STRATEGIC CHOICES FOR VIETNAM’S

HIGHER EDUCATION

Dr. Nguyen Thien NhanDeputy Prime Minister, Minister of Education and Training

Socialist Republic of Vietnam

Kuala Lumpur, Malaysia

Dec. 3, 2007

2

VIET NAM OVERVIEW

Land 330.900 km2

Population 84 mil.,1.2% growth rate

GDP 2006 USD 60 billion.

GDP per capita 729 USD

HDI 0.709 (109 of 177)

Economic Growth 2006 8.17%

WTO Member Since November, 2006

3

ECONOMIC GROWTH 1996-2006

Trends of GDP since 1986 up to 2006

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

Years

Rta

e o

f g

row

th(%

)

- High and stable growth with an annual average of 7,33%

- GDP in year 2006 doubled as compared to that in 1996

- Impact of economic crisis of South East Asia region, 1998-2000

- From 2000 up to now, a continuous increase in GDP

- In the year 2006, GDP increased by 8,17% and income per capita was 729 USD

4

RATE OF GROWTH IN SECTORS

GROWTH IN AGRICULTURE, INDUSTRY&CONSTRUCTION, SERVICE SECTORS

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

YEARS

x bi

llion

. VND Agr.m Forest, Fishery

Industry

Service

1996 -2006, the average rate of growth in the industry & construction sector: 10.3% annually

Service sector: 7.3%

Agriculture, forest and fishery: 3.9%

Industry and service sectors require a large amount of skilled workforce and high demand for appropriate training

Add

ed v

alue

5

CHANGES IN EMPLOYED POPULATION BY ECONOMIC SECTOR

0.0

5000.0

10000.0

15000.0

20000.0

25000.0

30000.0

35000.0

40000.0

45000.0

50000.0

2000 2001 2002 2003 2004 2005 2006

Years

La

bo

r (x

10

00

) Total labor

Agricultural labor

Industrial&constructionlabor

Service labor

  2000 2001 2002 2003 2004 2005 2006

Total employed population in three sector (x1,000) 37,610 38,563 39,508 40,574 41,586 42,527 43,347

Agr., Forest, Fishery 24,481 24,468 24,456 24,443 24,431 24,343 24,123

Industry and construction 4,930 5,552 6,085 6,671 7,217 7,740 8,193

Service 8,199 8,542 8,967 9,459 9,939 10,445 11,032

6

TREND OF EXPORTATION 2000-2006

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15000.0

20000.0

25000.0

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35000.0

Years

Va

lue

(x

10

00

US

D)

Total

Primary Products

Manufactured Products

1. Since 2000 up to 2006 the average growth of exportation has been 19.3%

2. In 2006, exportation made up 65 % of GDP (in 1991, it was 24 % of GDP)

Trend :2001-2006

Trend :1996-2000

7

STRUCTURE OF EXPORTATION

1. Agriculture-forest- fishery goods decreased from 52%in 1990 to 24.3%

in 2001 and remained 20.5 % in 2006

2. Industrial and handicraft goods increased rather fast: 33.9% in 2001,

39.0% in 2006

3. Fuel and mineral products changed from 21.6 % in 2001 to 23.4% in

2006

4. Vietnam belongs to the leading group of exporting some products:

- 4.6 mil. tones of rice: Number 2 worldwide

- The world's largest robusta coffee, cashew nuts and pepper exporter.

- Garment and textile: Number 10 worldwide

- Civil ship export: Number 7 worldwide

8

EXPORTATION WHAT SHOULD BE EXPORTED?

• Exporting primary (raw) materials

• Assembly-based, manufacturing industry labor

intensive, low value-added, low effectiveness

• Why?

No master of design, distribution and trading

Labor cost of making a shirt = 1USD, but sold for 30 -

50 USD (labor cost equals to 2-3% of price); the labor

cost of making a suite = 6 USD, but sold for 300 - 600

USD (labor cost equals to 1-2% of price)

Most profits remain with design and trading

9

NEW WAVE OF INVESTMENT IN HIGH TECH

Foreign companies invest in big projects of high-

tech industry with capital size from hundreds

million USD to billions USD.

