Comprehensive guide to foreign investment in the education sector in Vietnam

Foreign investment in the education sector in Vietnam opens up opportunities for the development of high-quality education but also requires strict compliance with legal regulations. This article provides a consolidated overview of investment forms, benefits, legal requirements, and frequently asked questions, enabling investors to clearly understand their rights and obligations while minimizing legal risks during operation.

I. Introduction to Issues Related to Foreign Investment in the Education Sector

In the context of globalization, many foreign companies are interested in investing in the education sector in Vietnam in order to expand their markets and enhance the quality of education and training. Such activities include the establishment of educational institutions, cooperation with domestic schools, implementation of international training programs, or provision of consultancy and professional training services.

However, foreign investment in education also requires strict compliance with legal regulations on licensing, management of training activities, and protection of learners’ rights. A proper understanding of the applicable legal framework is a fundamental basis for successful investment.

II. Overview of Foreign Investment in the Education Sector

To gain a comprehensive understanding of the role and operations of foreign companies investing in the education sector in Vietnam, it is necessary to analyze the forms of investment, training programs implemented, benefits generated, and mandatory legal requirements applicable to investors.

1. What Forms of Investment May Foreign Companies Use to Invest in the Education Sector?

In practice, foreign companies wishing to invest in education in Vietnam may choose from various forms, depending on their objectives, scale, and educational level. Pursuant to the Law on Education 2019 (Article 54) and the Law on Investment 2020 (Article 23 on investment activities), foreign investors may select the following forms:

• Establishment of wholly foreign-owned educational institutions: Covering levels from preschool and general education to higher education, allowing full operation and management by foreign investors.
• Joint ventures with Vietnamese educational institutions: This form combines international management experience and training programs with the existing facilities of Vietnamese schools.
• Establishment of training facilities or skill centers: Such as foreign language centers, information technology centers, or professional skill training centers, which often do not require the establishment of an independent legal entity.
• Establishment of branches of foreign universities in Vietnam: Permitting the direct implementation of training programs in Vietnam in accordance with international standards.
• Joint training programs: Conducted in cooperation with Vietnamese institutions without establishing a new legal entity, suitable for short-term courses or international transfer programs.

All of these forms must comply with regulations on licensing, training programs, and facility standards under Vietnamese law and may be applied flexibly depending on the field and level of education targeted by the investor.

2. What Training Programs May Foreign-Invested Educational Institutions Organize?

Pursuant to Article 28 of Decree No. 86/2018/ND-CP (as supplemented by Clause 12, Article 1 of Decree No. 124/2024/ND-CP), foreign-invested educational institutions may implement:

• Short-term training and refresher programs: Including skill-based courses, foreign languages, information technology, or short-term professional training.
• Preschool education institutions: Including kindergartens and nurseries with foreign investment.
• General education institutions: Including primary schools, lower secondary schools, upper secondary schools, or multi-level general education schools.
• Higher education institutions: Universities offering formal undergraduate, master’s, and doctoral programs.
• Branches of higher education institutions: Branches or campuses in Vietnam of foreign universities implementing training programs in accordance with international standards.

Accordingly, foreign companies may select training models that align with their investment strategies, ranging from short-term courses to higher education and advanced research.

3. What Are the Benefits of Foreign Investment in the Education Sector?

Foreign investment in the education sector in Vietnam brings about numerous practical benefits, including but not limited to:

• Enhancement of education quality: Application of international curricula, teaching methodologies, and educational management practices, enabling students to access global education standards.
• Expanded learning opportunities and capacity development: Students gain opportunities to develop skills and knowledge in line with international standards, enhancing their competitiveness in the labor market.
• Attraction of foreign capital: Contributing to the development of educational infrastructure and facilities, and creating employment opportunities for teachers and education professionals.
• Promotion of international cooperation and scientific research: Encouraging academic exchange and research, thereby elevating Vietnam’s education sector regionally and globally.

In summary, foreign investment not only improves the quality of education but also contributes to sustainable development and the international integration of Vietnam’s education system.

