Experts discuss role of private universities

Update: September, 01/2014 - 10:05
During the last 20 years, the private university system in Viet Nam has been facing a number of challenges, including an insufficient management framework, an unfair competitive environment as well as discriminatory attitude and stigma from the public. There has also been debate on whether it is possible to establish a non-profit private university. Viet Nam News reporters spoke with education experts about how to help private universities develop in a sustainable manner.

Can you describe the development of private universities in Viet Nam?

Le Truong Tung

Dr. Le Truong Tung, principal of FPT University, and vice chairman of the Viet Nam Association of Non-Public Universities and Colleges

After 20 years of development, the system of private universities in Viet Nam now trains around 12 per cent of students nationwide. With such a low proportion — much lower compared to the region and the rest of the world (the average proportion of non-public university students worldwide is 30 per cent) — the contribution of private universities in higher education in Viet Nam is still modest.

On the other hand, the Government's policies are creating huge disparities between public and private schools.

Some private universities in such a difficult context cannot operate well. This has created a bleak picture for private university education in Viet Nam. However, there are some private schools that operate well, but a few cannot change the whole picture.

This issue has two sides: one negative aspect is the gloomy picture, as I have said, but on the other hand, there are positive aspects: the pressure to consider changing the Government's policies to develop private universities. Because of the limited State budget, higher education in Viet Nam can only develop if the system of non-public universities develops.

If higher education does not develop, then national competitiveness will be threatened. The Government has also pointed out in a resolution on enhancing national competitiveness that it is necessary to privatise higher education.

Dam Quang Minh

Dam Quang Minh, general manager of the Institute of American Education

Viet Nam will see the closure of more and more private universities by 2020 if policies for private universities are not amended.

There has not been a fair competitive environment between private and public universities. Public universities receive subsidies from the State for infrastructure, land, and staff salaries, while private universities have to pay these costs.

Moreover, the Ministry of Education and Training's new policies seem to "strangle" private universities. People lose interest in investing in private universities because of the policy that regulates the members of the boards of management of these schools. The rector of private universities is hired by the investors. Representatives of local people's committees and labour unions are also on the board.

With this policy, shareholders are gradually losing ownership of the school.

Because of these policies, investment in private universities has not been an attractive option. Since the beginning of the year, more investors have been selling private universities. Foreign investors have also withdrawn capital.

Nguyen Van Ang, deputy head of the Department of Planning and Finance under the Ministry of Education and Training

Right now, 88 of the 436 universities and colleges in the country are private – about 20 per cent. Private institutions also employ 17 per cent of the nation's teachers and receive 16 per cent of Viet Nam's tertiary students.

Many private universities are well run and are becoming more renowned for the education they provide. They are equipped with modern facilities and a stable supply of teachers – both of which are key foundations of a good education.

However, that's not to say there aren't those who are struggling to perform. That is primarily due to management issues at those schools.

In terms of who is responsible for the direction of training and scientific research at a private school, the rector is in charge – just like in public schools.

The financial and investment decisions of the school, however, are overseen by a board of directors. This board is elected by shareholders based on their capital contributions, meaning that a person with a larger share of capital has a greater say on the boards makeup.

It is important to remember that just because someone has a majority stake in the school, they will not have influence over the day-to-day running. They will only be able to influence financial and investment matters through their vote for board directors.

Should Viet Nam's private universities put the matter of profit first when they invest in education?

Tran Vinh Du

Dr. Tran Vinh Du, president of Viet Nam American Training College and Broward College International Center in Viet Nam (Broward College)

From what I know, Viet Nam has very few profitable private universities and colleges. Most private tertiary education institutions in Viet Nam are facing tough challenges right now. Many will crumble and must exit the market in the very near future.

In Viet Nam, the rationale of allowing private and foreign investors to join the education market is that the state budget can no longer shoulder the cost, plain and simple.

If you want private and foreign investors to provide education services, then you will have to accept the fact that most of them are profit-driven. You may have a few super-wealthy business owners who want to build non-profit institutions, but the truth is, with the current stage of development in Viet Nam, they are just too hard to find.

And the bottom line to the society is efficiency of the service providers. If the society has to allocate US$1 for education services, then what will it get back in return? A non-profit player does not necessarily mean an efficient player.

What are the conditions and challenges to establish non-profit schools?

Ang: There is a legal framework for the development of non-profit universities, which has been mentioned in the Law on Higher Education and the Government Decree 141/2013/ND-CP.

