Foreign investment in Vietnam’s education sector: Key insights from Decree 124/2024/ND-CP

20 November 2024

On 5 October 2024, Vietnam issued Decree 124/2024/ND-CP (“Decree 124”) which amends and supplements Decree 86/2018/ND-CP (“Decree 86”) in relation to regulation of foreign cooperation and investment in the education sector. Decree 124 takes effect on 20 November 2024.

This article highlights some of its key changes.

Expanded scope and stricter requirements for education partnerships

Decree 124 amends the definition of “educational linkage” in Article 2(4) of Decree 86, allowing Vietnamese preschool and/or K-12 institutions to collaborate not only with foreign educational institutions but also with foreign educational organisations to implement integrated educational programs.

Decree 124 also amends the criteria for foreign institutions and organisations to participate in the education sector. Foreign partners (both foreign institutions and organisations) in an educational linkage must be legally established and operated abroad for a minimum of five years as of the date of application submission.

If the partner is a foreign educational institution, it must also meet the following additional requirements:

• not have violated the laws of the host country during its operation;
• provide direct teaching; and
• has a valid certificate of educational quality assessment or is recognised for educational quality by a competent foreign educational agency or organisation.

Decree 124 distinguishes between educational linkages and joint training at tertiary level.

Tightened investment capital and curriculum requirements for Foreign-Invested Education Institution

Decree 124 maintains the current requirement that foreign-invested project establishing a K-12 school must invest at least VND50 million per student, with a minimum total investment of VND50 billion. However, Decree 124 adds that at least 50% of the total investment must be realised at the time when educational operations are appraised for approval, with the investor committing to fulfil the remaining investment capital requirement within five years from such approval.

In addition to the requirements outlined in Decree 86 - prohibiting content that could jeopardize national security, public interests, or Vietnamese cultural values, as well as content that promotes religious activities or distorts historical facts - Decree 124 introduces further obligations for foreign-invested education institutions. These institutions must ensure that their programs are accredited in their country of origin, have been operational for at least five years, and have received approval from the program owner for implementation in Vietnam.

Requirements relating to tertiary education providers

Decree 124 expands the types of foreign-invested education institution allowed in Vietnam to include branch campuses of foreign universities. Foreign universities can apply to establish branch campuses in Vietnam if they meet the conditions set out in Decree 124, including that the foreign university has ranked in the top 500 prestigious universities globally for the last three years and has a minimum investment capital of VND500 billion.

Decree 124 sets out the procedure and requirements (planning, facility, minimum area, teachers, training programs, etc.) to be utilised by a foreign university in establishing a campus in Vietnam and also sets out conditions for the programs that will be run such as being recognised or accredited by the competent education authority in the university’s home country. Branches are only allowed to grant diplomas and certificates from the foreign higher education institutions that invested in establishing the branch.

Other amendments

Training linkage programs are no longer restricted to the main campus of Vietnamese universities; they can now also be offered at other licensed branch campuses, allowing for greater flexibility in delivering these programs.

Foreign teachers teaching foreign language skills are now mandated to possess at least a college degree or its equivalent, thereby upholding higher standards of educational quality.

Decree 124 streamlines 14 out of the 21 application forms prescribed under Decree 86 and introduces provisions for online submissions and data sharing among government agencies, thereby reducing administrative burdens and promoting transparency.

Educational institutions or economic organisations must - after foreign investors contribute capital, purchase shares, or purchase capital contributions - meet the following conditions:

• Market access conditions for foreign investors as stipulated by the Investment Law;
• Conditions for establishing foreign-invested educational institutions as set out in Decree 86 and Decree 124;
• Conditions related to financial obligations regarding land rent payments for the remaining land rent term (if any); and
• Related taxes and fees as set out in the Land Law during the implementation operation of the educational institution.