4. Are Foreign Companies Investing in the Education Sector Required to Obtain Licenses?

Pursuant to Article 45 of Decree No. 86/2018/ND-CP, in order for a foreign-invested educational institution to operate, investors are required to complete the relevant registration procedures and satisfy the following conditions:

Establishment License or Investment Registration:

• A decision permitting the establishment of the educational institution, or an Investment Registration Certificate and an Enterprise Registration Certificate (applicable to short-term training institutions).
• Satisfaction of Operational Conditions:
• Fulfillment of requirements regarding investment capital, facilities, educational programs, and teaching staff.
• Internal Regulations on Organization and Operation:
• Formulation and promulgation of regulations governing the organization, management, and operation of the educational institution.

Accordingly, the registration of licenses and compliance with the above conditions are mandatory for foreign companies to lawfully engage in Foreign Investment in the Education Sector in Vietnam.

III. Legal Regulations Applicable to Foreign Investment in the Education Sector

Foreign investment activities in the education sector in Vietnam are primarily governed by the Law on Investment 2020 and Decree No. 86/2018/ND-CP on foreign-invested education. These legal instruments clearly define the conditions for establishment, forms of investment, rights and obligations of investors, as well as procedures for registration and management of educational activities, thereby ensuring that such investments are conducted lawfully and in line with national policies.

1. What Does Vietnamese Law Provide Regarding Foreign Investment in the Education Sector?

Pursuant to the Law on Investment 2020 and Decree No. 86/2018/ND-CP, foreign companies investing in the education sector in Vietnam must comply with the following principles and conditions:

Forms of Investment (Article 23 of the Law on Investment 2020):

• Foreign investors may establish educational institutions directly or cooperate with domestic organizations and educational institutions, including short-term training institutions, preschool, general education, higher education institutions, or branches of universities.
• Licenses and Operational Conditions (Article 45 of Decree No. 86/2018/ND-CP):
• Educational institutions must obtain a decision permitting establishment or an Investment Registration Certificate and an Enterprise Registration Certificate (for short-term training institutions), and fully satisfy conditions regarding investment capital, facilities, training programs, and teaching staff.
• Internal Regulations on Organization and Operation (Article 45 of Decree No. 86/2018/ND-CP):
• Educational institutions are required to adopt internal regulations on organization and operation in compliance with Vietnamese law.
• Business Lines and Market Access Conditions (Article 9 of the Law on Investment 2020, as guided by Section 2, Chapter II of Decree No. 31/2021/ND-CP):
• Investors must comply with market access conditions applicable to conditional education sectors under the Law on Investment 2020, as well as regulations on national defense, security, and other relevant specialized laws.

In summary, these regulations are intended to ensure that all foreign investment activities in the education sector in Vietnam are lawful, transparent, and aligned with the national education development strategy.

2. Are There Mandatory Requirements for Dossiers When Foreign Companies Invest in the Education Sector?

Pursuant to Articles 46 and 48 of Decree No. 86/2018/ND-CP (as amended and supplemented by Decree No. 124/2024/ND-CP), the dossier for registration of educational activities by foreign companies must include the following components:

• An application for registration of educational activities in the prescribed form.
• A certified copy of the decision on establishment of the educational institution or the Investment Registration Certificate, and the Enterprise Registration Certificate for short-term training institutions.
• Internal regulations on organization and operation of the educational institution.
• A report on the progress of the investment project, including capital, facilities, educational programs, and teaching staff, enclosed with lists of managerial personnel and lecturers, curricula, teaching materials, regulations on enrollment, training, tuition fees, assessment and evaluation, diplomas, and certificates.
• Additional documents applicable to preschool and general education institutions delivering foreign curricula, including: subject curricula, written recognition by the competent educational authority of the country of origin, evidence that the curriculum has been taught for at least five (05) years, and written approval for the use of such curriculum in Vietnam.

Accordingly, the dossier must be complete and valid for a foreign-invested educational institution to be permitted to operate in Vietnam.

3. What Legal Consequences May Foreign Companies Face if Violations in the Education Sector Are Detected?

Pursuant to Clause 2, Article 50 of Decree No. 86/2018/ND-CP, a foreign-invested educational institution may be subject to suspension of educational activities if it commits one of the following violations:

• Fraud in obtaining establishment or permission to operate educational activities;
• Failure to maintain the conditions required for permission to operate educational activities as prescribed by the Decree;
• Permission for educational operation granted by an authority lacking competence;
• Violations of education laws to the extent that suspension is required under administrative sanctions;
• Other cases as prescribed by law.

