DECREE 86 ON FOREIGN INVESTMENT AND COOPERATION IN EDUCATION

LEGAL UPDATE

The Vietnamese government recently issued Decree No. 86/2018/ND-CP (Decree 86) to regulate foreign cooperation and investment in Vietnam’s education sector, including education linkage with foreign partners. Private schools in Vietnam could link up with legal and accredited educational establishments abroad.

Under Decree 86, the education linkage program is valid for 5 years and may be extended, with each extension not surpassing an additional 5 years. This decree sets out several points, including educational linkage, program enrolment, approval and accreditation requirements, teaching credentials, joint programs for foreign language proficiency, and investment capital minimums.

The new Decree took effect on 1 August and replaces Decree No. 73/2012 /ND-CP (Decree 73). Decree 86 explicitly excludes vocational education from its scope while this was covered by Decree 73.

On the one hand the Vietnamese Government seems to be more relaxed about foreign investment in the educational sector allowing more Vietnamese students to enrol, but on the other hand investment capital and teacher qualification requirements have increased.

1. Institutions

According to Decree 86, only the following types of foreign-invested educational institutions may be established in Vietnam, most of which were already listed in Decree 73:

- Short-term training institutions

- Pre-school education establishments

- High-school institutions (elementary, middle, high, and mixed-level)

- Higher education institutions

- Branches of foreign-invested higher education establishments in Vietnam

The Vietnamese wording for the various types that should be used to refer to these institutions are explicitly listed in Decree 86. The requirements to invest in such institutions and under which conditions, including detailed requirements about the building and classrooms,d and qualification requirements for teachers, are set out in detail in Decree 86.

2. Educational Linkage or Integrated Programs

Under Decree 86, kindergartens and schools established in Vietnam may partner up with accredited foreign educational institutions. However, the integrated curriculum implemented at these schools must first be approved by the Vietnamese government. Additionally, the government will provide guidelines outlining the manner in which schools should integrate both foreign and domestic courses.

3. Enrolment in Foreign Educational Programs

For the first time, this new decree allows kindergartens to enrol Vietnamese students under 5 years old in foreign education programs. Foreign-invested nursery and high-school education institutions can enrol Vietnamese students, but the number of Vietnamese students must be less than 50% of total number of students. Under Decree 73 the total number of Vietnamese students who could enrol in foreign invested education institutions was respectively limited to 0% for kindergartens, 10% for primary schools and middle, 20% for high schools.

4. Approval/Accreditation

All educational programs incorporated in Vietnam must be accredited by authorised authorities in their native countries. Moreover, the incorporated education programs must be approved by competent Vietnamese agencies, assigning the Minister of Education and Training to approve the incorporation of both Vietnamese and foreign educational programs.

Regarding the curriculum, the programs must ensure voluntariness in participation and may not cause work overload for students. The student examination and graduation recognition must be in line with the laws of Vietnam as well as the native country’s laws. Under this decree, graduates of senior high school must be granted a graduation certificate from both Vietnam and the foreign country.

5. Teacher Credentials

Several organisations in Vietnam work with foreign language proficiency centres to issue certificates of foreign language proficiency such as IELTS and JLPT.

To better manage these centres, Decree 86 lists guidelines and conditions for granting certificates, subjects and periods of association, location, facilities, approval procedures, and personnel working for such organisations. Additionally, the new decree requires domestic and foreign teachers involved in the educational programs to provide adequate documentation of their qualifications. Foreign teachers must hold a bachelor’s degree in their chosen subjects, in addition to teacher training certificates (or the equivalent). Under Vietnamese law, all teachers, regardless of the grade they teach, must have a foreign language proficiency at level 5 in the 6-level foreign language competency framework.

The requirements are even more stringent for lecturers. Under Decree 86, all lecturers must hold a master’s degree. Additionally, as determined by the Ministry of Education and Training, not less than 50% of the lecturers in specified fields must also have a doctorate degree. Prior to Decree 86, only 35% of the lecturers needed doctorate degrees.

6. Investment Capital

6.1 General

Decree 86 sets out investment amounts that apply to various education institutions. These amounts are exclusive of the value of the land area on which the institution will be built, and certain minimum total capital requirements apply. However, if these projects hire infrastructure facilities or are provided physical facilities by Vietnamese partners, the project must possess an investment capital equal to 70% of the amounts listed hereafter. This exception does not apply to investments related to branches of a foreign-invested universities.

6.2 Universities

For investment projects aiming to open a university, a minimum investment capital of VND1 trillion (~ USD44 million) is required. In the case of an investment project opening a branch of a foreign-invested university in Vietnam, a minimum investment capital of VND250 billion (~ USD11 million) is required.

6.3 Other Education or Training Institution

Per Decree 86, to establish a pre-school education institution, the minimum investment should be at least VND30 million (~ USD1,300) per child, excluding land use expenses. In contrast, general education establishments require a minimum of VND50 million (~ USD2,200) per student. To establish a short-term training institution, a minimum investment capital of VND20 million (~ USD875) per trainee is required, while a tertiary education institution requires VND1 trillion (~ USD44 million), an increase from the prior Decree’s VND300 billion (~ USD13 million) requirement.

7. Term of Operation

Under Decree 73 the facility could only be leased if the term of operation for an education institution was less than 20 years, if more than 20 years a new facility could be constructed. The maximum operation term is now 50 years.

8. More investment

If the Vietnamese government would like to further stimulate foreign investment in the education sector, preferential treatments including tax and land-use incentives should be granted to investors, similar to other sectors. The draft Law on Special Administrative and Economic Zones opens possibilities; however, these are limited to 3 specific areas.

For more information, please contact:

Mark Oakley / Managing Partner

mark.oakley@acsvlegal.com

Hieu Pham / Special Counsel

hieu.pham@acsvlegal.com

© 2018 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

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