Education FDI regulations still lagging

After years of proposals, foreign investors are still quite concerned about regulations on educational investment, despite the country’s efforts to improve the business climate in the field.

At last week’s workshop to seek comments for the draft decree replacing Decree No.73/2012/ND-CP on foreign investment and cooperation in education, the Ministry of Education and Training (MoET) said that the draft decree has many positive changes, including the removal of the prescribed ratio of Vietnamese to foreign students and the requirement that schools mus own land.

“For example, Article 29.5 states that foreign-invested education institutions may be allowed to lease stable property for a term of at least five years, while Decree 73 demands that they own land,” Nguyen Xuan Vang, director general of MoET’s International Cooperation Department, told VIR.

Regardless of these changes, foreign investors in education in Vietnam still complained about many problems that remain unresolved in the draft.

One of the hot-button issues on the agenda was the mandated verification of educational conditions. Like Decree 73, the draft decree also requires the verification of educational conditions before an investment certificate is issued.

The draft decree states that conditions, documents, processes, and procedures for granting an investment certificate are regulated in line with the Law on Investment 2014 (LoI). 

However, this prevailing law already removed the verification requirement.

The inconsistencies between this draft decree and other laws have brought about the legal status issue. Investors complained that Vietnam has yet to issue any provisions to clarify the legal status of a university and a company that invests in and operates a university.

Another concern that was discussed dealt with foreign investment form. Under Article 20.1, foreign-invested education institutions can only be established and operated under the form of a university or a centre. This regulation met with objections.

“For a foreign-invested university like RMIT Vietnam, which was incorporated in 2000, it would be problematic if there were only two forms of foreign investment models in the education sector-as we don’t fit into either one of these categories, as set out in Article 20.1,” said Huynh Vu Phuong Thao, a lawyer for RMIT Vietnam.

“As an entity set up under the LoI, an enterprise such as RMIT Vietnam would find it extremely onerous to move all operations and transactions from a corporate entity to a university as specified under the draft decree,” she added.

Regarding the required teaching experience for foreign teachers and lecturers at universities, Vietnam Business Forum’s (VBF) Education and Training Working Group-with members that include Apollo Institute and the British University of Vietnam-supported the five-year teaching experience requirement for foreign language teachers teaching in higher education programmes at universities.

However, they proposed removing the five-year teaching experience requirement for foreign language teachers who will be teaching pre-degree programmes (such as IELTS prep).

In the workshop, administrative procedures were once again highlighted as a burning issue. Although Vang noted that compared to Decree 73, the administrative procedures in this draft are significantly reduced, many educational investors and lawyers complained that those still remain problematic.

“I now see changes in the process of procedures and timing in the draft decree. They remain ambiguous,” said Phan Manh Hung, legal manager of KinderWorld Vietnam.

Hung cited Clause 2, Article 34 as an example. It states that within five working days from the time the documents are received, the agency responsible for reviewing the documents must check their legality and then seek comments from relevant agencies.

VBF also complained about the process of establishment permit. They recommended that two licences-an investment certificate and an operational permit-should be mandatory for all educational institutions.

Investors said that unless these problems are solved they will find it difficult to make further steps in the Vietnamese education sector.

Education still remains in the bottom tier of sectors receiving foreign direct investment (FDI) in Vietnam. 

As reported by the Ministry of Planning and Investment, as of March 20 this year, Vietnam attracted over US$684.4 million via 320 projects in the education sector, ranking 17th among the 18 sectors receiving FDI.  

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