Experts say that investments should bring a return, but in the context of education, the outcome is human development. It's important to think carefully about how much profit can be reinvested for future benefits and to avoid making decisions based on profits alone.
The Chairman of the Board of Directors of an educational institution in Ho Chi Minh City said that over a decade ago when he acquired the university, people thought he was mainly there to launder money.
After 14 years of operation, the institution has emerged as one of the largest private universities in the nation. With a student body numbering in the tens of thousands and an annual tuition fee that remains among the lowest at several million Vietnamese dong, the university generates over VND1,000 billion in revenue each year. Following the deduction of expenses, it is common to see profits in the range of several hundred billion Vietnamese dong.
However, without a commitment to continuous learning, reinvestment in infrastructure, and investment in personnel to enhance quality, the institution risks stagnation and losing its esteemed brand. For several years, I have been pursuing expansion into general education, aiming to evolve into a comprehensive educational corporation that encompasses all levels of education.
The recent failures of certain universities and schools have provided valuable insights. It is crucial to recognize that the essence of a university or school transcends mere business operations. If stakeholders insist on treating the institution solely as a profit-driven entity, sustainable growth will be challenging.
A minimum of 0.5 Vietnamese dong from every profit earned in education must be reinvested; otherwise, the risk of decline becomes imminent. Any initiatives aimed at innovation and development must prioritize the human element, empowering educators as stakeholders rather than viewing them as subordinates, as emphasized by the chairman.
Additionally, a former Deputy Minister of Education and Training, who previously directed a regional university, raised a critical concern regarding the allocation of profits generated from educational enterprises. It is alarming if these profits are not primarily directed towards enhancing facilities and modernizing educational methods but instead are diverted to enrich a select few individuals.
First of all, there's a concern that education is becoming too commercialized. However, policymakers shouldn't be too hasty to introduce policies that would limit private investment in education, especially given the current limitations on state budgets. Policy-makers need to come up with a better alternative than just limiting it. On top of that, if private investors are given the green light to pour money into the education sector, they are not prevented from looking for profits or from having a say in how those profits are used.
According to a lecturer of Law at Ho Chi Minh City National University, the current problem is that the 2018 Law on Higher Education only encourages non-profit private universities. So, even though they make a lot of money, many private schools still call themselves non-profit universities. When it comes to general education, there's no mention of whether a school is for-profit or not. Because of this lack of clarity, Vietnam doesn't have the same culture of giving and donating hundreds of billions of Vietnamese dong to education as other countries do.
From another angle, an education manager said that the government can split private investors in education into two groups based on how private universities are run in developed countries. The first group is made up of investors who are looking to make a profit, but who don't use most of the profits to line their own pockets. Instead, they use them to develop and expand the scale and quality of educational institutions.
In developed countries, these schools are known as private universities that aren't run for personal profit. The government gives the school land and almost completely exempts it from taxes with one requirement that over 70 percent of annual profits must be used to increase the physical scale, strengthen the quality of facilities and allocate shares to those who have worked and contributed to the development of the school for 10 years or more. So, just a few years later, these schools have become well-known and respected, with great infrastructure and a high standard of service, and they're still developing and growing.
The second category consists of private universities that choose not to register for the benefits associated with training facilities aimed at enhancing the quality and scale of their operations, unlike the first category. As a result, they do not receive any state incentives. The government permits these institutions to determine their profit margins independently; however, they face significant taxation as they are classified as service businesses.
The revenue generated from these taxes is utilized to bolster the quality of other educational institutions, thereby curbing the concentration of wealth among individuals. Due to the burden of high taxes and the necessity to invest in facility expansion to attract students, many institutions in this category eventually opt to transition to the first type after some time. This shift helps mitigate the risk of educational profits being diverted for personal gain while still promoting private investment in high-quality education.
