Foreign Investment Scope in Vietnam’s School Education Sector

October 14, 2024 Posted by Vietnam Briefing Written by Vu Nguyen Hanh Reading Time: 6 minutes

Vietnam’s school education sector offers strong potential for foreign investment, driven by rising demand, state policies, and tax incentives. However, investors must carefully navigate regulatory requirements and conduct thorough market research.

Vietnam’s government aims to boost private sector participation in the education industry. In 2019, the government issued Resolution 35/NQ-CP (“Resolution 35”), focusing on mobilizing social resources for investment in education and training development from 2019 to 2025. Under this resolution, Vietnam targets non-public educational institutions to make up 8.75 percent of all institutions by 2020 and 13.5 percent by 2025.

Targeted Proportion of Private Educational Institutions in Vietnam’s Educational System by 2020 and 2025 (%)
Education categories	2020	2025
Preschool education	20	25
General education	2.3	2.7
Higher education	28	30
Vocational training	28	30
Total	8.75	13.5

Source: Resolution 35

To achieve this goal, the government has outlined steps to improve the investment environment in education, including facilitating visa and work permit processes to attract foreign intellectuals, businesspeople, and enterprises, both local and international.

However, experts are now calling for accelerated implementation to meet the targets with less than two years remaining before the deadline. For example, according to the Ministry of Education and Training, by early 2022, Vietnam had 67 private higher education institutions, representing 27.68 percent of the total—0.32 percentage points below the 2020 target. This data excludes universities and academies in the security and defense sector.

As the government is expected to intensify its efforts, the unmet goals offer significant opportunities for foreign investment in Vietnam’s education sector.

Private school market dynamics in three major cities in Vietnam

Growing demand

A significant portion of Vietnam’s population is school-aged. According to real estate agency Savills, as of 2019, 39 percent of Hanoi’s population was school-aged, while Ho Chi Minh City (HCMC) and Binh Duong had 36 percent and 38 percent, respectively. The influx of foreign direct investment (FDI), along with the national economy’s positive growth, has fueled demand for education, particularly as over 50 percent of international school students are foreign nationals.

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Additionally, rising incomes and the expansion of the middle class—projected to grow by 36 million by 2030—are increasing disposable income, driving higher spending on services like private education and training. From 2014 to 2020, average annual incomes saw significant growth across major cities, further supporting this trend.

In the 2022 Global Innovation Index (GII), Vietnam achieved impressive rankings, placing second among lower-middle-income countries, just behind India, and 48th globally. However, its performance on the Human Capital Index (HCI) was less favorable, ranking 80th. To meet its goal of becoming an innovative, high-tech economy, Vietnam faces significant pressure to address potential skills shortages in the future, with increased support from the private sector seen as crucial to this effort.

Current supply of private schools

As of 2022, the number of private schools in Vietnam remained significantly lower than public schools. For example, in Hanoi, only 41 out of 2,801 schools were private, while Binh Duong had 8 out of 715, and Ho Chi Minh City (HCMC) had 55 out of 2,346. Most private schools in Hanoi and HCMC were either pre-schools or compulsory schools, with kindergartens representing the largest share in Binh Duong.

According to Savills, private senior high and secondary schools in these cities charged the highest fees, with tuition exceeding US$20,000 per student per year. Meanwhile, international kindergartens were the most affordable but still averaged US$10,794 per student annually. Bilingual schools tended to be more cost-effective in comparison.

Annual tuition fees of major international and bilingual schools in Hanoi (the School Year 2023-2024)

School	Campus	Student enrollment in Hanoi by education program			Average tuition fees by education program
		Total (US$)	International	Bilingual	International	Bilingual
United Nations International Schools of Hanoi (UNIS)	1	1,000-2,000	100%	0%	31,854	NA
British International School Hanoi (BIS)	1	1,000-2,000	100%	0%	30,289	NA
St. Paul American School Hanoi	1	500-1,000	100%	0%	26,686	NA
Hanoi International School (HIS)	1	Less than 500	100%	0%	26,798	NA
Singapore International School (SIS)	3	500-1,000	45%	55%	21,977	12,899
British Vietnamese International School Hanoi (BVIS Hanoi)	1	1,000-2,000	100%	0%	21,656	NA
TH School	2	500-1,000	100%	0%	21,986	NA
Horizon International Bilingual School (HIBS)	1	Less than 500	45%	55%	19,806	11,658
International School at ParkCity Hanoi (ISPH)	1	Less than 500	100%	0%	23,498	NA
International schools (Total/Average)	12	12 7,127	85%	15%	24,950	NA
Vinschool	7	Over 15,000	0%	100%	NA	4,782
Wellspring	1	1,000-2,000	3%	98%	18,505	8,426
Olympia	1	1,000-2,000	0%	100%	NA	7,127
Hanoi Academy	1	1,000-2,000	0%	100%	NA	5,351
Alfred Nobel	1	1,000-2,000	0%	100%	NA	4,668
Bilingual schools (Total/Average)	11	24,700	0%	100%	NA	6,071

Source: Fiingroup

Regulations for foreign investments

Setting up an educational institution in Vietnam requires navigating various regulations and securing necessary approvals. Educational institutions can be public or non-public, with non-public institutions classified as semi-public, individually founded, or private. All institutions must adhere to the national curriculum and comply with Vietnamese laws. In line with Vietnam’s commitments to the World Trade Organization, foreign investors are allowed to establish wholly foreign-owned educational institutions.

