Regulations relaxed for vocational investments

The launch of the fresh Decree No.15/2019/ND-CP outlining the implementation of the Law on Vocational Education is expected to ease procedural difficulties for foreign investors to open vocational training schools in the country, and to improve the quality of local labourers. 

According to the Ministry of Labour, Invalids, and Social Affairs (MoLISA), over the past few years, the local education and vocational training sector has seen a large number of foreign investors wishing to establish vocational training schools in Vietnam. However, due to a lack of specific regulations stipulating conditions on establishing such facilities, opening these schools has thus far met with support.

Discussing the issue with VIR, Mac Van Tien, director of the MoLISA’s National Institute for Vocational Education, said that there are currently around 300 foreign-funded education and vocational training schools, including training of foreign languages and informatics accounting for the majority, with a very few number in vocational training.

The Korean International Cooperation Agency in Vietnam (KOICA Vietnam), which partnered with the Bac Giang’s People’s Committee to open the Vietnam–Korea Vocational College of Technology in 2012, has faced problems on procedures to open such schools.

According to the Agency, the time to finish procedures and get school building permits was more than a month, but the introduction of Decree 15 hopes to change that.

“The project for establishment of the vocational college relate to some ministries and localities which are responsible for getting the project investment policy and project documentation approved. The biggest difficulty was the long delay to get such permit and approval, affecting the project progress and budget plan priorly agreed between donor and recipient partner.”, a KOICA’s representative clarified.

A new lifebuoy

On February 1, 2019, Prime Minister Nguyen Xuan Phuc issued Decree No.15/2019/ND-CP providing guidelines and implementation of the Law on Vocational Education, which will take effect on March 20, 2019 (see box for details).

The decree is considered to be a new breakthrough in the educational sector as it is believed to help remove difficulties on investment procedures related to opening foreign-invested vocational training schools.

Tien said before this change, Decree No.86/2018/ ND-CP was the only document outlining regulations on foreign-invested educational training schools, but with a focus on kindergarten and university. Therefore investors wishing to establish vocational training schools have been stuck with unsuitable regulations in the country.

“There were no certain legal basics to assure them with investment in vocational education. Therefore, the launch of Decree 15 aims to resolve these troubles,” Tien said. “Decree 15’s new features mainly focus on specifying order and procedures for opening foreign-invested vocational training schools. The changes are expected to favour investors to adapt investment procedures.”

Under Decree 15, the time to complete procedures and grant a permit to carry out a venture will be 15 days. For invalid dossiers, the licensing agency takes the obligation to notify foreign investors for revising and supplementing dossiers within three days.

“Difficulties for foreign investors will be resolved more quickly,” Tien added.

Priority on tech sectors

The government is also providing incentives to open schools specialised in international, regional, and national key sectors, as stipulated in Decision No.1839/QD-LDTBXH.

Accordingly, new tech segments like Big Data, blockchain, and data mining, will receive priority to develop. In particular, the government is favouring foreign investors by facilitating a grant for 20,000 square metres of land, classed as a minimum area in order to open vocational training schools in suburbs or rural areas.

“Vingroup’s VinFast complex was exempted from import duties when it first established vocational school training automobile assembly in the northern port city of Haiphong,” Tien said.

He also said that international investors are highly interested in opening vocational schools training technology segments, following closely by fashion outlets, beauty services, and restaurant establishments.

Over the past few years, Vietnam has housed several foreign-invested vocational education institutes like Bosch’s Technical Industrial Apprenticeship, and Hyundai’s KOICA Dream Centre.

Jobs related to technology and Industry 4.0 are forecast to explode in the country over the next few years due to global trends and Vietnam’s participation in international integration.

According to online recruitment service Navigos’ latest report, the trend on recruiting personnel working in data mining, blockchain, deep learning, machine learning, and Artificial Intelligence (AI), will continue to increase at a huge rate this year. In 2018, the demand for recruitment of positions related to blockchain has grown by 140 per cent compared to 2017, in finance, banking, e-commerce, and retail.

Ngo Thi Ngoc Lan, regional director of Navigos Search, told VIR, “Two-thirds of candidates surveyed said that businesses are interested in new technologies such as blockchain, AI, and machine learning, while a quarter said their companies plan to apply new tech in the near future, lifting the demand to recruit also.”

Experienced recruitment

Improving the quality of local labourers to meet Industry 4.0 standards is one of the leading targets behind the launch of Decree 15. Over the past few years, the local market has suffered from a serious shortage of experienced labourers in related sectors.

The latest VietnamWorks survey calculated that if the growth rate of IT personnel stays at 8 per cent in the next few years, Vietnam will be short of an extra 78,000 employees annually. By 2020, this shortage will exceed 500,000.

Lan said that due to the tough recruitment arena of Vietnamese IT engineers, foreign enterprises operating in this field must recruit experts from abroad. “Currently, human resources for new technology are still lacking of both quality and quantity. In the context of transition towards Industry 4.0 and the strong development of the digital trend, not only will technology-related businesses need relevant engineers, but other companies using tools or products related to technology platforms will require a team of tech engineers to grow,” Lan added.

Tien from the MoLISA’s National Institute for Vocational Education stated, “Our statistics show that Vietnamese labour quality ranks nearly bottom in Asia, with an average of 3.7 out of a 5-point scale. Companies require 4.5 points at least. While South Korean labourers’ points for foreign language are 7.0 out of a 10-point scale, Vietnamese sits at 4.0.”

To fulfil the shortage, improving quality of local labourers is necessary. According to Tien, foreign-invested vocational schools will help.

“We all know that Vietnam welcomes foreign investors but they will be selected carefully. Investors need to meet conditions and training in the priority category. Conditions are very strict about training programmes, training facilities, the trainer-trainee ratio, and advanced training technology tested by the host country,” Tien added.

Decree 15’s Clause 9 stipulating the conditions to establish foreign-invested vocational tranining schools

Any project would need to be in line with national planning of vocational training. The investor must obtain at least 1,000 square metres of land for a basic vocational training centre; 10,000sq.m for a secondary-level school in urban areas, or 20,000sq.m in suburbs or rural areas; 20,000sq.m for college-level schools in urban areas, or 40,000sq.m outside urban areas.

The foreign investor would be required to possess at least VND5 billion ($217,400) in investment capital to open a vocational training school, and VND50 billion ($2.17 million) and VND100 billion ($4.34 million) to open a secondary vocational training school and vocational college, respectively.

Planned training curricula would have to meet requirements of Item 1, Article 34 of the Law on Vocational Education, and not contain content that might threaten national defence and security, propagate religious ideology, or present warped views of history, and cause negative influence on Vietnamese morals, culture, and customs.

Vocational training schools would need to make sure that Vietnamese trainees are taught obligatory subjects as per regulations by the Ministry of Labour, Invalids and Social Affairs.

The decree specifies conditions for establishment of a branch or another campus of a foreign-invested ¬secondary vocational school and college, which include a project to establish said branch, with statements ¬clarifying necessity; the name and scope of operations; and a development plan.

The investors who wish to establish another branch of vocational training would need to present a contract or agreement on the lease of infrastructure and facilities for a minimum of five years, with investment capital reaching at least 25 per cent of that required to establish full-fledged vocational training schools of the corresponding levels mentioned above.

Source: VIR