In general, to establish a non-profit private university, capital contributors must commit to certain regulations over the structure of the board of directors and its authority. This is binding for the duration of the school's operation.

I believe that is not a legally complex task to establish and operate this kind of school. The biggest difficulty is finding investors who meet two conditions: having the financial resources and the dedication to build the school.

In Viet Nam, few people are attracted to the idea of using their assets to invest in universities as a way of donation. Most consider investment in education an opportunity to make profits.

However, I think we believe that this model will develop in the future. A legal framework for the development of non-profit private universities has been built. A true non-profit university is a society-owned one.

Sponsors only donate initial capital. The school itself will develop during its operation.

Tung: Establishment of a private university, whether for profit or non-profit, is not a national issue. It all depends on the school's founders. If the founders want to establish a private university for non-profit in Viet Nam, no one would ban it. They can also establish a private university for profit according to the law. That's also fine.

International examples show that there are both good and bad non-profit universities, and there are also good and bad universities for profit as well. Students often do not care if their university is for profit or non-profit. Similarly, people use many social services such as healthcare, transport and telecommunications. In fact, all of these are for profit, but most customers only care about the quality of the services.

The first condition for establishment of a non-profit school is that the founder has to establish it as a non-profit organisation, and it must follow the rules of a non-profit organisation like any other non-profit organisations. Currently, there are no general provisions on non-profit organisations in Viet Nam. However, there are regulations on social funds for education service. Based on these regulations, we can establish non-profit universities, and there would not be any dispute in the future.

Foreign non-profit universities usually belong to a religious organisation or a fund established by a wealthy person who initiates the school.

I think in the next 10 years, there will be many wealthy people with a good heart, many of whom would ask, with my strong financial capacity, what can they do for society? Investment in non-profit education is one of the possible answers, I think.

Minh: The legislative framework for developing private universities on a non-profit basis is insufficient. Regulations for the operation of private non-profit or for-profit universities are not clear. Moreover, policies have also prevented both non-profit and for-profit private universities from developing.

Du: Many claim to be non-profit private universities and colleges, but I don't think there are any that really are. But this is my belief only.

How can private universities develop in a sustainable way?

Tung: To develop private universities in Viet Nam, the best solution as suggested by the World Bank is to limit the development of public universities. With an available State budget, we should reduce the number of public university students, which would help improve the quality of public university education. Also, the Government should create a favourable environment and incentives for private school development.

Du: The government needs to have a clear set of rules – which need to be fair, by the way — for all private players in the education market, and then they should let them play.

The government should refrain from interfering too often, changing rules or regulations too often, and creating too many barriers for market entry. The market will do the rest. I have seen many private providers doing great jobs in the K-12 school segment and some private providers doing a reasonably good job in the tertiary education segment. We need to have more of those.

Minh: The State should amend policies to create a fair environment for private schools to develop. We should allow the owners of private schools to choose an operational model; operating for profit or non-profit is OK. In other countries, especially in developing countries, the two models co-exist.

Students only pay attention to the quality of private universities, and do not care whether they are for-profit or non-profit.

Can you describe the development of private universities in other countries?

Du: We are still a developing country with a very low-income level. It is futile to implement a model copied from a developed country to Viet Nam. It is better to learn from countries that are one or two decades ahead of us (such as Thailand, South Korea, China, India and others) instead of those centuries ahead of us (such as the US or UK). What those countries have been doing is similar to what I mentioned earlier.

Is it possible that we could establish a non-profit private school in Viet Nam in the next few years?

Tung: Yes. But firstly we need to establish a Viet Nam non-profit university fund, for example, and raise money for this fund. The fund will be established according to Decree 30/2012/ND-CP.

It would be very encouraging if every dong raised for the fund would be equalled by the Government. Someone has agreed to raise VND2.5 billion (US$118,000) for the fund if the State also agrees to contribute the same amount, to have an initial VND5 billion ($236,000) to set up the fund, according to Article 12 of Decree 30/2012/ND-CP.

It would be good if a locality agreed to provide 30 hectares of cleared land at an appropriate location to build the school. It would also be encouraging if there would be an individual who is willing to contribute an amount of money that is large enough to establish the school, instead of mobilising capital from various sources. This individual has the right to name the fund and name the school.

In order to operate the school well, we need to have a qualified staff that have both ability and heart. A truly non-profit university must have a clear orientation for operation, and strong financial capacity, and it should bee a place that attracts qualified management staff and teachers. — VNS