Setting the Stage

Let's begin by examining recent developments in Vietnam's semiconductor market. In late 2023, Intel – one of the world’s leading semiconductor manufacturers – made the decision to halt its multi-billion-dollar investment in Vietnam. At first glance, this appears to be a significant setback for Vietnam’s semiconductor industry. However, soon after, another striking event unfolded. Nvidia, a globally renowned semiconductor giant, announced a partnership with FPT, an Information Technology service company in Vietnam, to develop an AI chip ecosystem. So, what’s really going on here? Is Vietnam’s semiconductor market losing its appeal? Or could this be a calculated move to align with emerging trends in the country's semiconductor landscape? Today’s blog article will offer fresh insights into this intriguing issue.

Intel's Setback

In recent years, Intel’s dominance in the semiconductor market has faltered. Once holding a 50-70% market share, Intel saw its lead diminish starting in Q1 2020 as the gap with AMD began to close. Experts now predict AMD will soon overtake Intel and become the market leader, surpassing its long-time rival.

Intel's revenue dropped from $79 billion in 2021 to $55 billion by June 2024, driven by weak CPU demand. In 2023, Intel experienced a 31% revenue decline dropping to $18.9 billion, which is largely attributed to challenges in its foundry business.  Following the submission of its financials to the US Securities and Exchange Commission (SEC), Intel's stock declined by 4.3%.

In 2024, Intel's CEO, Pat Gelsinger, announced a Q2 net loss of $1.61 billion, with further losses expected. Intel has also  delayed the construction of two major chip plants in Germany and Poland, citing reduced demand—a considerable setback for both the company and the respective governments.. Meanwhile, Asia continues to dominate as the global semiconductor hub, housing over 80% of production capacity. Taiwan, Japan, and China lead the region, with China alone contributing 27%.

Intel’s decision to withdraw investment from Vietnam and redirect it to European countries has raised questions about its effectiveness. However, is this truly the primary reason for Intel’s current challenges?

What Are the Real Causes?

Intel is facing significant challenges due to emerging trends in the global semiconductor market, particularly the rapid advancement of AI chip technology. The AI chip industry, valued at $45.5 billion in 2021, is expected to grow substantially, with the market projected to reach $311.58 billion by 2029, reflecting a compound annual growth rate (CAGR) of 20.4%. Meanwhile, global investment in AI is skyrocketing, with major contributions from India, South Korea, China, and Saudi Arabia, amounting to a total of $380 billion. This boom is driving semiconductor growth, with companies like Nvidia and TSMC demonstrating strong performance.

This is likely the main reason behind Intel’s recent decline, rooted in a critical misstep by its leadership. About seven years ago, Intel had the opportunity to acquire shares in OpenAI. However, then-CEO Bob Swan believed that generative AI would not emerge in the consumer and enterprise markets anytime soon and would be unlikely to generate profits. As a result, Intel declined the investment, and today, OpenAI's market valuation is estimated at $80 billion.

This marks yet another strategic miscalculation by Intel. In the 1990s and 2000s, Intel dominated the semiconductor chip market. However, their decision to stick with DUV lithography technology while TSMC and Samsung Foundry shifted to EUV caused Intel to lose its competitive edge. Now, once again, they have missed a major opportunity, ceding ground to Nvidia, Google, and Microsoft in the AI era.

Vietnam in the New Wave and Promising Partnerships

In recent years, Vietnam has solidified its position in the global semiconductor market, playing  a crucial role in the global semiconductor manufacturing supply chain. Vietnam became the third-largest semiconductor partner of the United States in Asia and accounted for over 10% of U.S. chip imports for seven consecutive months. Between 2016 and 2021, Vietnam's semiconductor market grew by 7.1%, reaching a valuation of $18.2 billion in 2022. The country is home to approximately 40 to 50 companies in the chip design sector, supported by over 5,000 design engineers, positioning itself for future industry expansion.

Vietnam has surpassed the global average in the Government Artificial Intelligence (AI) Readiness Index for three consecutive years. The country currently ranks 5th out of 10 in the ASEAN region and has moved up three places to rank 59th out of 193 countries, according to the assessment by Oxford Insights.

Vietnam has also successfully attracted major electronics companies to invest in AI chip packaging and substrates, such as Intel ($1.5 billion), Samsung (nearly $2 billion), Amkor ($1.6 billion), and Hana Micron ($1 billion). These companies will not only enhance the quality of the workforce in AI chip production in Vietnam, but also contribute to the development of the AI chip supply chain.

Recently, NVIDIA partnered with FPT, a leading Vietnamese technology group and one of Asia's Top 50 IT service companies, to invest up to $200 million in an AI Chip Factory. This facility aims to boost the economy and advance Vietnam's semiconductor and AI chip industries. At the signing ceremony, Keith Strier, Vice President of NVIDIA's Global AI Initiative, highlighted their commitment to collaborate with Vietnamese businesses to accelerate digital transformation and establish Vietnam as a powerhouse in AI chip development.

From a business perspective, this partnership represents a successful investment attraction from a major foreign name for FPT, showcasing the company's credibility in the eyes of its partners. On a larger scale, this deal, along with other international investments, demonstrates the potential and capabilities of Vietnamese companies as well as the Vietnamese government. It underscores that Vietnam has established strategic directions and sound policies to embrace and adapt to the new trends of the era, including the decision to "decline" investments from Intel.

Opportunities and Challenges for Investor

Vietnam has a multitude of factors that can positively influence foreign investment, instilling a significant level of confidence for companies looking to establish operations in the country.

In terms of policy: The government has identified opportunities and is committed to enacting supportive measures, while various provinces are working to improve their infrastructure. Leaders are actively working to attract Vietnam's semiconductor companies and factories, as evidenced by Resolution No. 136/2024/QH15 from the National Assembly, which outlines specific initiatives for Da Nang:

• Vietnam's semiconductor sector is a key focus, drawing investment for projects related to semiconductor technology, integrated circuits, electronic components, flexible electronics, new technology batteries, advanced materials, defense industries, and high-tech products. These initiatives are backed by capital investments of at least 4 trillion VND (approximately $170 million).
• The government will offer land leases to strategic investors in Vietnam's semiconductor industry without requiring a bidding process and will provide a five-year income tax exemption on profits generated from innovative startups and local support initiatives related to Vietnam's semiconductor growth.

Regarding High-Tech Workforce Development: Vietnam aims to develop 50,000 semiconductor specialists by 2030, a strategic move that will greatly benefit high-tech firms like Intel. Nonetheless, this target may fall short, as certain industries could demand an even larger talent pool than originally anticipated.