New opportunities

ON DEMAND SIDE ON SUPPLY SIDE

New challenges

10

NEW WAVE OF INVESTMENT IN HIGH TECH

1. Intel Product Company- Invested in a project of USD 1 billion =>requires 1000

engineers specialized in electrical engineering, electronics, information technology, automation

2. Renesas company of Japan- To build a design center in Vietnam =>needs 1.000

engineers. - All of functions of design centers in Japan and the United

States will be transferred to the Vietnam Renesas Center

3. Hon Hai corporation – Taiwan (China), investing in Vietnam. - Global turnover => 60 bil. USD /year- Products: electronic products used in mobile, computer

part, telecommunication, and home electronics- Next five years, to invest USD 5 bill.=> needs over 50.000

workers

11

NEW WAVE OF INVESTMENT IN HIGH TECH

4. Campal company – Taiwan (China) investing in Vietnam Production of laptops and electronic products First phase of the project USD 500 mil. in Vinh Phuc Recruiting 1200 engineers to train them oversea Huge demand of skilled workers

5. Quang Trung Software Park in Ho Chi Minh City 78 enterprises and 32 investment projects; 46 foreign enterprises

from 14 countries (United States, Japan, France, Swiss, Korea,

Thailand...) Total capital of 150 mil. USD Employees: 3,100 engineers and IT experts 4.500 IT undergraduate students are trained in international and

domestic university programs

12

Biggest challenges For investors:

Difficulties in finding professionals and highly skilled workers while paying low labor costs (300-500 USD/month) compared to other countries.

For Vietnam:

- Risk of missing opportunities to attract foreign investors to manufacture and export high-tech products. - inappropriate skills and knowledge lead to miss opportunity for development.

Trend 1: investment for manufacturing and exportation of high-tech products in next 10-20 years (demand-side)

13

Trend 2: Outsourced research services for foreign companies (demand-side)

Example of India: Outsourced research services for US companies (IBM, GM, Microsoft,…)

Competitive advantages of India:- A number of good research universities (high quality of engineers, masters, PhD.); English as second language- Low labor cost compared to USA(Expectation: by 2015, 800,000 workers for outsourced research with 30

billion USD income)

Opportunities for Vietnam: Increasing need of outsourced research from companies in the developed countries (demand-side)

- Labor: low cost, hardworking, good basic education, learn willingness, innovative, adaptive to changes- 300,000 oversea Vietnamese engineers, scientists in the developed countries- Improved quality of the best universities in Vietnam (National University in Hanoi, and in HoChiMinh City, German-Vietnamese Uni.)

Sup

ply-

side

14

- 322 universities and colleges (47 private HEIs, account for 15%)- 1.5 million students (4 year bachelor degree)- 170 students /10,000 citizens- 52,000 faculties (teaching staff), ratio of students to faculty (29 student/faculty)

7,000 PhD. Holders as faculties (about 13.5% total teaching staff) 463 professors, 2,467 associate professors

- Few research at universities (3% of universities revenues)- Weak linkage with the industry- Obsolete equipment for teaching and research, outdated curriculum and

teaching method- Low funding low spending on teaching and research

HIGHER EDUCATION 2007

LOW QUALITY OF GRADUATES

(DO NOT MEET THE INDUSTRY’S SKILL REQUIREMENTS )

15

- State budget for education increased from 4.2% of GDP in 2000 to 5.6% in 2006;- Private contribution fluctuated between 1.7%- Total funding from public and private sectors increased from 5.8% of GDP in

2000 to 7.5 % of GDP in 2006, mainly from the increase of public budget- The ratio of private sector expenditure to total expenditure on education: 25.1%

in 2006

FUNDING FOR EDUCATION

Expenditure on education (bil. VND) 2000 2002 2004 2006

Total expenditure …............................In which: - budget expenditure ………. - private’s expenditure …….

