Vietnam’s first non-state university, Thang Long University, was founded in 1988 by a group of intellectuals. It had to wait for five years to be recognised as a successful pilot of a non-state higher education model.
After this a series of legal frameworks were enacted to regulate three different types of non-state universities: those ‘people-founded’ institutions established by social and professional associations; private universities set up by corporates or individuals; and those which are semi-public – set up by the state but wholly financed by private income.
However, because of the sensitivities in a communist country, no private university was allowed. The remaining two types of non-state university enjoyed more than a decade of stability and prosperity.
An uneasy introduction
The government officially legalised private universities in 2005. A few months later, the new version of the Education Law, passed by the National Assembly, recognised only two types of non-state universities, namely people-founded and private. The semi-public model was phased out.
A year later, the prime minister allowed the first 19 people-founded universities to transfer to private status, with the remaining expected to follow suit. However, that transfer is still incomplete despite detailed guidance from the Ministry of Education and Training issued in 2014.
One reason for the delay is the significant differences in ownership between people-founded and private universities. The management board of people-founded universities consists not only of investors but also the university’s founders, the rector, faculty representatives etc.
By contrast, investors are the sole owners of private universities, holding the highest decision-making authority. Hence, it was difficult to reach an internal consensus on the transfer of a people-founded university to private status.
For many of those that did reach a consensus, private university status brought more uncertainty than opportunities. Hung Vuong University started and completed its transfer in 2010. However, an internal dispute quickly arose and affected the Ministry of Education and Training. Both the chairman of the management board, a known businessman, and the rector were dismissed after revelations of wrongdoing by inspectors and student recruitment was suspended.
In 2016, after firing hundreds of staff and faculty the dying university had only a handful of staff and around 50 students left, but a huge debt of more than US$2 million. This was difficult to believe for a university founded by a noted doctor and professor, led by committed faculty and with over 10,000 students in its heyday before the transfer.
Hung Vuong shared the same fate as many first-generation people-founded universities. In the early 1990s, the private economy emerging from the Doi Moi (Innovation) policy in 1986 was still immature. Capitalists and investors with stable financial resources were almost non-existent.
Hence, initial investment in non-state universities came from hundreds of people, some of whom contributed non-monetary assets. In such cases, determining the value of non-monetary assets so contributors could be compensated, as was required during the transfer process, proved complicated. Once that obstacle had been overcome, another one lay in waiting.
In the mid-2000s, entrepreneurs and corporates who had prospered from the country’s amazing economic growth started targeting private universities as super-profitable investments. With abundant financial resources, they quickly secured management positions in those universities and turned them into money-making machines.
Inside these universities were two opposing factions: committed faculty who prioritised education quality and investors whose ultimate goal was maximising profit.
This sort of turbulence was not the only thing private universities had to face. They have also been thrown into direct and fierce competition with public universities that are usually the first choice for high school graduates.
It is not the low, subsidised tuition fees that attract these students, but the quality of education offered and the chance to get a recognised graduate degree. However, public universities, constrained by state funding, must deal with the enrolment quota set by the ministry. This unintentionally means that private universities are able to recruit those students who fail to get into public universities.
The situation has changed significantly since 2014 when several top public universities were approved to pilot a financial autonomy scheme. This means they will no longer have to rely on state funding and are free to set their own student recruitment quotas.
Currently, 13 public universities, several of which are national elite universities, have piloted this scheme and Deputy Minister of Education and Training Professor Bui Van Ga has said the number of public universities applying for the scheme will not be capped. This policy puts private institutions in direct battle with public ones, a fight which private institutions are much less likely to win.
Not-for-profit private higher education
‘Not-for-profit’ status emerged for the first time in the Higher Education Law of 2012. Two years later, not-for-profits were more clearly defined in the University Charter as universities where “shareholders receive dividends in proportion to their shareholding, although the dividend must be lower than state bond rates”.
The legal emergence of ‘not-for-profits’ in 2012 brought problems that were equally severe as those which surfaced in the case of private status transfer. Internal conflicts arose immediately inside many private institutions that had been for profit. The not-for-profit model, often coupled with the kind of liberal education synonymous with the Ivy League, is appealing to educators. By contrast, investors in private universities saw the model as posing a serious threat to their investment.
These fierce internal conflicts turned Hoa Sen University, a high-performing private university that was highly valued by employers, upside down. The rector claimed that the university had been not-for-profit in its original design in the early 1990s. However, a group of shareholders held an extraordinary meeting and voted against her and the board chairman, who was also an intellectual inspired by the not-for-profit model.
For the two years following the introduction of the new policy, news of internal conflicts at the university hit the headlines and sparked heated debates among educators, policy-makers and society at large. The battle finally ended just before the close of 2016 when the government officially recognised the new management board which immediately dismissed the tenacious rector and re-directed the university back to the ‘normal’ path of private higher education, despite faculty and student protests.
A gloomy outlook
In 2013, the Vietnamese higher education system consisted of 428 institutions, 85 of which were private. Private universities enrolled almost 270,000 students, accounting for roughly 13% of total enrolment numbers. Compared with the target of 40% by 2020 set by the Higher Education Reform Agenda in 2005, the current percentage is too modest. Most doubt this goal can be achieved.
Private higher education, whether for-profit or not, has proven to be a successful model in many countries. However, this does not seem to be the case in Vietnam, due to many factors, including political ones.
The battle between ‘private’ and ‘for-profit' education and political sensitivities due to the country’s communist background, combined with an inconsistent approach, have hampered the growth of private institutions. What is more, the number of students in private institutions has shown signs of stagnation. All of these factors collectively paint a gloomy picture for private higher education in Vietnam.