Open Market and Strong Diplomatic Strategy: Vietnam boasts an open market and an effective diplomatic approach, collaborating with nations on the United Nations Security Council and leading semiconductor countries. Its geographic proximity to Japan, Taiwan, and China is advantageous for participation in the global supply chain, which greatly benefits Vietnam's semiconductor industry. Vietnam has entered into free trade agreements with Japan (VJEPA) and South Korea (VKFTA), enhancing technological collaboration within Vietnam's semiconductor sector. Furthermore, companies such as Samsung and Intel have made significant investments in the country, reinforcing Vietnam's semiconductor standing in the global market.

Additionally, the Vietnamese semiconductor market will face numerous new challenges, with competition being the most significant. Although various factors continue to present opportunities for Vietnam's semiconductor sector, becoming a leading global hub in semiconductor technology requires patience and long-term strategies. Furthermore, the government must intensify efforts to refine policies that support foreign investment, enhance the quality of the workforce, and comprehensively enhance infrastructure to  create the optimum conditions for rapid growth.

Conclusion

In summary, it can be affirmed that Vietnam has taken the right steps in its development within the semiconductor technology market. While initial challenges emerged, they have showcased Vietnam's adaptability and ability to navigate industry trends, paving the way for a promising entry into this new wave of opportunities. Objectively speaking, this is indeed a dynamic and promising environment for the future. Data and market trends clearly indicate that Vietnam’s semiconductor chip has the potential to become one of the leading semiconductor technology hubs in the world.

Education has always been a top priority for Vietnam’s leadership. Not only does it play a critical role in the nation’s long-term development, but it also significantly contributes to the economy, particularly in attracting foreign direct investment (FDI). Many investors from around the world have recognized the potential of this sector in Vietnam and are showing increasing interest in the market. To tap into this key market through establishing branch campuses, it is essential to have a comprehensive understanding of the landscape, especially considering Vietnam’s unique ideological context and its stringent regulations on investing in education. This article aims to provide a thorough and in-depth perspective on the subject.

You may also like: Vietnam’s Attractive Preschool Market: A Magnet for Visionary Investors

Overview of the Higher Education Market in Vietnam

Higher education has always been crucial to Vietnam's development, significantly impacting socio-economic issues like economic growth and poverty reduction. Consequently, Vietnamese leaders prioritize its growth. However, the World Bank highlights financial resource shortages that hinder the higher education system's development. In response, the government has introduced legal frameworks through the Ministry of Education and Training to attract domestic and foreign private investment, leading to positive progress.

In fact, FDI interest in Vietnam's higher education sector started to gain traction in 2019. According to statistics reported by the news portal CafeF, FDI into education between August 2019 and October 2019 reached US$97 million.

As of December 31, 2021, Vietnam had 408 joint training programs with foreign higher education institutions. Of these, 186 programs were partnerships between private universities and international partners, while 222 programs were licensed by the Ministry of Education and Training.

According to the Ministry of Education & Training, by June 2024, the total foreign investment in this sector amounted to US$4.57 billion across 605 projects, with around 430 joint training programs being implemented at 65 domestic higher education institutions. Additionally, five foreign-invested universities are currently operating in Vietnam. Notable names in this field include RMIT University Vietnam, the British University Vietnam (BUV), the American University in Vietnam (AUV), Swinburne Vietnam, and Greenwich Vietnam.

Despite progress, Professor Raymond Gordon, Vice-Chancellor of the British University Vietnam (BUV), noted that Vietnam is a "hidden gem" for educational investment in Asia. While other countries face intense competition in higher education, Vietnam, despite having prestigious institutions, still sees limited foreign investment. This indicates that the market's potential remains underdeveloped.

Legal Regulations on Establishing University Branch Campuses

The government is currently accelerating the process of refining policies and legal regulations related to investment in higher education. On October 5, 2024, the government issued Decree No. 124/2024/NĐ-CP, amending and supplementing several provisions of Decree 86/2018/NĐ-CP, which governs foreign cooperation and investment in the education sector. This decree, effective from November 20, 2024, notably introduces amendments and supplements to current regulations to establish branch campuses in Vietnam.

Firstly, there are two forms of foreign branch campuses in Vietnam:

• Branch campus of a Foreign Higher Education Institution: Directly established by a foreign higher education institution.
• Branch campus of a Foreign-Invested Higher Education Institution: Parts of the organizational structure are under the management of an existing foreign-invested higher education institution operating in Vietnam.

With regards to eligible educational fields, foreign investors are only permitted to cooperate and invest in fields authorized by Vietnamese law, and are prohibited from investing in sectors related to security, defense, politics, and religion.

Secondly, several additional points regarding investment conditions have been outlined. According to Articles 33, 35, 36, 37, and 38 of Decree 86, supplemented by Decree 124, specific conditions for establishing university campus branches have been detailed:

Conditions for Investment Licensing:

• Compliance with the planning of the higher education and teacher training network as prescribed.
• Engagement in fields authorized for cooperation and investment.
• The foreign higher education institution establishing a branch in Vietnam must be legally established and operating overseas.
• The foreign higher education institution must be ranked among the top 500 universities in reputable global university rankings for one of the last three years.
• For campus branches of foreign higher education institutions: The Ministry of Planning and Investment shall seek appraisal opinions from the Ministry of Education and Training and relevant agencies to synthesize and submit to the Prime Minister for decision on investment policy. For campus branches of foreign-invested higher education institutions: the assessment of the Ministry of Education and Training is required. 

Conditions for Investment Capital:

• For establishing a campus branch of a foreign higher education institution in Vietnam: A minimum investment capital of 500 billion VND (excluding land use costs) is required. At the time of appraisal for the establishment of the university branch, the realized investment value must exceed 250 billion VND.
• In cases where a foreign-invested higher education institution does not construct new facilities but instead leases or uses existing facilities provided by a Vietnamese partner, the minimum investment must meet at least 70% of the prescribed requirement. By the time of appraisal for educational operation, the realized investment value must exceed 50% of the total investment capital, and the investor must commit to fully investing the required capital within five years from the date of the operation approval.

Finally, the procedures for establishing branch campuses have been revised to better support investors: 

(1) Apply for an Investment Registration Certificate from the competent authority (Article 34 of Decree 86/2018/NĐ-CP, as amended by Decree 124); 

For projects establishing campus branches of foreign higher education institutions in Vietnam, the Ministry of Planning and Investment consults with the Ministry of Education and Training and relevant agencies before submitting the proposal to the Prime Minister for approval; 

For campus branches of foreign-invested higher education institutions, the investment authority must seek evaluation from the Ministry of Education and Training.

(2) Obtain the permission of establishment (Articles 40 of Decree 86/2018/NĐ-CP,  amended by Decree 124 and Articles 44 of Decree 86/2018/NĐ-CP ): The Prime Minister has the authority to approve the establishment of campus branches of foreign higher education institutions in Vietnam, while the Minister of Education and Training is responsible for approving the establishment of campus branches of foreign-invested higher education institutions.

