1. STRATEGIC CHOICES FOR VIETNAMS HIGHER EDUCATION Dr. Nguyen Thien Nhan Deputy Prime Minister, Minister of Education and Training Socialist Republic of Vietnam Kuala Lumpur, Malaysia Dec. 3, 2007

2. 2 VIET NAM OVERVIEW Land330.900 km2 Population84 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 MemberSince November, 2006

3. 3 ECONOMIC GROWTH 1996-2006 - 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. 4 RATE OF GROWTH IN SECTORS 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 Added value

5. 5 CHANGES IN EMPLOYED POPULATION BY ECONOMIC SECTOR 2000200120022003200420052006 Total employed population in three sector (x1,000)37,61038,56339,50840,57441,58642,52743,347 Agr., Forest, Fishery24,48124,46824,45624,44324,43124,34324,123 Industry and construction4,9305,5526,0856,6717,2177,7408,193 Service8,1998,5428,9679,4599,93910,44511,032

6. 6 TREND OF EXPORTATION 2000-2006 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. 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. 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. 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 SIDEON SUPPLY SIDE New challenges

10. 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. 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. 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 (d emand-side)

13. 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.) Supply-side

14. 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 INDUSTRYS SKILL REQUIREMENTS )

15. 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)2000200220042006 Total expenditure …............................ In which: - budget expenditure ………. - privates expenditure ……. 25,70133,14349,42773,186 18,38622,54134,87254,798 7,31510,60214,55518,388 Ratio of private/total expenditure (%)28.4631.9929.425.1

16. 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. 17 PUBLIC/PRIVATE EXPENDITURE ON EDUCATION

18. 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 efficiency of production & service Government Policy and Administration Vicious Circle of Higher Education Development in Vietnam (1986-2007) Limited private contribution Weak linkage with industry Education management quality limited Neglecting of training quality Limited quality of faculties Limited ICT application

19. 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 ICTs year in education)

20. 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 industrys 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. 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. 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. 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. 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. 25 THANK YOU THE END