You can’t go wrong with starting an education business in Vietnam. The education market in the country has been appealing to many foreign investors due to its continuous demand and growth, as well as increasing profitability.
Statista has shown that in 2019, the expenditure of Vietnamese households on education reached approximately US$10 Billion.
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Apart from the increased spending, the Vietnamese government allocated about 20% of the total state budget (about US$57 billion) of Hanoi in the education sector, up 18.8% from the previous year.
According to data disclosed by the Vietnamese Ministry of Planning and Investment in 2020, the foreign investment in the education sector in Vietnam was recorded at approximately US$78.9 million, which was more than 50% of the previous year.
The above-mentioned projects cover elementary schools, kindergartens, secondary schools, international schools, language institutions, state schools, vocational training providers, and tertiary institutions such as colleges and universities.
Therefore, in order to support the growth of the education sector in Vietnam, the Vietnamese government has enacted Decree 86 on foreign investment and cooperation in education that has been effective since August 1, 2018.
The Pros and Cons of the Decree No. 86
There are definitely advantages and disadvantages coming from the newly implemented regulations.
The Pros
First and foremost, the increasing number of enrolments of Vietnamese students in foreign educational institutions is the main advantage that comes from this regulation.
Decree 86 permits the maximum rate of Vietnamese students to enrol in foreign institutions to no more than 50%, a much higher percentage as compared to the 10-20% previously.
Vietnamese children who haven’t reached 5 years old can now enroll in foreign institutions as well. Thus, the hike of Vietnamese students also creates more opportunities for foreign investors.
In addition to the rise of Vietnamese enrolment, the simplified procedures of foreign training and education institutions stipulated under Decree 86 are why foreign investments are pouring in.
Currently, foreign investors are only required to comply with three procedures and can now engage in mergers and acquisitions activities. This has saved foreign investors a lot of time and provides them with more investment opportunities.
The Cons
All implementations do come with their own shares of challenges. Even with the enactment of Decree 86, the process may still be challenging, and the government control over specific activities may somehow be stringent.
For example, approval on curriculum and subjects, investment capital, teachers, infrastructure, and many others. A deep research or consultancy is highly advised for foreign investors.
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How to Establish an Education Business in Vietnam
Foreigners starting a business in Vietnam must choose a legal entity, and the same applies to set up an education business in Vietnam.
Investors can opt for one of the most common following entities:
- A limited liability company with at least one shareholder with no minimum capital required
- A partnership with a local national (at least two shareholders)
- A 100% foreign-owned company
- A foreign subsidiary or branch office
Of course, just like any other businesses in the country, foreign investors must secure an education license when starting a business in Vietnam in this sector.
The Vietnamese Department of Education and Training is the authority that is responsible for the education license issuance after your company registration is done.
Why Choose Cekindo as Your Business Partner
Are you searching for the perfect investment and want to start a business in Vietnam? Would you want a cost-efficient educational business setup and quick business license application in Vietnam?
Whatever your requirement is, Cekindo will point you in the right direction and bring your dream business come true in no time.
With Cekindo, you will understand the different jurisdiction and various types of company ownerships that you can choose from in Vietnam.
Our specialist consultants will explain the differences of legal entities, ownerships, licenses and more based on your company’s business activities and budget.
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