(3) Obtain the permission for educational activities (Article 47 of Decree 86/2018/NĐ-CP, as amended by Decree 124, on the issuance of permits for educational activities): The Minister of Education and Training grants permission for educational activities to higher education institutions, branches of foreign-invested higher education institutions, and branches of foreign higher education institutions in Vietnam.

Reassessing the Issue

Although the higher education market in Vietnam currently faces several limitations in its development, significant progress is anticipated in the near future due to the proactive efforts of the Vietnamese government in enhancing and refining legal regulations. This has created substantial opportunities for Foreign Direct Investors to penetrate this promising sector. However, to ensure optimal investment effectiveness and facilitate access, thorough preparation is essential, with the search for reliable consulting partners being a critical factor. Viettonkin is one of such organizations that can assist investors in completing procedural requirements, advising on the latest trends, and providing market updates. Let us help you make more informed and effective decisions.

Introduction

The preschool education market in Vietnam has been experiencing robust growth in recent years. With the trend of international integration and a rising demand for quality education, more foreign investors are setting their sights on this sector. Notably, Southern Vietnam, characterized by its dense population and developed economy, has emerged as an attractive destination for Foreign Direct Investment (FDI) in preschool education. This article provides an overview of the market, current challenges, and opportunities for collaboration with Smiling Star School—a committed institution dedicated to delivering a high-quality educational environment for children.

An Overview of Vietnam's Preschool Education Market

Vietnam's preschool education market has achieved significant milestones in recent years. According to the Ministry of Education and Training, the country had approximately 15,256 preschool institutions by the end of the 2023-2024 academic year, with private schools accounting for 21% of the total. In particular, the Southern region has experienced a significant increase in the number of private preschools, addressing the growing demand for quality education from young families and the expatriate community. This development stems not only from domestic needs but also from rising FDI.

According to the Ministry of Planning and Investment, total FDI in Vietnam reached $15.19 billion in total FDI during the first half of 2024, showing a 13.1% increase compared to the same period last year. A significant portion of this investment was allocated to educational projects, particularly preschool education. International investors from Japan, Singapore, and South Korea are actively expanding their presence in major cities such as Ho Chi Minh City and Binh Duong, aiming to tap into this promising market.

Legal Framework for Foreign Investment in Vietnam's Education Sector

The recent updates to foreign investment regulations in Vietnam's education sector are outlined in Decree 124/2024/ND-CP, which revises and expands upon Decree 86/2018/ND-CP. A key provision requires that investors maintain at least 70% of their capital investment, even when utilizing rented facilities, along with a commitment to provide adequate investment over a five-year span (Article 35.6).

The decree specifies facility requirements, stating that lighting, furnishings, and educational resources must be appropriate for the curriculum. Additionally, ancillary spaces, such as health rooms and kitchens, must comply with safety standards (Article 36.2). Foreign educational programs are required to obtain quality accreditation in their home country and must align with Vietnam's educational goals, especially when catering to Vietnamese students (Article 37.1).

Administrative processes have been simplified through inter-agency data sharing, reducing costs, and saving time for investors. Nevertheless, stringent standards for quality accreditation remain in place to uphold transparency and maintain educational excellence.

Smiling Star: A Model for Smart Investment in a Changing Era

Legal issues continue to pose significant barriers for foreign investors entering the Vietnamese market. However, investors, such as Smiling Star Preschool, demonstrate resilience and acumen are determined to invest in Vietnam and spearhead a new wave of educational investment.

The Smiling Star Preschool curriculum originates from the Lion City of Singapore. Its educational programs are crafted to align with Singapore's Nurturing Early Learners (NEL) Framework with standards set by the Ministry of Education (MOE). This underscores Smiling Star’s capability as an investor in Vietnam’s education sector.

Smiling Star aims to establish itself as a leading brand in the region’s education sector. Its commitment to continuous learning and improvement to foster not only intellectual development in children but also their moral and life skills. The organization has demonstrated sharp market research capabilities and a keen awareness of trends. With a focus on establishing a presence in Vietnam, Smiling Star is eager to collaborate with local stakeholders to lay the groundwork for its international preschool system as the Vietnamese government gradually implements supportive policies for investors.

This illustrates that Vietnam remains an attractive market for prominent international education brands. Investors like Smiling Star recognize this potential and are strategically refining their plans to invest directly in Vietnam. Furthermore, Smiling Star and other prospective investors are paving the way for new FDI opportunities in the preschool education sector.

Conclusion

The preschool education market in Vietnam is on an upward trajectory, attracting increasing interest from foreign investors. This presents a promising opportunity for those looking to engage in the education sector in Vietnam, particularly as the demand for high-quality education continues to rise. Despite existing challenges, collaborations between international investors and educational organizations like Smiling Star can bring positive contributions to Vietnam's preschool education landscape. With strategic investments and partnerships, Vietnam's preschool education can not only meet domestic needs but also progress toward international standards.

Over the past few years, there has been a notable trend among investors who are redirecting their attention to Vietnam's education sector, seeking greater prospects, particularly in the burgeoning EdTech market. To establish a thriving venture in Vietnam's EdTech industry, it is crucial for investors to grasp the legal procedures involved in setting up an EdTechenterprise in the country. Understanding and adhering to the regulatory framework will play a pivotal role in their success in this exciting and rapidly expanding sector.

Overview of regulations and legal framework governing EdTech in Vietnam

Vietnam's educational system is a rich tapestry of different components, ranging from Kindergarten and general education to vocational training and higher education programs. As the country strives to keep pace with the demands of its rapidly evolving economy and society, the popularity of short-term courses catering to soft or life skills, as well as various certification programs for national and international practices and foreign languages, has surged.

However, despite these advancements, the domain of EdTech in Vietnam remains somewhat ambiguous due to a lack of explicit definition in the legal framework. While the Vietnamese Government has initiated efforts to develop EdTech projects since the 2010s, these endeavors have primarily centered on small-scale subject-based initiatives with limited objectives, predominantly aimed at public schools.

Recognizing the regulatory obstacles and inconsistencies, the Ministry of Training and Education has now taken notice of the issue and is actively working on a draft Circular that addresses E-learning activities. To be more specific, on July 6, the Vietnamese government took a significant step by issuing Decision No. 793/QD-TTg, which entails the approval of a plan aimed at streamlining regulations for specific business activities within the education and training sector.

This decision focuses on simplifying regulations for ten key business lines in the education sector. The new simplified rules will be applicable to various educational institutions and services, including preschools, general education institutions, gifted schools, tertiary education establishments, vocational education institutions, education quality accreditation services, consulting services for studying abroad, joint training activities with foreign countries, and foreign-invested education establishments operating within Vietnam.

By streamlining regulations for these business activities, the government aims to promote growth and facilitate easier entry for investors and stakeholders in the education sector, particularly in areas like Edtech, where opportunities are expanding rapidly. This move is expected to encourage more investment in Vietnam's education market and foster innovation in the sector.