25,701 33,143 49,427 73,186

18,386 22,541 34,872 54,798

7,315 10,602 14,555 18,388

Ratio of private/total expenditure (%) 28.46 31.99 29.4 25.1

16

ISSUES ON FUNDING FOR EDUCATION

1. Expenditure on education per capita is still low; For example: In

2006 the expenditure for a person: ≈ 54 USD (over 1 USD per

week) and about 203 USD per student (0.56 USD/student/day)

2. Expenditure for universalization at primary and lower secondary

education accounts for 52% of the total budget for education

3. Expenditure for kindergarten and general education accounts for

71% of the total education budget

4. The remaining share of budget for workforce training from semi-

skilled workers to higher education was only about 15%

5. Average expenditure on higher education is just about 400

USD/student/year

=> quality of education and training is an issue

17

PUBLIC/PRIVATE EXPENDITURE ON EDUCATION

Public/private expenditure on education

18,386.0022,541.00

34,872.00

54,798.00

7,315.0010,602.00

14,555.0018,388.00

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10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

2000 2002 2004 2006

Years

Bil

lio

n (

x100

0)

VN

D

Public Expenditure onEducation

Private Expenditureon education

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Vietnam as a poor country

Low budget for education

Low income of household

Low spending

on education

Low quality of facilities

Low salary of faculties

Low quality of graduates

Small scale of HE

Low

effi

cien

cy o

f pr

oduc

tion

& s

ervi

ce

Government Policy and Administration

Vicious Circle of Higher Education Development in Vietnam (1986-2007)

Limited private

contributionW

eak

linka

ge w

ith

indu

stry

Edu

catio

n

man

agem

ent

qual

ity

limite

d

Neg

lect

ing

of

trai

ning

qua

lity

Lim

ited

qual

ity o

f fa

culti

es

Lim

ited

ICT

ap

plic

atio

n

19

FIVE SOLUTION DIRECTIONS

1. Introducing performance – based system in education

management

1.1. Performance standards for teachers and instructors

1.2. Contract-based employment for all teachers and faculties

1.3. Faculty evaluation by students

1.4. Introduction of credit system at universities

1.5. Promoting ICT application for institutions (next year is the ICT’s

year in education)

20

FIVE SOLUTION DIRECTIONS

2. Improving autonomy, efficiency and accountability of HE institutions

Benchmark-based regulation of student size of universities

Quality assessment and ranking of universities (Hanoi

Declaration of ASEAN Ministers of Education, Nov. 23, 2007)

Allow HEIs to collect higher tuition (recently 150

USD/student/year)

Student size-based (instead of institution based) support from

Government

Performance and demand-based competition for research fund

from the Government

Introduction of financial audit of universities and publication

Encouraging industry’s participation in training programs of

universities

Training courses on professional development of universities’

presidents

ICT application for management at university and the Ministry

…to be continued

21

SOLUTION DIRECTIONS

3. Improving the efficiency of financial management of HE Introduction of student loan scheme to support poor

students Student related financial support from Government (instead

of institution related) Funding for national target programs: high standard

universities (advanced foreign training programs at 9

universities, German- Vietnamese Uni., National Uni.; program of

training 20,000 PhD. from 2008-2020; 13 years English teaching

program) Improving financial management information system International donors support education

…to be continued

22

FIVE SOLUTION DIRECTIONS

4. Further decentralization

Delegation of decision making autonomy to local government and HE

institutions

Enhancing the responsibilities of the ministry in policy design, long-

term strategic planning in cooperation with other ministries;

Improving quality assurance and effective monitoring and evaluation

Improving professional collaboration of HE by establishment of the

national councils of university presidents and faculty directors in order

to improve quality education and training

…to be continued

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5. Developing 2-tier higher education system

Research universities including high standard research universities

o Hanoi University of Science and Technology

o German-Vietnamese University

o Hanoi, and HoChiMinh City national University

o 14 recognized research-oriented universities

o In future: 25-30 research universities.

Universities of applied science and colleges (approximately. 300 Uni. and colleges)

FIVE SOLUTION DIRECTIONS…to be continued

24

THE PHILOSOPHY OF THE SOLUTION

World market

World education

Demand-led

Vietnam Higher education

Research capacity building

Local market

Local education

Demand-driven

Vietnam Higher education

Supply-pushed

Local market

Local education

World market

World education

?

2008

2012

2020

2040

25

THANK YOU

THE END