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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
0.0
5000.0
10000.0
15000.0
20000.0
25000.0
30000.0
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
0.00
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
18
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
23
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