Additionally, there are specific incentives provided to businesses investing in educational socialization facilities. Educational socialization institutions are educational establishments that fully meet the criteria outlined in Decision No. 1466/QD-TTg, 1470/QD-TTg, and 693/QD-TTg. This includes technical and technological training at professional intermediate schools and colleges. Foreign investors who invest in these fields can enjoy the incentives offered to educational socialization establishments.

To accelerate digital transformation in the field of education, the Government has further taken a proactive step by issuing Decision No. 131/QD-TTg, which formally approves the Project "Strengthening the application of information technology and digital transformation in education and training in the period of 2022 - 2025, orientation to 2030". This ambitious project outlines the strategic development orientations and goals for digital transformation in the field of education.

Vietnam's educational system continues to evolve and embrace innovation, marked by its proactive efforts in streamlining regulations, promoting EdTech, and driving digital transformation. The nation's commitment to cultivating a future-ready education landscape reflects its dedication to staying at the forefront of global advancements in education and technology.

Market entry scenarios and licensing prerequisites

Market entry scenarios and licensing prerequisites are critical considerations for EdTech companies looking to establish themselves in Vietnam. Depending on the nature of their operations, EdTech investors must carefully select and apply for the appropriate business lines to ensure they adhere to the country's regulations.

Creating and Providing Own Online Courses

If the EdTech company develops and offers its own online courses and e-learning activities to users, it must register business lines covering both educational and technological activities. This registration ensures that the company is legally permitted to provide educational services and utilize technology for its online learning platform.

Distributing Third-Party Online Courses or Operating an E-commerce Platform

For EdTech companies that act as intermediaries and distribute online courses or packages from third-party providers to users, without creating their own content, they may only need to register business lines related to technology and trading activities. However, it is crucial that the curriculum they distribute complies with all the legal requirements to avoid any regulatory issues.

Providing Technological Solutions for Classroom-Related Tasks

If the EdTech company's primary focus is to offer technological solutions that support various classroom-related tasks, such as attendance tracking, homework assignment and grading, study progress monitoring, and access to a library of study materials, they will only need to register business lines specifically related to technology.

Understanding the appropriate business lines for registration is essential for EdTech companies to ensure they operate legally and in compliance with Vietnam's regulations. By adhering to these licensing prerequisites, EdTech investors can enter the Vietnamese market confidently, knowing they are properly authorized to conduct their desired operations in the country.

The Registration Process of an EdTech Enterprise in Vietnam

Applying for an investment certificate in the dynamic field of Edtech demands meticulous attention to procedural excellence and the presentation of a comprehensive business plan. Prospective investors must meticulously compile an array of indispensable legal documents to initiate the process. These include a formal request for the investment project and, for individual investors, copies of their ID card or passport, while organizational investors are required to furnish their Certificate of Establishment or equivalent legal documents.

A well-crafted proposal for the investment project is then presented, encompassing vital aspects such as project goals, scope, capital, financing, location, duration, progress, labor, and a request for investment incentives. Moreover, a comprehensive assessment of the project's impact on the social-economic landscape is essential. To substantiate the financial aspect of the application, investors can choose from a range of documents, including the most recent two years' financial statements, commitments of financial support from parent companies or financial institutions, and proofs of financial capacity.

For projects involving land use, the application must include a request for land use, along with relevant documents like rental agreements to demonstrate the investor's rights to the location. Additionally, if the project incorporates transfer-restricted technology, a detailed report on technology usage, covering names, origins, process mapping, and specifications of major machinery and equipment, must be provided to comply with regulations.

The time frame for establishing the company is estimated at 30-45 days, while the time required for sub-licensing depends on the type of license sought for educational institutions. Various types of sub-licenses exist in the education sector, encompassing operational licenses for international preschools, primary schools, and inter-level institutions, licenses for study abroad counseling centers, and licenses for foreign language and informatics centers.

However, it is crucial to acknowledge that there is currently no dedicated sub-license tailored exclusively to edtech investment activities. Nonetheless, when seeking to establish an educational institution, prospective investors must scrupulously adhere to Vietnam's legal stipulations and secure the appropriate sub-license in accordance with regulatory mandates.

Final thoughts

When venturing into the EdTech market in Vietnam, foreign investors should recognize the importance of conducting a case-by-case evaluation to ensure compliance with the latest regulatory updates and protection from a company structure and statutory perspective. Each business model and activity may have unique requirements, and staying informed about the ever-changing regulations is crucial.

To do so, it is important that investors reach out to a local partner for further guidance and tailored advice on structuring their EdTech business in Vietnam. At Viettonkin, we gather a team of seasoned consulting experts who are dedicated to support investors and ensure a well-informed and legally compliant investment strategy.

For more information or to seek assistance, you can contact the Viettonkin team through the contact details provided on our website. By availing themselves of the expertise of our advisors, investors can enhance their chances of a successful and smooth market entry into Vietnam's dynamic EdTech industry. Do not hesitate to reach out and get in touch with us now.

As one of the fastest-growing economies in Southeast Asia, Vietnam has been making remarkable strides in digital transformation, particularly in the education sector. The remarkable growth witnessed in this domain is a testament to Vietnam's unwavering dedication to elevating its educational standards and embracing cutting-edge technology. As the country continues its upward trajectory, navigating the challenges ahead, an array of enticing opportunities beckons savvy investors to enter the scene and contribute to the exciting evolution of Vietnam's education sector.

The dynamic surge in Vietnam’s Edtech investment

Vietnam's EdTech market has undergone remarkable growth since its inception in 2007. In the past two years, particularly during the Covid-19 pandemic, the demand for online teaching and learning has surged, resulting in a flourishing new EdTech market. This surge has caught the attention of both domestic and international large corporations and startups.

Several factors contribute to the increasing flow of capital into Vietnam's EdTech market, which is the country’s favorable legal framework for digital transformation, a stable and modern network infrastructure, along with advanced technology and techniques. In addition to that, the significant proportion of the population aged 15 to 24 represents a potential customer base for EdTech solutions, accounting for approximately 15.22% of the population in 2020.  

Despite the rapid growth, Vietnam's EdTech market is still considered to be in its early stages, with its primary focus on content delivery (pre-recorded lessons and exam banks) and live classes (online classes with teachers, either one-on-one or group format). However, there are untapped opportunities in the OMO segment (online-offline model) and B2B solutions (school or educational institution process management). This indicates that the Vietnamese EdTech market has ample potential for further development, particularly in the areas of digital education platforms and school management systems. As the market continues to evolve, there will be more room for innovative solutions and investments in the digital education landscape in Vietnam. 

What makes Vietnam’s Edtech market attractive to investors?

