Currently, investment and development of preschool education are an urgent need of society. So, what is investment in establishing preschool education institutions, and what are related issues surrounding such an investment? Let's explore current legal regulations on this matter with NPLaw below.
I. Current situation of investment in establishing preschool education institutions
At present, investment and establishment of preschool education institutions are increasingly developing and receiving attention in Vietnam. The government has introduced policies to support and encourage the effective management of preschool education to improve the educational quality at these institutions. However, some challenges still exist in the investment and establishment of preschool education institutions, such as:
- Lack of infrastructure: Many preschool education institutions still do not meet required standards for infrastructure, classrooms, playgrounds, toys, etc.
- Insufficient quality of teachers: Recruiting and training a high-quality team of teachers remains a major challenge.
- Complex administrative procedures: The process and procedures for establishing a preschool education institution are still quite complicated, creating difficulties for investors.
- High investment costs: Establishing and equipping preschool facilities, along with hiring qualified teachers, requires a significant amount of capital.
- Intense competition: The competition in the preschool education sector is increasing, especially in major cities.
In conclusion, despite receiving government’s support and attention, the investment and establishment of preschool education institutions still face many challenges that need to be addressed to improve the quality and effectiveness of such sector in Vietnam.
II. Understanding investment in establishing preschool education institutions
1. What are conditions for investors to establish preschool education institutions? What infrastructure and equipment are required for preschool education institutions with foreign investment capital?
Pursuant to Article 3 of Decree 46/2017/ND-CP on investment and operational conditions in the education sector, conditions for establishing public preschools, kindergartens, and daycare centers (nurseries), as well as permitting the establishment of private and people-founded preschools, kindergartens, and daycare centers (nurseries), are as follows:
- A proposal for establishing a preschool, kindergarten, or nursery must align with the local socio-economic development plan and the education network plan approved by the competent state authority.
- The proposal must clearly determine objectives, tasks, curriculum, and educational contents; land, infrastructure, equipment, and intended location; organizational structures, financial and human resources; as well as strategic development directions.
Pursuant to Article 36 of Decree 86/2018/ND-CP, preschool education institutions must meet the following infrastructure and equipment requirements: .
- School must be located in a well-conditioned area. The building area is determined based on the number of classes and children with an average of at least 8m2/child for urban areas and 12m2/child for rural areas.
- There are classrooms, children's bedrooms, and functional rooms with adequate space, lighting, tables, chairs, equipment, and supplies for childcare and education.
- There are school offices, principal's offices, administrative offices, medical rooms, security rooms, and staff rooms with adequate space, equipment, and supplies for management, care, nurturing, and education of children.
- There is a clean water system, drainage system, and suitable restrooms with safe and clean sanitary equipment to meet all school activities.
- There is a kitchen organized according to a one-way operating procedure with appropriate equipment and supplies, ensuring food safety and hygiene if the school organizes cooking for children.
- There is a playground, a fence surrounding the school area, and a school gate with a sign clearly stating the school's name as prescribed in Article 29 of this Decree.
- There are green trees in the school area. All construction designs, equipment, supplies, and toys of the school must ensure absolute safety for children.
2. Forms of investment in establishing preschool education institutions
Preschool education services with foreign investment are not included in Vietnam's service commitments under the World Trade Organization (WTO).
However, based on Article 28 of Decree 86/2018/ND-CP, preschools are among the types of education facilities allowed to receive foreign investment. Foreign investors are permitted to establish foreign-invested preschools in Vietnam without restrictions on capital contribution ratios.
Thus, foreign-invested preschools are allowed to be established in Vietnam under Decree 86/2018/ND-CP, which governs foreign cooperation and investment in the education sector.
III. Legal regulations on investment in establishing preschool education institutions
1. Processes and procedures for investing in the establishment of a preschool education institution
Processes and procedures for establishing a preschool education institution is stated in Clause 3, Article 31 of Decree 86/2018/ND-CP, as follows:
Establishing a preschool education institution, general education institution, or higher education institution with foreign investment shall follow these steps:
- Issuance of the Investment Registration Certificate;
- Issuance of a Decision on Establishment Approval;
- Issuance of a Decision on approval for educational operations and publication on the licensing authority's official website.
2. Required dossiers for establishing a preschool education institution
Pursuant to Clause 2, Article 6 of Decree 46/2017/ND-CP (amended by Clause 3, Article 1 of Decree 135/2018/ND-CP), a necessary dossier for obtaining the approval to operate a preschool education institution include:
- An application for educational operations.
- A copy issued from the original register, a copy certified from the original, or a copy accompanied by the original for comparison of the decision or approval for establishment of the preschool, kindergarten, or nursery.
