Notable legal points relating to the establishment of a foreign-invested educational organization in Vietnam

Are foreign individual investors allowed to establish an educational organization in Vietnam?

First of all, it should be noted that education is defined as a national policy of Vietnam. In accordance with Article 17 of the Education Law, the Vietnamese state has firmly affirmed the importance of investing in education. Accordingly, investment in education is considered a special investment in the field subject to conditional investment and is entitled to investment incentives. In addition, the state prioritizes investment in education, encourages foreign organizations and individuals, in addition to domestic organizations and individuals and overseas Vietnamese, to invest in education and protect their legitimate rights and interests.

In addition, under Vietnam’s Schedule of Specific Commitments on Services to the World Trade Organization (WTO), it is allowed to invest in higher education services in the form of 100% investment. % foreigners. In addition, under Article 3 and Article 28 of Decree No. 86/2018/ND-CP of June 06, 2018 of the Government of Vietnam on Foreign Cooperation and Investment in Education (“Decree 86”), foreign investors, regardless of individuals or organizations, are permitted to invest in the education and training sector to provide educational services to Vietnamese nationals from (i) educational institutions in short term ; (ii) pre-school education establishments; (iii) compulsory education establishments (elementary schools, colleges, high schools, universal schools); (iv) higher education institutions; and (v) branch campuses of foreign-funded higher education institutions in Vietnam.

In light of the above, from a legal point of view, foreign investors are technically allowed to invest in the education sector in Vietnam.

In addition, under Vietnam’s Investment Law, foreign investors are free to choose one of the following investment companies to conduct business in Vietnam: (i) a 100% foreign-owned company; (ii) a joint venture; or (ii) a Business Cooperation Contract (BCC). With the exception of the BCC which will not be considered as a separate legal entity, the other investment firms (i.e. 100% foreign-owned companies and joint ventures) are legal entities governed by the Vietnamese legislation. In the event that there are two or more individual investors, the options available are: (i) a limited liability company with two or more members; or (ii) a corporation (referred to as a corporation).

It should be noted that the investment in education services is conditionally applied to the foreign investor under Vietnam’s investment law and is much more sensitive from the point of view of the state authority of the country. Vietnam due to the conventional idea that the quality of education should be maintained in a good way to improve Vietnam’s workforce as well as to respect Vietnamese traditions of life.

Investment projects by foreign investors in this education sector must therefore meet certain strict conditions and requirements as set out in the laws of Vietnam. In addition to the conditions applied to foreign investment in the education sector, investment in the establishment of the foreign-owned university (“University“) is subject to the approval of the Prime Minister’s investment policy under Article 34.1 of Decree 86.

The legal conditions will be listed in detail below.

Conditions for establishing a foreign university

As stated above, the creation of the University is a conditional investment sector. In addition, being foreign investors, Investors are required to develop an investment project for the establishment of the University (the “Investment projectInvestment Registration Certificate”). In order to establish the University, the investment project must meet all of the following conditions under Decree 86:

An investment project in the establishment of a higher education institution such as the University must reach at least a total minimum capital of VND 1 trillion (excluding expenses related to land rental). The foreign invested business entity which is the investor of the investment project must prove its financial capacity in accordance with the investment law. During the time of evaluation of the application for academic establishment, the value of the investment will reach more than 500 billion VND.

An investment project in the establishment of a branch campus of a foreign-invested higher education institution in Vietnam must have a capital of at least 250 billion VND (excluding the expenses incurred for the rental of the land) During the time of evaluation of the application for the creation of the campus, the investment value must be more than 150 billion VND.

For foreign-invested educational institutions whose facilities are not newly constructed but are leased or contributed by the Vietnamese partner, the capital must reach at least 70% of the capital specified above.

  • Facilities and equipment
    • The construction area of ​​the school must reach at least 25m2 per student when the training ladder in the school development plan is highest;
    • The average area of ​​a building must be at least 09 m2 per student; the study area must be at least 06 m2 per student; the dormitory area must be at least 03 m2 per student;
    • There must be enough lecture halls, classrooms and functional halls that meet the training requirements in the disciplines and forms of training;
    • There must be sufficient office space, administrative space and boardrooms suitable for the organizational structure of academic departments, faculties and disciplines. The minimum area must be 08 m2 per person;
    • There must be lecture halls, libraries, testing laboratories, workshops and other facilities that meet the requirements of the training program and scientific and technological activities;
    • There must be canteens and buildings serving recreational, sporting and cultural activities, and buildings and medical services serving executives, teachers and students;
    • There must be a technical construction area and parking.

Rental of facilities:

A foreign-invested educational institution must also have the authority to lease the facilities for at least 5 stable years and must ensure that the facilities meet the above requirements.

The educational program provided in the educational institution with foreign participation must demonstrate the educational objective, without harming national security and public interests; without spreading religion and distorting history; without negatively affecting the cultures, ethics and traditional customs of Vietnam, and must ensure the link between levels and grades.

Accordingly, foreign-funded educational institutions may offer: (i) a Vietnamese education program in accordance with Vietnamese laws; (ii) pre-school and compulsory education program abroad; (iii) short-term training programs abroad; Bachelor’s, Master’s and Doctoral level programs as part of joint training programs conducted with foreign partners.

The Ministry of Education and Training of Vietnam specifies the content of education and training for Vietnamese students studying in preschool institutions, compulsory education institutions, higher education institutions and secondary campuses of higher education institutions with foreign participation.

  • University professors
    • Teachers must hold at least a master’s degree or higher. The proportion of teachers holding a master’s degree must not be less than 50% of the total number of teachers, except in certain specific disciplines specified by the Minister of Education and Training;
    • The maximum student-to-faculty ratio is 10:01, applicable to art majors; 15:01 applicable to science and technology majors; 25:01, applicable to majors in social sciences, humanities and economics – major in business administration;
    • The higher education establishment must have a sufficient number of permanent teachers to provide at least 60% of the program in each discipline;
    • Foreign lecturers teaching at an educational institution with foreign participation must have experience in the discipline they are teaching, except in cases where foreign lecturers teaching foreign language skills at a higher education institution must hold a bachelor’s or higher degree and qualifications for teaching foreign languages.

University Establishment Procedures

Under Decree 86, the creation of the University is decided by the Prime Minister of the Government. The investment project relating to the creation of the University will be carried out in three stages:

Step 1: Obtaining the approval in principle of the Prime Minister on the creation of the University;

2nd step: Issuance of the investment registration certificate for the investment project by the local Planning and Investment Department;

Step 3: Obtaining of the decision establishing the University by the Prime Minister;

Step 4: Registration of the educational offer applicable to the University and posting of the decision on the website of the Ministry of Education and Training.

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