High Rate of Mobile Device Ownership and Internet Connection

Vietnam's high rate of mobile device ownership and Internet connection presents a significant market opportunity for enterprises, especially within the Edtech industry. According to Vnetwork, a leading Cybersecurity and Rescue Center in Vietnam, as of January 2023, there were approximately 77.93 million Internet users in the country. This figure reflects a substantial increase of 7.3% compared to the previous year, and it accounts for more than 79.1% of the population.

These statistics highlight the vast potential for online business development, particularly in the Edtech sector. With such a large number of Internet users, there is a considerable audience ready to embrace digital education solutions. The high rate of mobile device ownership further adds to this opportunity, as it enables convenient access to educational content and platforms on-the-go.

For Edtech companies, this presents a fertile ground to offer a wide range of innovative educational products and services to cater to the growing demand for online learning. Whether it's providing interactive learning platforms, mobile learning apps, or virtual classrooms, the market is ripe for expansion and exploration.

Surging Investment in Education among Vietnamese People

In recent years, Vietnam has emerged as a global leader in education spending, with Vietnamese families showing a remarkable commitment to investing in their children's education. According to the report e-Conomy SEA 2021 by Bain & Company, on average, Vietnamese families allocate approximately 20% of their disposable income to educate their children, a significantly higher proportion compared to other Southeast Asian nations, where the spending ranges from 6% to 15%. Only Malaysia in Southeast Asia surpasses Vietnam in education spending.

The General Statistics Office reports that annual spending on education has risen by 2.3 times over the past decade, amounting to 7.1 million VND per student in 2020. This expenditure is projected to increase further, reaching 7.3 million VND per student in 2021. The Vietnam's commitment to education is also evident in its national budget, with the country dedicating 4.9% of its GDP to education during the period of 2011 to 2020, according to the Vietnam National Institute of Educational Sciences. Remarkably, in 2022, the government expenditure on education was reported at 15.45 % of the national budget. 

Compared to neighboring countries like Cambodia, Singapore, and Laos, Vietnam's education spending as a percentage of GDP stands considerably higher, reflecting the nation's prioritization of its educational system.

The remarkable emphasis placed by Vietnamese families on investing more in their children's education creates a promising prospect for investors looking to tap into this thriving market. This heightened commitment to education highlights the significance Vietnamese society attributes to nurturing and developing its human capital. With substantial investments being made in the education sector, Vietnam is poised to cultivate a highly skilled and educated workforce, which, in turn, is expected to fuel the country's long-term economic growth and development. For investors, this presents a unique opportunity to participate in a burgeoning market with the potential for significant returns and positive societal impact.

Government making E-learning a priority in Vietnam

Recognizing the importance of digital transformation, the Vietnamese Government has identified education as one of the eight priority sectors in its national digital transformation program from 2025 with a vision for 2030. This strategic move emphasizes the significance of leveraging technology to enhance the education system.

To support this vision, in 2021, the Prime Minister issued Decision No. 1373/QD-TTg, providing approval for the project titled "Building a society of learning in the 2021-2030 period." This project aims to achieve specific milestones, including digitizing 70% of universities and developing digital learning materials by 2025. Additionally, it seeks to implement information technology in the management and organization of educational activities in 70% of community learning centers.

These policy initiatives highlight the government's commitment to fostering a technologically-driven education sector, promoting online learning platforms, and encouraging investments in the EdTech industry. By embracing digital transformation and innovation, Vietnam is poised to create a more resilient and dynamic education ecosystem that better caters to the evolving needs of students and educators, while also opening up significant opportunities for growth and advancement in the EdTech market.

ICT Infrastructure Improvement

The Vietnamese government's proactive efforts through the "National Digital Transformation Program through 2025, with vision to 2030" to enhance ICT infrastructure and cater to the growing demand for digital content are set to have a positive impact on the Edtech market in the coming years. By prioritizing ICT development, the government aims to create an enabling environment that fosters the growth of digital education solutions and improves access to educational resources.

In the education sector, this ICT infrastructure improvement is expected to provide a robust foundation for the growth of Edtech solutions. With improved connectivity and access to technology, educational institutions and Edtech companies can offer innovative digital learning platforms, interactive content, and remote learning options. As a result, students and learners across Vietnam will have greater access to quality education, regardless of geographical barriers.

Moreover, as the private sector, including educational stakeholders, adopts advanced ICT solutions, it will further drive the demand for Edtech products and services. This collaborative effort between the government and private sectors will create a conducive environment for Edtech companies to thrive and contribute to the development of the education landscape in Vietnam.

Challenges that remain ahead

Despite the promising growth potential, Vietnam's Edtech market is not without its challenges. While market research organization Ken Research predicts significant growth, with the market reaching a value of US$3 billion by 2023 and a compound annual growth rate of about 20.2% from 2019 to 2023, experts caution that the Edtech industry presents several obstacles for investors.

One of the main challenges lies in the enduring popularity of traditional classroom learning. Despite the increasing trend of online education, many individuals still prefer the conventional classroom model. Convincing users to transition to digital learning platforms may require substantial effort and time. Furthermore, developing Edtech products is a resource-intensive process, demanding significant time and financial investment. This can create difficulties for startups seeking to generate revenue and profit in the early stages, especially when facing pressure from venture capital funds. Not to mention, the Vietnam Edtech market faces tough competition from established players in the global tech industry. Many countries worldwide have made significant advancements in technology, making it challenging for domestic investors to compete on a global scale.

Thus, to navigate these challenges successfully, investors and domestic Edtech companies need to devise comprehensive strategies to harness the full development potential of Vietnam's Edtech market. This includes creating breakthrough products that cater to the practical needs of users and focusing on building sustainable revenue models to ensure long-term growth. By offering innovative and user-friendly solutions that address the specific demands of learners, the Edtech industry can cultivate a growing market and deliver substantial returns to investors.

Final Thoughts

Vietnam's Edtech sector stands as a fertile ground of opportunity for savvy investors seeking to capitalize on the country's rapid digital transformation and growing demand for online education. Given all the challenges such as the persistence of traditional classroom learning and competition from global tech players, the rewards of investing in Vietnam's Edtech market are significant. As the government prioritizes ICT infrastructure improvement and places education as a key sector in its national digital transformation program, the landscape for Edtech companies is set to become even more promising.

For investors seeking to seize the opportunities in Vietnam's Edtech sector, partnering with Viettonkin's consulting service can be a strategic move towards successful investment endeavors. With our expert guidance and in-depth knowledge of the local market, investors can navigate the challenges effectively and capitalize on the burgeoning Edtech opportunities.

Now is the time for visionary investors to take action and participate in shaping Vietnam's educational future. Embracing this dynamic and evolving Edtech landscape can not only yield attractive financial returns but also contribute to the nation's progress in nurturing a highly skilled and tech-savvy workforce.