- A list of main leadership personnel including the principal, vice principals, and professional team leaders, clearly stating their intensive qualifications; a list of teaching staff, clearly stating their qualified professional; employment contracts (labor contracts) signed between the kindergarten, preschool, or nursery and each management staff member and teacher;
- Programs and materials for implementing the preschool education program;
- A list of the number of classrooms, offices, facilities, and equipment that meet the prescribed conditions;
- Legal documents: a confirmation of land use rights or a lease agreement for headquarters with a minimum term of 05 years; confirmation of the existing funds managed by the kindergarten, preschool, or nursery, ensuring legality and commitment to using them solely for investment in construction and expenses for their regular activities after being permitted to operate educationally; and a plan for capital mobilization and subsequent capital balancing to ensure stable operations of 05 years, starting from the time of enrollment;
- Organizational and operational regulations of the kindergarten, preschool, or nursery.
Thus, to establish a preschool, an application for establishment approval, a detailed project proposal, and compliance with the outlined procedures are required. The Chairman of the District People's Committee holds the authority to approve the establishment of the preschool.
IV. Questions related to the investment in establishing preschool educational institutions
1. How much investment capital is required for investing in the establishment of a preschool educational institution?
The minimum investment rate for an investment project to establish a preschool educational institution with foreign investment capital is stipulated in Clauses 1 and 6, Article 35 of Decree 86/2018/ND-CP as follows:
- An investment project to establish a preschool educational institution must have an investment rate of at least 30 million VND/child (excluding land use costs). The minimum total investment capital is calculated based on the time of the highest expected scale. The investment capital plan must be consistent with the expected scale of each stage.
- An investment project to establish a general education institution must have an investment rate of at least 50 million VND/student (excluding land use costs). The minimum total investment capital is calculated based on the time of the highest expected scale, but not less than 50 billion VND.
- An investment project to establish a short-term training and retraining institution must have an investment rate of at least 20 million VND/learner (excluding land use costs). The minimum total investment capital is calculated based on the time of the highest expected scale.
- An investment project to establish a higher education institution must have a minimum total investment capital of 1,000 billion VND (excluding land use costs). Foreign-invested economic organizations as project investors must demonstrate their financial capacity in accordance with the Law on Investment. By the time of appraisal for the establishment of the higher education institution, the investment value must be over 500 billion VND.
- An investment project to establish a branch of a foreign-invested higher education institution in Vietnam must have a minimum investment capital of 250 billion VND (excluding land use costs). By the time of appraisal for the establishment of the branch, the investment value must be over 150 billion VND.
- For foreign-invested educational institutions that do not build new facilities but only lease them or have Vietnamese parties contribute capital with existing facilities to implement operations, the minimum investment level must reach 70% of the levels specified above.
Therefore, according to the above regulations, an investment project to establish a preschool educational institution must have an investment rate of at least 30 million VND/child (excluding land use costs). The minimum total investment capital is calculated based on the time of the highest expected scale.
Accordingly, foreign-invested preschool educational institutions that do not build new facilities but only lease them or have Vietnamese parties contribute capital with existing facilities to implement operations, the minimum investment level must reach 70% of the above level.
2. Authority to permit the establishment of preschool educational institutions
Pursuant to Article 52 of the Law on Education 2019, which stipulates the authority and procedures for establishing or permitting to establish; permitting educational operations, and suspending educational operations; merging, dividing, separating, and dissolving schools, as follows:
(1) The authority to establish public schools and permit the establishment of people-founded and private schools is stipulated as follows:
- The Chairman of the District People's Committee decides for kindergartens, preschools, primary schools, secondary schools, multi-level schools with the highest level being secondary school, and ethnic minority boarding schools, except for the cases specified in Point d of this Clause.
- The Chairman of the Provincial People's Committee decides for high schools, multi-level schools with the highest level being high school, ethnic minority boarding schools, and intermediate schools in the Province, except for the cases specified in Points c and d of this Clause.
- The Minister or Head of a ministerial-level agency decides for intermediate schools under their management.
- The Minister of Labor, Invalids and Social Affairs decides for colleges, except for colleges of education.
- The Prime Minister decides for higher education institutions.
(2) The Minister of Education and Training permits educational operations for higher education institutions. The authority to permit educational operations for schools at levels and other training levels is implemented according to the Government's regulations.
(3) The entity with the authority to establish or permit the establishment also has the authority to revoke the decision or approval to establish, and decide to merge, divide, separate, and dissolve the school. Besides, the entity with the authority to permit educational operations has the authority to suspend educational operations.
In the case of a merger between schools that are not established by the same level of authority, the higher level of authority decides; in the case of equal levels of establishment, their competent authorities agree to decide together.
In addition, Clause 1 of Article 4 of Decree 46/2017/ND-CP stipulates that the Chairman of the District People's Committee decides to establish public kindergartens, preschools, and nurseries or permits the establishment of people-founded and private kindergartens, preschools, and nurseries.
Therefore, the Chairman of the District People's Committee has the authority to decide to establish a preschool.
V. Consulting services and procedures related to investing in the establishment of preschool educational institutions
The above is all the detailed information that our NPLaw provides to assist our client with the issue of investing in the establishment of preschool educational institutions. If you have any further questions related to the above issues or other legal matters, please contact NPLaw immediately for our team to provide direct consultation and guidance for resolution.
