Establishing University Branch Campuses in Vietnam: A Deep Dive into the Higher Education Market

Education has always been a top priority for Vietnam’s leadership. Not only does it play a critical role in the nation’s long-term development, but it also significantly contributes to the economy, particularly in attracting foreign direct investment (FDI). Many investors from around the world have recognized the potential of this sector in Vietnam and are showing increasing interest in the market. To tap into this key market through establishing branch campuses, it is essential to have a comprehensive understanding of the landscape, especially considering Vietnam’s unique ideological context and its stringent regulations on investing in education. This article aims to provide a thorough and in-depth perspective on the subject.

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Overview of the Higher Education Market in Vietnam

Higher education has always been crucial to Vietnam's development, significantly impacting socio-economic issues like economic growth and poverty reduction. Consequently, Vietnamese leaders prioritize its growth. However, the World Bank highlights financial resource shortages that hinder the higher education system's development. In response, the government has introduced legal frameworks through the Ministry of Education and Training to attract domestic and foreign private investment, leading to positive progress.

In fact, FDI interest in Vietnam's higher education sector started to gain traction in 2019. According to statistics reported by the news portal CafeF, FDI into education between August 2019 and October 2019 reached US$97 million.

As of December 31, 2021, Vietnam had 408 joint training programs with foreign higher education institutions. Of these, 186 programs were partnerships between private universities and international partners, while 222 programs were licensed by the Ministry of Education and Training.

According to the Ministry of Education & Training, by June 2024, the total foreign investment in this sector amounted to US$4.57 billion across 605 projects, with around 430 joint training programs being implemented at 65 domestic higher education institutions. Additionally, five foreign-invested universities are currently operating in Vietnam. Notable names in this field include RMIT University Vietnam, the British University Vietnam (BUV), the American University in Vietnam (AUV), Swinburne Vietnam, and Greenwich Vietnam.

Despite progress, Professor Raymond Gordon, Vice-Chancellor of the British University Vietnam (BUV), noted that Vietnam is a "hidden gem" for educational investment in Asia. While other countries face intense competition in higher education, Vietnam, despite having prestigious institutions, still sees limited foreign investment. This indicates that the market's potential remains underdeveloped.

Legal Regulations on Establishing University Branch Campuses

The government is currently accelerating the process of refining policies and legal regulations related to investment in higher education. On October 5, 2024, the government issued Decree No. 124/2024/NĐ-CP, amending and supplementing several provisions of Decree 86/2018/NĐ-CP, which governs foreign cooperation and investment in the education sector. This decree, effective from November 20, 2024, notably introduces amendments and supplements to current regulations to establish branch campuses in Vietnam.

Firstly, there are two forms of foreign branch campuses in Vietnam:

• Branch campus of a Foreign Higher Education Institution: Directly established by a foreign higher education institution.
• Branch campus of a Foreign-Invested Higher Education Institution: Parts of the organizational structure are under the management of an existing foreign-invested higher education institution operating in Vietnam.

With regards to eligible educational fields, foreign investors are only permitted to cooperate and invest in fields authorized by Vietnamese law, and are prohibited from investing in sectors related to security, defense, politics, and religion.

Secondly, several additional points regarding investment conditions have been outlined. According to Articles 33, 35, 36, 37, and 38 of Decree 86, supplemented by Decree 124, specific conditions for establishing university campus branches have been detailed:

Conditions for Investment Licensing:

• Compliance with the planning of the higher education and teacher training network as prescribed.
• Engagement in fields authorized for cooperation and investment.
• The foreign higher education institution establishing a branch in Vietnam must be legally established and operating overseas.
• The foreign higher education institution must be ranked among the top 500 universities in reputable global university rankings for one of the last three years.
• For campus branches of foreign higher education institutions: The Ministry of Planning and Investment shall seek appraisal opinions from the Ministry of Education and Training and relevant agencies to synthesize and submit to the Prime Minister for decision on investment policy. For campus branches of foreign-invested higher education institutions: the assessment of the Ministry of Education and Training is required. 

Conditions for Investment Capital:

• For establishing a campus branch of a foreign higher education institution in Vietnam: A minimum investment capital of 500 billion VND (excluding land use costs) is required. At the time of appraisal for the establishment of the university branch, the realized investment value must exceed 250 billion VND.
• In cases where a foreign-invested higher education institution does not construct new facilities but instead leases or uses existing facilities provided by a Vietnamese partner, the minimum investment must meet at least 70% of the prescribed requirement. By the time of appraisal for educational operation, the realized investment value must exceed 50% of the total investment capital, and the investor must commit to fully investing the required capital within five years from the date of the operation approval.

Finally, the procedures for establishing branch campuses have been revised to better support investors: 

(1) Apply for an Investment Registration Certificate from the competent authority (Article 34 of Decree 86/2018/NĐ-CP, as amended by Decree 124); 

For projects establishing campus branches of foreign higher education institutions in Vietnam, the Ministry of Planning and Investment consults with the Ministry of Education and Training and relevant agencies before submitting the proposal to the Prime Minister for approval; 

For campus branches of foreign-invested higher education institutions, the investment authority must seek evaluation from the Ministry of Education and Training.

(2) Obtain the permission of establishment (Articles 40 of Decree 86/2018/NĐ-CP,  amended by Decree 124 and Articles 44 of Decree 86/2018/NĐ-CP ): The Prime Minister has the authority to approve the establishment of campus branches of foreign higher education institutions in Vietnam, while the Minister of Education and Training is responsible for approving the establishment of campus branches of foreign-invested higher education institutions.

(3) Obtain the permission for educational activities (Article 47 of Decree 86/2018/NĐ-CP, as amended by Decree 124, on the issuance of permits for educational activities): The Minister of Education and Training grants permission for educational activities to higher education institutions, branches of foreign-invested higher education institutions, and branches of foreign higher education institutions in Vietnam.

Reassessing the Issue

Although the higher education market in Vietnam currently faces several limitations in its development, significant progress is anticipated in the near future due to the proactive efforts of the Vietnamese government in enhancing and refining legal regulations. This has created substantial opportunities for Foreign Direct Investors to penetrate this promising sector. However, to ensure optimal investment effectiveness and facilitate access, thorough preparation is essential, with the search for reliable consulting partners being a critical factor. Viettonkin is one of such organizations that can assist investors in completing procedural requirements, advising on the latest trends, and providing market updates. Let us help you make more informed and effective decisions.