Unlock the potential of Vietnam's Edtech market and secure successful investment opportunities by partnering with Viettonkin's consulting service today. Together, let's drive innovation, accessibility, and excellence in education while reaping the rewards of strategic investments in this lucrative sector.

Being one of the most sought-after investment destinations, Vietnam is equally popular for growing opportunities in the education sector. In the last few decades, education has become an issue of priority and the government has reserved about 20% of its budget for it. As Vietnam’s edtech market is growing fast, it holds immense opportunities for investors to jump in and invigorate the landscape.

Vietnam’s Edtech growth prospects in 2023

Over the past two years, Vietnam's educational technology market has experienced significant growth, driven by the surging demand for online learning amidst the COVID-19 pandemic. According to Mr. Pham Giang Linh, the Chief Executive of Galaxy Education and General Director of Hocmai, a prominent player in Vietnam's e-learning industry, online education companies have witnessed remarkable growth, potentially exceeding 150% within this short period.

As mentioned in a comprehensive report by Ken Research, the Vietnamese EdTech market is poised to achieve a revenue of approximately 3 billion USD by 2023. The growth rate of this sector has been truly impressive, averaging about 20.2% per year from 2019 to 2023. Currently, there are around 260 edtech businesses in Vietnam, with a majority being start-ups and business-to-consumer (B2C) enterprises, according to data from Tracxn Technologies.

Several key factors contribute to the positive outlook for the market, including an increase in the number of E-learning service providers, a rise in the overall number of educational institutions, and a shortage of teaching staff. Moreover, the entrance of foreign companies into Vietnam's E-learning sector is expected to bring about technology breakthroughs and enhance the quality of educational content.

This exponential growth and a multitude of factors supporting the edtech market's advancement underscore Vietnam's position as a thriving hub for educational technology. With a burgeoning market and favorable conditions, the country offers an exciting landscape for investors and industry players alike to seize the vast opportunities in the dynamic world of edtech.

Opportunities for foreign investors breaking into Vietnam’s edtech market

Vietnam has significant potential for edtech market development. Accelerated by the pandemic, several edtech companies have been experiencing strong growth, but experts say that Vietnamese edtech firms still lack breakthrough technologies to grow stronger. This presents attractive opportunities for investors to look at.

Blended learning in higher education and vocational training

In response to the challenges posed by the pandemic, blended learning has emerged as a successful and efficient approach to education in Vietnam. By seamlessly integrating traditional face-to-face teaching with e-learning and computer-mediated support, this hybrid method has gained popularity and efficacy in the country's educational landscape.

With Vietnamese educators increasingly adopting blended learning, there are promising opportunities for local businesses to collaborate with foreign investors. Local partners can serve as essential recruiting hubs while gauging the market's needs and demands.

An excellent example of such collaboration is the joint delivery of an undergraduate degree in ICT by Swinburne University of Technology (Australia) and FPT University (Vietnam). This initiative provided a blended learning experience leveraging Swinburne's courseware and ICT system, complemented by FPT University's mentorship and learning support, as well as localized marketing, admissions, and enrollment.

In the realm of vocational education and training (VET), exploring partnerships with esteemed vocational colleges that have a strong commitment to skill development can prove advantageous. Collaborations in online VET delivery, particularly in the form of industry-recognized micro-credentials or mini-qualifications, present an attractive opportunity for foreign businesses and Vietnamese partners alike. Key industries such as tourism and hospitality, IT, design, and communication could benefit significantly from such collaborations.

Early childhood education

The early childhood education sector in Vietnam presents a niche market ripe with potential business opportunities, particularly in the realm of private kindergartens, aligning with the government's strategic sector development plan.

For edtech businesses, this segment offers an array of possibilities, including designing digital content tailored for young learners to acquire foreign language skills and fundamental soft skills. Additionally, teacher training solutions offered on digital platforms can greatly enhance educator effectiveness. Collaborative efforts focused on sharing experience and professional expertise in curriculum development, quality assurance, and managing digital agenda implementation at an institutional level further contribute to the growth of early childhood education.

A noteworthy collaboration in this domain involves Japanese Gakken Holdings and Vietnamese edtech company KiddiHub Education Technology. The partnership aims to leverage KiddiHub's established online presence to promote non-cognitive learning, emphasizing critical thinking skills among young learners.

As the early childhood education sector continues to thrive in Vietnam, edtech ventures have a unique opportunity to play a significant role in shaping the educational landscape. By providing innovative solutions that cater to the specific needs of young learners, edtech businesses can contribute to fostering a strong foundation for lifelong learning and development.

General education

Vietnam's commitment to education system reforms has paved the way for tremendous advancements in general education. With the goal of attaining international standards of quality in human resources, the country has implemented significant changes across various aspects of general education.

A new competency-based curriculum has replaced traditional textbook-centric delivery, ushering in a new era of innovative teaching methods and materials. This includes integrating STEM/STEAM subjects into the curriculum, emphasizing the development of critical skills and problem-solving abilities among students.

Edtech partners have promising business opportunities in this segment, particularly in the field of digital content for STEM/STEAM subjects and e-textbooks. Moreover, teacher training and assessment products tailored for English language training are also in high demand as educators adapt to the evolving educational landscape.

E-learning in corporate training

Vietnam's e-learning market extends its potential to cater to business customers seeking online training solutions. The rising demand for Learning Management Systems (LMS) presents an opportunity to streamline and enhance in-house corporate training processes efficiently, reaching a large number of staff members across various industries.

Leading companies like state-owned Vietnam Electricity (EVN) and Vietcombank have already established their own e-learning centers to facilitate effective human resource development. In sectors such as banking, tourism, and hospitality, the demand for customized e-learning solutions is on the rise.

For edtech companies, this presents a fertile ground to develop and offer tailored e-learning products to meet the specific needs of corporate clients. By catering to the training requirements of businesses in various industries, edtech partners can make a significant impact in enhancing workforce skills and productivity.

Final Thoughts

Vietnam's edtech industry offers a wealth of opportunities for investors looking to capitalize on the country's thriving education technology landscape. However, to fully unlock the potential of this burgeoning market, foreign edtech providers must navigate certain challenges, particularly in terms of understanding and complying with the regulatory framework governing edtech entities in Vietnam.

In our upcoming article, we will delve into essential legal information on how to establish an edtech enterprise in Vietnam, in strict accordance with Vietnamese law. We recognize that setting up and succeeding in the edtech market requires careful planning and expert guidance.

At Viettonkin, we take pride in assembling a team of experienced consulting experts who can provide comprehensive support to guide you through the intricate process of establishing and building a successful edtech business in Vietnam. From regulatory compliance to market entry strategies, we offer the expertise needed to make informed decisions and achieve investment success.

To make your mark in Vietnam's vibrant edtech sector, partner with us and let our consulting services pave the way for your business growth and success. Contact us today to embark on your edtech investment journey with confidence.

