Education plays a central role in Viet Nam’s society and culture. By using Ho Chi Minh City, Ha Noi, and Binh Duong as case studies, this article will explore the current supply landscape, the rising popularity of private schools, and the challenges of the existing education system. With the commercialisation and demand for quality education on the rise, what is the outlook for this sector in Viet Nam?
Overview
Learning is fundamental to Vietnamese culture. Folk sayings like “a stock of gold is worth less than a bag of books” (Một kho vàng không bằng một nang chữ) demonstrate the importance of education in Viet Nam. The country’s Socio-Economic Development Strategy (2021-2030) prioritises quality human resource development, and the Government is working to upgrade workforce skills to ensure a large future productive labour force.
Between 2017 and 2021, Government expenditure on education and training increased by 4% per annum. In 2021, education received US$10.8 billion, equivalent to 13.5% of the State Budget.
There has been significant growth in the private education offering. Since 2018, international and bilingual schools in Ha Noi have increased by 4%, 2% in Ho Chi Minh City and 6% in Binh Duong. Demand for high-quality education is rising, and private schools bridge the gap between Western curriculums and Vietnamese culture.
Supply Landscape
Despite a growing private sector, the public offering far exceeds the private segment. Of the 2,801 schools in Ha Noi in 2022, 41 were private. In Binh Duong, eight of the 715 schools were private. HCMC had the largest proportion of private schools, with 55 of its 2,346 schools.
Kindergartens were the most numerous across both sectors. In 2022, there were 1,342 in Ho Chi Minh City, 1,155 in Ha Noi, and 434 in Dinh Duong.
Figure 1.1: Private schools in HCMC, Ha Noi, Binh Duong, 2018-2022
Most private schools in Ha Noi and Ho Chi Minh City went from kindergarten to grade 12. In Binh Duong, kindergartens had the largest share.
Senior high school was the most expensive private school offering across the three studied areas at over US$20,000 per student per year. For international schools across the three areas, kindergartens were the most affordable but still averaged US$10,794 per student per year.
Most students at international schools were foreign, but bilingual schools had mostly Vietnamese students. Bilingual schools are more affordable but still deliver high-quality education.
Why Private Education?
Private education is perceived to deliver greater opportunities. It offers smaller classes, foreign teachers, and educational strategies that promote academic and personal development. They are geared toward Socratic methods, which stress critical thinking and questioning, an approach contrary to the rote, top-down learning common in many public classrooms.
Demand for overseas study is increasing, and private schools deliver greater access to foreign universities. Students at these schools often do not take additional entrance exams, which streamlines the application process. This appeal was emphasised in November 2022 when the MOET froze IELTS, Aptis, and other foreign language tests conducted by language centres, which are crucial for students wanting to study abroad. The freeze left many hopeful students dismayed, with some even flying to Thailand to take the test to meet the application deadline for overseas universities.
Demand
A high proportion of the population is of school age. In 2019, people aged between 0 and 24 accounted for 39% of the population in Ha Noi, 36% in Ho Chi Minh City, and 38% in Binh Duong.
FDI inflows have been healthy and foreign enterprisers want to continue to invest in Viet Nam. Total registered FDI reaching US$14 billion by 20 June 2022. Binh Duong had an 18% share and Ho Chi Minh had 16%. Significant investors include South Korean, Singaporean, Hong Kongese, and Japanese enterprises. Given that over 50% of the students at international schools are foreign, steady FDI inflows will support demand. This opens opportunities to invest in education.
Viet Nam continues to perform well economically. It will be one of the fastest growing economies in Southeast Asia in 2022 and likely in 2023 too. 2022 GDP growth is forecast at 7.5%, and the Viet Nam dong to US dollar exchange rate has been resilient.
The healthy performance corresponds with rising annual incomes, improving daily spending, and a growing middle class. Between 2014 and 2020, the average annual income in Binh Duong increased by 11% per annum (pa), Ho Chi Minh City by 5.1% pa and Ha Noi by 7.1% pa. The country also has a rapidly expanding middle class, which is forecast to welcome an additional 36 million people by 2030. As such, disposable income levels are improving, and consumers have more to spend on services like private education, language classes, and training.
Gaps
In the 2022 Global Innovation Index (GII), Viet Nam ranked second in the lower-middle income category behind India and 48th globally. However, it ranked 80th on the Human Capital Index. If Viet Nam’s ambitions to be an innovative, high-tech economy are to be realised, then future skills shortages must be avoided.
According to the 2021 Statistical Yearbook, only 26.1% of the labour force over the age of 15 had degrees or technical certificates. The Government is improving the education system. The development strategy until 2030 plans aims to improve quality and access, and education will utilise scientific, technological, and digital tools coupled with quality human resources to foster productivity and future economic growth.
Commercialisation and privatisation mean a larger supply of quality education products but also expose consumers to greater risk. The money parents invest in education is not always handled efficiently. In October 2022, parents filed a complaint against a well-known English language centre for the return of approximately US$29,000 after its services failed to meet basic requirements. During the Covid-19 lockdowns, many language schools closed without a trace, leaving customers out of pocket.
What Do the Experts Have to Say?
Giang Huynh, Associate Director of S22M, commented: “Strong demand for high-quality education in the local market draws the attention of private education investors, especially foreign players with regional experience. There are many players who are keen on investing in education in Viet Nam.”
Conclusion
For Viet Nam to become an innovative and modern economy, it must prioritise education. While education spending has improved in recent years, there is more to be done. Given the cultural significance education holds in Viet Nam, the expanding middle class with higher disposable incomes, and the age structure, the education sector is well placed for expansion. There is room for the private sector to fill the gaps left by the public offering.
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Read more:
Education and Its Link to Commercial Real Estate Performance
Terms and Definitions
Private education and schools refer to international, bilingual, and international-bilingual schools. International schools offer an international curriculum and most use English as the language of instruction. Bilingual schools combine the Vietnamese curriculum and international curricula accepted by the Ministry of Education and Training (MOET), like the Cambridge curriculum with A Levels or International Baccalaureate (IB). International-bilingual schools offer both international programs and bilingual programs accepted by the MOET.
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