Vietnam’s Private Higher Education in the Making

Private higher education institutions are serving the excess the quick-growing population. They are responsive and absorbing the strong demand of workforce development. There are around 60 private higher education institutions (PHEIs) in Vietnam in 2023. It is widely discussed amongst private higher education institutions that they are still in the water-testing stage and early development amidst the fluctuating laws and regulations. Under current institutional, economic and legal constraints, majority of these institutions lack institutional support for the development of their facility, faculty, and discipline creation. It is still questionable about the privatized higher education and its accessibility for the degree-seeking individuals.

Newly established private higher education institutions point out that the development of private higher education institutions in Vietnam remain a huge challenge in terms of internal governance, legal constraints, and unequal treatment compared to public higher education institutions. Looking back to 2008 when Vietnam officially encouraged the so-called socialization – or privatization, of private higher education, there are plethora of challenges facing this specific sector.

Ownership and Accessibility of Private Higher Education

The current legal framework encourages the social investment into the education system at all levels. Vietnam’s private higher education institutions (VNPHEIs) are groping for the governance model. Currently, VNPHEIs are adopting the corporate governance model consisting of a board of directors and a board of administration. The board of administration is led by the president who is usually nominated by the board of directors, and have to be approved by the Vietnam’s Ministry of Education and Training. The board of directors of private higher education institution act in the similar manner like its counterpart in the corporations.

Vietnam’s laws also recognize the investors as the owners of the PHEIs. Three government documents elaborate on the ownership of these PHEIs, namely Decision 61/2009/QĐ-TTg issued in 2009, Decision 58/2010/QĐ-TTg issued in 2010, Decision 63/2011/QĐ-TTg  issued in 2011. The elaboration in these documents acknowledges of the education investors’ ownership and henceforth share-based dividends of the PHEIs. The original purpose of these promulgations was to boost the social investments into education. However, these legal guidelines unintendedly turn the PHEIs into the for-profit entities. Although VNPHEIs might claim themselves as non-profit institutions, the board of directors has the power to interfere in the president’s decisions and forge their own operation and administration agendas to achieve the financial goals. It is necessary to point out that investors do not necessarily come from the education background. The intervention from the investors posed the conflicts of interests with the president’s administration and operation policy.  

To remedy the loophole of the previous law and regulations on education privatization, Vietnam issued the Decision 70/2014/QĐ-TTg in 2014 was aimed to differentiate between not-for-profit and for-profit higher education institutions. This government document still acknowledges the ownership and financial benefits of the investors. However, it stipulates that the dividends cannot be higher than the government bond interest rate. The reality exposes the possibility of the lasting conflicts on the ground that the board of directors still hold on the profit-seeking principles. The forms of PHEI ownership might significantly affect how accessible degree-granting programs will be to degree-seeking populace.  

Bureaucracy and unsystematic treatment toward PHEIs

Vietnam’s education law of 2012 and its subsequent guiding documents clearly establish that private higher education institutions are invested, and therefore owned by corporates or competent individuals. These legal documents stipulate incentive clauses on PHEI’s long-term land lease, loans, foreign direct investment and taxes. However, accessibility to these incentives is not consistent and depends largely on the local government. The treatment for each PHEI, therefore, varies significantly. The PHEI investors bear sole responsibility of acquiring land and building their infrastructure which are the huge investment from the beginning. Facilities without the government’s subsidy or incentives. With most PHEIs at their infancy, their campus facilities are often limited in both quality and quantity. Some of the PHEI leaders raised the following concerns:

First of all, the bureaucratic process places great burden on setup stage. In order to be approved for their establishment. PHEI investors have to prove they already have land area, campus buildings and facilities, faculty and charter capital for their first 10-year operation. This requirement is harsh for any new higher education institutions.

Second, the lack of autonomy and academic freedom is hindering the development of PHEIs. The Ministry of Education and Training’s (MOET) centralized authority significantly limits the disciplines and the number of students in PHEIs. Again, the application process to open new disciplines is highly bureaucratic, time-consuming and sometimes arbitrary. It is hard to have the disciplines ready to meet the quick-changing needs of labor market.

And thirdly, inconsistency in auditing and inspection causes time and financial wastes for PHEIs. As mentioned earlier, the private higher education is still at the infancy. The government agencies’ attitude and treatment for the PHEIs are also fluctuating and unpredictable. They can relax and tighten the regulations without a clear agenda. Chasing after frequent changes in legal requirements causes disruption the operation and student recruitment of the PHEIs.

Conclusion

The emergence of the knowledge society, demographic bomb, sluggish economic growth and increased competitive pressures from globalization have demanded a plethora of reforms in Vietnam’s higher education system. There needs to be urgent change in education law and policies to make the private higher education an accessible sector for both investors and students.  This article suggests three solutions. First, to solve the challenge caused by the form of ownership and non-profit education orientation, laws and policies need to give further differentiation and incentives for non-profit PHEIs. Also, PHEIs needs clear demarcation in the power between board of directors and board of administration, or chairperson versus president.

Second, PHEIs along with public higher education institutions, should have their autonomy. The Ministry of Education and Training should decentralize its authority. It should only promulgate guidelines and standards on the discipline creation and faculty appointments rather than controlling PHEIs’ operation. Finally, fair and equal policies and incentives should be also given to PHEIs. To reduce the financial burdens on PHEI investors, Vietnam should subsidize the land lease for PHEIs at their early establishment stage. PHEIs should be able to access loans with low or zero interest rates to develop their infrastructure, facilities and equipment, and faculty pool. Equivalent tax exemption should be given to corporates and individuals that make financial donations to education sector. The thrive of private higher education plays a significant role in empowering the workforce for Vietnam to catch up and equally participate in the global economy. Both private and public education should receive equal treatment in all laws and policies.
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Dr. Le Quoc Loi is post-doctoral interdisciplinary researcher at the Ash Center, Harvard Kennedy School. His area of research covers education, international and regional politics, and the Indochina Wars in the 20th century. With the experiences and academic training focused on the international politics, history, education, and culture of the Greater Mekong Subregion.

The views expressed by the author are not necessarily those of Heinrich Böll Stiftung.