The edtech (educational technology) market in Vietnam has emerged as one of the most rapidly advancing markets globally, capturing attention with its significant growth trajectory. The increasing number of startups and the substantial influx of investment capital pouring into the industry are clear indicators of its thriving ecosystem. This growth signifies the recognition of the transformative potential of technology in education and highlights Vietnam's commitment to embracing innovative solutions to enhance learning experiences. As the edtech sector continues to flourish, it presents promising opportunities for both local and international stakeholders to contribute to the educational advancement of Vietnam and shape the future of learning.

A Glance at the Global Edtech Industry

The global edtech and smart classroom market is poised for remarkable growth, with a projected increase from US$133.55 billion in 2023 to a staggering US$433.17 billion by 2030, reflecting a robust compound annual growth rate (CAGR) of 18.3%. This growth signifies the immense opportunities that lie within the education sector today. As educational institutions and learners recognize the value of a comprehensive learning environment, they are proactively investing in the advancement of education.

According to HoloniQ, a leading provider of education intelligence, approximately 3% of global education expenditure is currently allocated to digital infrastructure. This highlights the growing importance placed on digital transformation in education. Notably, the potential impact of digital transformation is expected to soar from US$6 trillion in 2018 to a staggering US$10 trillion by 2030. These remarkable figures signify the tremendous potential for growth and adoption of edtech and smart classroom solutions in the years to come.

Highlights of Vietnam’s Edtech market

In the case of Vietnam, investing in education and training is consistently a top priority for the Vietnamese government, recognized as a crucial element in driving rapid and sustainable economic development. As a result, significant resources from the state budget are allocated to this field, ensuring the necessary support to enhance the quality of education.

According to the Government's report on education activities and the implementation of the education budget in 2022, the estimated recurrent expenditure for the education and training sector in the same year is VND 275.7 trillion. This amount accounts for approximately 15.45% of the total state budget expenditure, which falls short of the minimum requirement of 20% set forth in Resolution 37 and the Education Law. Recognizing this gap, the government intends to continue prioritizing education in the coming years by allocating a substantial budget for investment.

Notably, the field of edtech receives particular attention in this investment strategy. In July 2021, the government announced a target to achieve online training coverage of 90% for universities and 80% for high schools and vocational training institutions by 2030. This ambitious goal serves multiple purposes: preparing a high-quality workforce for future demands, especially in digital skills, fostering the growth of startups, and attracting investments and funds dedicated to the development of the Edtech market.

Vietnam’s Edtech Market Size

According to a report by Ken Research, Vietnam has emerged as one of the fastest-growing online education markets worldwide, with a remarkable compound annual growth rate (CAGR) of 44.3% in the online education sector. Projections indicate that the market is set to reach a value of US$3 billion by year end 2023.

This rapid growth is a testament to the increasing demand for online education in Vietnam. Factors such as improved internet accessibility, the proliferation of mobile devices, and a growing emphasis on digital learning have contributed to the surge in online education adoption. In addition to that, accelerated by Covid-19, students and parents are used to the concept of online learning. As technology continues to advance and the benefits of online learning become more apparent, Vietnamese learners are embracing digital platforms to enhance their educational experiences.

FDI Inflow into the Edtech Sector

As indicated in a report by GetJSC, the Vietnamese edtech market has experienced substantial investment activity, positioning it as one of the top four industries capturing investor interest in Vietnam. In 2022 alone, the market attracted over US$30 million of investment capital, indicating its growing significance and potential. Continuing this momentum, the early months of 2023 witnessed a series of significant investment deals in the Vietnamese edtech landscape, coinciding with a wave of unexpected layoffs in prominent tech companies.

To be specific, in April 2023, MindX, a Vietnamese startup specializing in technology skills training and programming, secured a notable investment of $15 million from Singapore-based Kaizenvest. This injection of funds is expected to provide crucial support for the expansion and development of MindX in the edtech market.

Furthermore, Vietnam Education Group EQuest recently announced a successful fundraising round on May 19, resulting in a total capital raise of $120 million from KKR, through the Global Impact Fund. EQuest intends to allocate the newly acquired funds to enhance its K12 Online Marketing and School Management System.

Additionally, in May 2023, Teky Alpha JSC, another edtech company focused on coding training for younger students, successfully secured US$5 million in investment from Singapore's Sweef Capital Investment Fund, with participation from Strategic Year Holdings. The investment is expected to facilitate Teky's expansion of educational services within the public education system and the provision of extracurricular programs catering to children aged 5 to 18.

These substantial investments underscore the attractiveness of Vietnam's edtech sector for both local startups and international investors. As the digital economy continues to thrive, edtech is poised to receive increased attention and investment in the foreseeable future. The dynamic nature of the market presents vast opportunities for innovation, collaboration, and transformative advancements in the Vietnamese education sector.

Dominant Players in Vietnam’s Edtech Playfield

The EdTech industry in Vietnam is rapidly growing and drawing inspiration from the global EdTech landscape. In addition to importing products from foreign companies, domestic enterprises are also asserting their position in the local market.

Source: Vietnam Edtech Report 2023

The number of new businesses registering in the EdTech sector is increasing at a rapid pace. In 2022 alone, Vietnam's EdTech sector witnessed significant activity with over 100 new EdTech companies emerging and attracting foreign investment.

Prominent software companies in Vietnam, including FPT, Viettel, and VNPT, are recognizing the potential of the EdTech sector and actively developing products to cater to its demands.

Furthermore, online teaching applications and platforms like CoderSchool, Marathon, Elsa, and AI Clevai have successfully secured multimillion-dollar investments as they compete to capture users in the market.

Domestically, Vietnamese companies are dominating the EdTech landscape, with LeGia Group leading the way in providing and operating technology experience centers that utilize modern technologies like virtual reality and augmented reality. Other companies, such as Thien Ha Xanh, offer Azota - an assignment and grading software to support schools, as well as the WEWIIN online school platform that supports blended learning in Vietnam.

The STEAM/STEM education segment has also flourished in Vietnam in recent years, particularly in grade 12, aiming to enhance students' technology knowledge. Leading companies in this segment include Vinarobot and Sunbot.

However, the EdTech market in Vietnam is still relatively new and emerging. Existing EdTech products only address a small portion of customer needs. Although there is great potential for development and a diverse range of product offerings, the quality and distribution of these products vary. EdTech platforms developed for schools and businesses are still in their infancy and lack significant promotion. Currently, more than 80% of EdTech companies in Vietnam primarily focus on the 12th-grade and foreign language markets. Within each category, products tend to be highly similar, and differentiation has yet to be fully realized.