The competent authority granting permission for educational operation shall be responsible for issuing the decision on suspension, and during the suspension period, the institution must ensure the legitimate rights and interests of learners, teachers, and employees.

Violations of education laws not only adversely affect the operation and reputation of the institution but may also result in suspension or termination of activities, thereby causing serious consequences for foreign investors engaged in Foreign Investment in the Education Sector in Vietnam.

IV. Frequently Asked Questions Regarding Foreign Investment in the Education Sector

Below are common questions that foreign investors frequently raise when investing in the education sector in Vietnam, with a view to clearly understanding their rights, obligations, and potential legal risks.

1. What policies are in place to protect the interests of foreign companies investing in the education sector?

Pursuant to Article 32 of Decree No. 86/2018/ND-CP (as supplemented by Clause 15, Article 1 of Decree No. 124/2024/ND-CP), Vietnam provides multiple mechanisms to protect the lawful rights and interests of foreign-invested educational institutions, specifically as follows:

Protection of lawful rights and interests:

• Educational institutions are protected in accordance with Vietnamese law and international treaties to which Vietnam is a party (Article 32).
• Commitments on quality and finance:
  Investors are required to publicly disclose commitments regarding training quality and financial revenues and expenditures; in the event such commitments are not fulfilled, the institution must refund tuition fees to learners.
• Protection of interests upon termination of operations:
  In cases where an institution is suspended or its operations are terminated, the lawful rights and interests of learners, lecturers, and employees must be safeguarded through lawful refunds or compensation.
• Ownership of separate assets:
  Foreign educational institutions are entitled to have their own bank accounts and seals in accordance with the law.

In summary, Vietnam safeguards foreign investors’ property, financial interests, personnel-related rights, and quality commitments in the education sector, thereby ensuring a transparent, safe, and equitable investment environment for Foreign Investment in the Education Sector.

2. What restrictions apply to foreign companies investing in the education sector in Vietnam?

In practice, when investing in education in Vietnam, foreign companies are subject to several specific restrictions, including:

• Restrictions on types of educational institutions:
  Foreign investors are only permitted to establish preschool, general education, short-term training, higher education institutions, or branches of universities as prescribed in Article 28; they may not unilaterally establish other types of institutions beyond those permitted by law.
• Restrictions on training programs:
  Foreign curricula must be appraised and recognized by competent authorities prior to being applied to Vietnamese learners.
• Restrictions on capital ownership:
  Foreign ownership ratios in educational institutions subject to market access conditions must not exceed the prescribed limits; certain specialized education levels are subject to stricter limitations on foreign capital.
• Restrictions on enrollment and learner management:
  Institutions must comply with regulations on age, academic qualifications, and enrollment standards as issued by the Ministry of Education and Training.
• Restrictions on land use and facilities:
  The use of land and facilities must satisfy legal, national defense, and security requirements, particularly in sensitive areas.

These restrictions reflect Vietnam’s legal and regulatory framework, ensuring that foreign educational activities are lawful, of high quality, and safe for learners.

3. How is the licensing process for foreign companies investing in the education sector carried out?

Pursuant to Article 48 of Decree No. 86/2018/ND-CP (as amended and supplemented by Clause 28, Article 1 and Clause 1, Article 2 of Decree No. 124/2024/ND-CP), foreign-invested educational institutions seeking to operate in Vietnam must carry out the procedure for registration of educational activities as follows:

Step 1: Preparation of the registration dossier

• Application for registration of educational activities (Form No. 16, Appendix to Decree No. 86/2018/ND-CP).
• Certified copies or copies accompanied by originals for comparison: decision on establishment (for educational institutions) or investment registration certificate/enterprise registration certificate (for short-term training institutions).
• Internal regulations on organization and operation of the educational institution.
• Report on the progress of the investment project, capital contribution, loan status, and total implemented investment capital.
• Explanatory report on compliance with conditions relating to capital, facilities and equipment, educational programs, and teaching staff.
• List of managerial personnel and lecturers; description of education levels, curricula, teaching plans, learning materials, training regulations, training scale, tuition fees, assessment and evaluation regulations, and samples of diplomas/certificates.

Step 2: Dossier for foreign education programs (if any)

• Subject curricula and mandatory educational content.
• Written recognition of educational quality from the competent authority of the country of origin or a valid accreditation certificate.
• Documents evidencing that the program has been delivered for at least five (05) years in the country of origin.
• Written approval for the use of the program in Vietnam.

