments on opening up the education sector have, in fact, created opportunities for foreign investors. With Viet Nam in desperate need of an international-standard learning environment, the education business may lead to significant profitability for the investors.

When establishing educational institutions, foreign investors and enterprises do not, in all cases, have to build and complete the construction of the facility before starting operations.

For educational institutions that are registering to operate for less than 20 years, it is not necessary for foreign investors to build separate facilities; instead, they can rent schools, classes, workshops and other areas that are suitable and stable for at least five years.

For those that are registering to operate for 20 years or more, the construction of new facilities is mandatory. In the initial period of up to five years, these facilities must have a lease contract or an agreement, in principle, to provide necessary and stable facilities for training and teaching and to ensure investment for the construction of such facilities is in accordance with the progress of the project.

Foreign investors can also open their branches in the same province or city as the main educational institutions or in other provinces and cities.

Legal issues to be noted

1. The scope and form of foreign investment in education

According to the schedule of commitments with the WTO, for the education sector, Viet Nam has only committed to the fields of engineering, natural sciences, technology and business administration, as well as business science, economics, accounting, international law and language training. However, for the aforementioned fields, which belong to the higher education and adult education sectors, the training programs must be approved by Viet Nam's Ministry of Education and Training.

With respect to general education services, which includes elementary schools, secondary schools, high schools and pre-schools, Viet Nam has not yet committed to opening the sector to foreign investors. Institutions operated by foreign investors that provide general education are meant for foreign students and a fixed number of Vietnamese students only. Pre-schools can only enroll foreign students, not Vietnamese children.

Foreign investors are permitted to establish educational institutions in two forms: wholly foreign-owned educational institutions or joint venture educational institutions.

2. Restrictions foreign investors will encounter in establishing educational institutions

Foreign investors must perform the necessary procedures to obtain three types of licences:

1. Investment Registration Certificates

2. Decision permitting the establishment of educational institutions

3. Licence for educational activities.

Please note the "Decision permitting the establishment of educational institutions" will be revoked if the educational institutions have not qualified for the "Licence for educational activities" within 36 months for higher education and vocational institutions (excluding vocational training centres) and 24 months for other educational institutions.

The percentage of Vietnamese students studying at educational institutions offering foreign educational programmes and a foreign diploma cannot exceed 10 per cent for primary and secondary schools and must be 20 per cent or less for high schools. This provision will create difficulties for the schools when the number of Vietnamese students demanding admission exceeds the established quota.

As stipulated in Decree 73, the percentage of lecturers with a doctoral degree from colleges and universities with foreign investment must be at least 25 per cent and 35 per cent, respectively. For colleges and universities that do not have foreign investment, the percentage of lecturers with a doctoral degree has not yet been unfixed, so it can be expanded to meet the requirements of the schools. — PLF Law Firm