Final Thoughts

Vietnam's EdTech market is experiencing remarkable growth and presenting lucrative investment opportunities. The sector's rapid expansion, coupled with the country's strong commitment to education and digital transformation, makes it an attractive prospect for those seeking to make an impact and achieve significant returns. At Viettonkin Consulting, we specialize in guiding investors through the intricacies of Vietnam's EdTech market. With our deep understanding and expertise, we can help you identify high-potential investment opportunities and navigate the sector with confidence. Partnering with us will provide valuable insights and strategic guidance for making informed investment decisions.

Now, stay tuned for our next article, where we will delve into the future outlook and forecast of the EdTech industry in Vietnam. We will examine emerging trends, growth opportunities, and key factors driving the sector's continued expansion. Don't miss out on the valuable insights that will help you stay ahead of the curve and make well-informed investment choices in Vietnam's thriving EdTech market.

Take advantage of Viettonkin Consulting's consulting services to unlock the full potential of Vietnam's EdTech sector. Contact us today to embark on a successful investment journey and capitalize on the exciting prospects that lie ahead.

Vietnam’s education sector has gained more attention in the recent decade. Compared to five years ago, the number of foreign investment projects in Vietnam's education has climbed by 321, with a total registered capital of about US$3.5 billion. According to the deputy minister, however, foreign investment in education has not been commensurate with its potential. Particularly, Vietnam's early childhood education still holds great opportunities to seize.

The Government’s supporting policies in early childhood education

According to Vietnam's Culture and Education Policy (1972), education for children ages between three and five is preschool education. There are 2 main forms of school:  state-run (public) preschools and non-state (private) ones. State-run kindergartens account for almost half of Vietnam’s preschool system. Besides, there are private kindergartens that use Vietnamese as the main language of teaching, and international kindergartens located in major cities that use English as the medium of instruction.

Over the last 10 years, the Vietnam Government has significantly softened its approach to foreign investment. Although there are still foreign ownership restrictions in place for a number of sectors, education is one of the exceptions. However, it is still a sector in which the Government has approval authority over foreign investments.

To encourage investment in kindergartens and K-12 schools, in 2018, the Government published Decree No.86/2018/ND-CP replacing Decree No.73/2012/ND-CP. Under the old regulation, the proportion of Vietnamese students in international schools must be 0-20 percent depending on the stage of education. 

However, under the new Decree No 86, Vietnamese students can make up roughly half of all pupils in schools. This paved the way for increased investment in kindergartens and K-12 institutions.

It used to be difficult for parents to enroll their children in international schools. Mainly the well-off parents could afford to send their children to these schools. However, thanks to the new law, middle-class families are also sending their children to international schools.

In 2021, The Ministry of Education and Training (MOET) has announced a draft decree updating Decree 86 of 2018. It concentrated on regulations on management of joint education programs toward higher efficiency and transparency.

Notably, the draft includes private preschool education institutions and private general education institutions to the list of businesses that can collaborate on education with foreign parties. To mitigate the financial burden of investors investing in the education sector during the early stage, the draft allows investors to disburse investment capital according to a set roadmap. 

However, it still requires them to commit to completing the contribution of investment capital within five years after obtaining an operation license. For the year 2021-2025, the Government continues to develop more favorable conditions to increase investment in education and preschools particularly.

Urban migration increases demand in preschool education institutions

The major cities' economy is developing rapidly and attracting a large number of workers and employees. As a result, urban migration in Vietnam is rapidly increasing: Every year, around 1-1.2 million individuals migrate to cities. 

According to Urbanet, Vietnam's six major cities will grow significantly by 2030. The population of Ho Chi Minh City will grow by about 4 million people to 11.1 million over the next decade. Hanoi, the country's capital and second-largest city, is expected to grow by 2.7 million people to 6.4 million.

Consequently, the demand for preschool education institutions is occuring at a rapid pace. However, urbanization puts strain on the educational system. It exhausts the capacity of public schools. According to the ministry, the number of preschool aged students increases by 250,000 every year. In the last 10 years, the number of private and public kindergartens increased by 2,634. Meanwhile, the number of children went up by 1.5 million.

Nguyen Ba Minh who heads the Department of Early Childhood Education (ECED) stressed that early childhood education is a must. However, due to urban population explosion, the sector has faced difficulties in meeting the rising demand. For example in 2020, Ho Chi Minh City had nearly 880 private kindergartens. However, the number of classrooms available fell short of demand, and the number of students per classroom remained too high.

Vietnam now has nearly five million children aged three to five years old. At this time, it is advisable for investors to expand the number of private kindergarten classes to meet the huge demand in several big cities like Hanoi, Hai Phong and Ho Chi Minh. 

Expanding middle income population increases demand in private and international preschools

Parents in Vietnam place a high value on their children's education. One of the key drivers of education investment in Vietnam is the increase in income and the growth of the middle class. Vietnam has had stable GDP growth of between 5% and 7% from 2013 to 2017, and average incomes of its citizens grew by a CAGR of 11.6% from 2012 to 2016. 

By 2030 or earlier, the middle class is predicted to reach 40% of the population. This growing middle class will lead to higher demand and consumption of non-necessity products and services, such as world-standard education mainly available in international schools.  

Furthermore, Vietnam has a favorable demographic structure for the growth of the education sector. It has a population of more than 96 million people, 60% of whom are under 40 years old and 34.4%  living in metropolitan areas. 

People of the 7x-8x and even 9x generations - those with a good education and high income – are starting to have children. These young parents have a great desire for high-quality education. They are willing to invest more to ensure that their children have access to the necessary knowledge and skills.

Moreover, Vietnam has been progressively integrating into the global market as a developing economy. This results in a growing demand for high-quality human resources. Having a good education background can improve individual competitiveness in the future. 

Therefore, Vietnamese parents are seeking an international education environment where their children can be proficient in English and obtain a global-citizen mindset at a young age. For that reason, investing in international institutions that use English as the medium of instruction would yield great benefits for investors. 

The impact of Covid-19 pandemic

Due to the Covid-19 outbreak, several private kindergartens have been forced. This resulted in a preschool crisis in Hanoi and Ho Chi Minh City. According to the education ministry, 28,500 kindergartens across the country had to suspend operation during the lockdown, while 584 private schools were dissolved.

Since April 2022, students have returned to school, even the preschool-aged students. However, because too many private kindergartens were to stop operations due to financial difficulties, state-run schools were too overloaded when the children returned to the class. 

The prolonged lockdown also resulted in the alarming shortage of preschool teachers. Meanwhile, the number of students per class increased significantly. Vietnam is lacking qualified local instructors and teachers. This is why foreign talents are very important and are an appealing reason to invest in the education sector.

Deputy Minister Nguyen Van Phuc expressed his hope that Vietnam would have more private education institutions by both domestic and foreign investors. The Vietnam Government always supports and provides favorable conditions for investors in this sector, he added. 

With comprehensive knowledge of Vietnam’s education sector, Vietonkin can help you set up your education business in Vietnam. Our experts who are experienced and familiar with the market are confident to help investors seize the most valuable opportunity!