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Recent updates, particularly under Decree No. 86/2018/ND-CP (“Decree 86”) on Foreign Cooperation and Investment in Education, have increased the limit for foreign program enrollment at the preschool and compulsory education levels to below 50 percent. Foreign-owned companies can also establish various educational entities, including short-term training centers and branch campuses of foreign higher education institutions.

To proceed, investors must acquire an Investment Registration Certificate (IRC) and an Establishment Registration Certificate (ERC). Following this, they need approval to establish the educational facility and a license for educational activities.

Decree 99/2019/ND-CP, effective from February 15, 2020, outlines further requirements for foreign higher education institutions, including a minimum capital investment of US$21.5 million and the formation of a governing board, while also granting these institutions greater autonomy in their operations.

Also Read: Education in Vietnam: Opportunities and Challenges

Requirements for foreign-capitalized educational institutions

School type	Capital requirements	Infrastructure requirements	Staffing and enrollments
Pre-school institutions	– Minimum investment of about US$1,200 per child (excluding land tenancy expenses).	– Minimum land area for campus: 8m² per student in urban and suburban areas and 12m² per student in rural areas. – Must be located in a suitable environment (safe water supply, food safety, playground, walls, trees). – All constructions and materials must ensure safety for kids.	– The teachers must have at least college degrees in preschool pedagogy or equivalent. – Specific requirements for the maximum number of kids within a group or a class by age and per teacher.
Compulsory schools (K-12)	– Minimum investment of about US$20,000 per student (excluding land tenancy expenses) and must be more than US$2 million.	– Minimum land area for campus: 6m² per student in urban and suburban areas and 10m² per student in rural areas. – Areas for learning must be at least 2.5m² per student. – Specialized classes, gyms, art rooms, and computer labs are required. – Playgrounds and parking must account for at least 30 percent of the school area.	– Teachers shall hold at least a bachelor’s degree in pedagogy or equivalent. – Compulsory ratios of teachers per class for elementary, secondary, and high schools. – Student limits for elementary, secondary, and high schools.
Higher educational institutions	– Minimum investment of about US$40 million (excluding land tenancy expenses). – Minimum investment of above US$20 million during the application appraisal.	– Minimum land area for campus: 25m² per student. – Minimum land area for buildings: 9m² per student, including 6m² for the study area and 3m² for the living area. – Requires lecture halls, classrooms, libraries, labs, conference rooms, canteens, and parking lots etc. – Minimum administration area: 08 m² per person.	– Lecturers must have at least a master’s degree or higher. – The proportion of lecturers with a doctorate degree must not be less than half of the total number of lecturers, except for special training majors. – Promulgated maximum ratio of students to lecturers by art majors, science and technology majors, or social science, humanities, and economics majors – business administration major. – The higher educational institution shall have enough permanent lecturers to undertake at least 60 percent of the program of each discipline.
A branch campus of higher education institutions	– Minimum investment of about US$1 million (excluding land tenancy expenses). – Minimum investment of above US$600,000 during the application appraisal.
Short-term training centers	– Minimum investment of about US$800 per student (excluding land tenancy expenses).	– Classes must have appropriate teaching materials and at least 2.5m² per student. – Functional rooms such as offices or libraries are required.	– The teachers must have college degrees or equivalent in the profession suitable to their teaching subjects. – The maximum ratio of students to teachers shall be 25:1.

Source: Decree No. 86/2018/ND-CP

Notes:

The total minimum capital is calculated based on the institution’s maximum estimated education capacity.
For foreign-invested educational institutions using leased facilities or facilities contributed by a Vietnamese partner, the investment must cover at least 70 percent of the capital specified in Decree 86.
Foreign-invested educational institutions must secure facility leases for a minimum of five stable years and ensure that the facilities meet all stipulated requirements.

Investment incentives

Foreign investments in educational institutions shall benefit from incentives under Vietnam’s Law on Corporate Income Tax (CIT) and Law on Value-added Tax (VAT), as below:

10 percent CIT rate on investment incomes.
CIT exemption for undistributed incomes retained for investment.
VAT incentives are available for most education-related goods/services.

Outlook

Investing in Vietnam’s education sector offers promising returns but also requires navigating stringent regulations related to capital, infrastructure, and operations. Foreign investors should carefully assess their target location, considering factors such as competitor tuition rates, demographics, and local human resource training plans.

Looking ahead, experts predict the following key trends in Vietnam’s private education sector that investors should consider:

Continued growth in investments in kindergartens and K-12 schools, including new establishments, mergers and acquisitions (M&A), and private equity transactions.
Increased focus on investment in higher education and vocational training.
A shift toward training tailored for the new technology era.
The rise of online training as a complementary method to traditional education models.

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