Step 3: Place of dossier submission

• Ministry of Education and Training: dossiers for higher education institutions and branches of foreign-invested universities.
• Provincial Departments of Education and Training: dossiers for short-term training institutions, preschools, and general education institutions, including those established by foreign diplomatic missions or intergovernmental international organizations.

Note: For preschools and general education institutions delivering foreign programs, the Department of Education and Training shall submit the dossier together with its opinions to the Ministry of Education and Training for approval of the program.

Step 4: Appraisal and licensing

• The competent authority receiving the dossier shall coordinate the appraisal of conditions and submit it to the competent authority for decision.
• Time limit for settlement:
  Thirty (30) days for preschools and general education institutions delivering foreign programs; twenty (20) days for other cases, calculated from the date of receipt of a complete and valid dossier.
• If the dossier is invalid, the authority shall notify the applicant in writing within five (05) days.
• If the institution fails to meet the required conditions, the authority shall issue a written response stating the reasons within five (05) days.

This procedure ensures that foreign-invested educational institutions operate lawfully, meet requirements on quality, facilities, teaching staff, and training programs, and comply with Vietnamese law in the context of Foreign Investment in the Education Sector.

4. What policy changes may affect foreign companies investing in the education sector?

Foreign companies investing in the education sector in Vietnam should pay close attention to changes in laws and policies, as such changes may directly affect their rights, obligations, and business operations. Key areas of potential change include:

• Changes in licensing conditions and management of educational activities:
  Amendments to regulations on minimum capital requirements, facilities, teaching staff, training programs, or education levels may require companies to adjust their facilities, curricula, or dossiers in order to maintain lawful operations.
• Policies on foreign education programs:
  Changes to standards for recognition of foreign programs, requirements for quality accreditation certificates, or appraisal of educational content may affect the feasibility of implementing teaching programs.
• Regulations on ownership and foreign investment in the education sector:
  Any adjustment to the maximum foreign ownership ratio, restricted business lines, or market access conditions may directly impact shareholder structure, investment capital, and the ability to expand operations in the context of Foreign Investment in the Education Sector.
• Changes in taxes and fees related to educational activities:
  Amendments to tax laws or administrative fees, including corporate income tax, licensing fees, or other financial obligations, may affect operating costs and financial planning.
• Updates to regulations on inspection, examination, and sanctions:
  Changes in supervision mechanisms, enforcement measures, or rules on suspension of operations may increase legal risks and affect the day-to-day operations of educational institutions.

In general, any policy change relating to licensing, training programs, ownership ratios, operating conditions, or taxes and fees should be closely monitored by foreign companies to ensure compliance and mitigate legal risks.

5. What legal risks may foreign companies investing in the education sector encounter?

In practice, when investing in education in Vietnam, foreign companies may face a number of significant legal risks, including:

• Licensing and regulatory compliance risks:
  If registration dossiers are incomplete or fail to meet statutory conditions, the educational institution may be denied a license or be subject to suspension of operations.
• Risks related to training programs and educational quality
  The application of foreign programs that are not recognized or that fail to meet quality standards may result in requirements for rectification or suspension.
• Risks concerning ownership, capital contribution, and foreign capital ratios:
  Violations of limits on foreign ownership ratios or investment in restricted sectors may lead to rejection of applications or mandatory restructuring of the shareholder structure.
• Financial and tax risks:
  Failure to comply with tax obligations, fees, or financial regulations applicable to foreign-invested educational institutions may result in administrative penalties or tax arrears.
• Human resources and management risks:
  Failure to ensure that teaching staff and managerial personnel meet statutory requirements may prevent the institution from operating or result in sanctions.

These risks require foreign companies to conduct thorough legal due diligence, ensure full regulatory compliance, and closely monitor policy changes in order to minimize adverse impacts on investment activities in Foreign Investment in the Education Sector.

V. Are you seeking a reputable legal expert to support matters relating to foreign companies investing in the education sector?

If you are a foreign investor in the education sector and wish to ensure compliance with Vietnamese law, NPLaw is ready to accompany you by providing comprehensive legal advisory services, from dossier preparation to the resolution of arising legal issues, thereby safeguarding your lawful interests and optimizing the investment process.