Rationale of the research
The field of Edtech has been rapidly growing and evolving in recent years, with a significant impact on the education sector globally Edtech offers innovative solutions to educational challenges, improves access to education, and enhances the learning experience for students Vietnam, as a developing country, has recognized the importance of Edtech and has made significant efforts to improve its education system However, there is still a huge gap between the current state of the education system in Vietnam and the potential it holds.
FDI is a crucial element in boosting the economic growth of a country. Vietnam has been experiencing an increase in FDI in various sectors, but there has been limited investment in Edtech Attracting FDI in the field of Edtech can bring numerous benefits to Vietnam It can provide access to advanced technologies, expertise, and resources that can help enhance the quality of education in Vietnam.
It can also create job opportunities, generate revenue, and stimulate the growth of the economy Additionally, FDI can bring much-needed resources to build the necessary infrastructure, such as high-speed internet and digital devices, to support the growth of Edtech in Vietnam This, in turn, can improve access to education for students in remote and rural areas and help bridge the urban-rural education gap.
Vietnam’s education sector has been developing rapidly in recent years, with the government’s efforts to increase access to education for its citizens Based on World meter elaboration of the latest United Nations data, Vietnam has a young population, with over half of its 96 million people below the age of 35, making it a prime market for Edtech companies The potential for Edtech in Vietnam is immense, with the market size projected to be worth $3 billion by 2023, according to a report by Google, Temasek, and Bain & Company The report highlights that the demand for online education is growing rapidly, and EdTech companies are well-positioned to meet this demand The demand for Edtech services in Vietnam is high due to the country's large population and the growing trend of digitalization.With the right investment, Vietnam can become a hub for Edtech in Southeast Asia.
Literature Review
- The application of educational technology and its role:
Huynh Nhu Yen Nhi published “Applying Educational Technology to Higher
Education in Vietnam: Opportunities and Challenges” in the year 2021 This paper discusses the use of Edtech at Dong Nai Technology University The authors explore how these innovations can help students develop and contribute to society, while also acknowledging the opportunities and challenges they present to Vietnamese universities The authors also provide recommendations for Vietnamese policy makers in higher education (Nhi, 2021).
In “The application of web-3d and augmented reality in e-learning to improve the effectiveness of arts teaching in Vietnam” published in 2019, Nguyen Duc Son analyzed the development of information technology, particularly in Industry 4.0 It has rapidly transformed education in Vietnam, including arts education E-learning is a non-traditional form of education that can bring knowledge across borders and is constantly developing to meet societal needs This paper explores the role of e- lecturers and the use of web-3D technology and augmented reality in innovating art teaching and learning methods in Vietnam By using an interdisciplinary approach, the article proposes solutions to improve the effectiveness of art teaching in
Vietnamese universities through the implementation of e-learning using web-3D and augmented reality (Son, 2019).
“Application of technology in teaching and learning at the University -
Opportunities and challenges for lecturers and students in Vietnam today” was published in 2020 During the Covid-19 pandemic, Vietnam, like many other countries, increased its use of technology in the classroom Online learning has been a crucial tool in maintaining university operations and ensuring output standards. This shift to technology has allowed for more resources and efficient utilization of lecture content The article analyzes the advantages and disadvantages of incorporating technology in the classroom from the perspectives of both instructors and students, using a document-analysis methodology (Vu, 2022).
“Integration or transformation? Looking in the future of Information and
Communication Technology in education in Vietnam” was published in 2015 This study has two objectives: first, to identify targets for ICT in education in Vietnam by consulting key players in the field; and second, to assess the level of consensus among these key players regarding the importance of these targets for 2020 By achieving these objectives, the study also aims to analyze the mindset of these key players regarding the future of education in Vietnam and the role of ICT in it (Jef Peeraer, 2015).
David K.Evans published “Education Technology for Effective Teachers” in
2021 Education systems globally are investing in technology to support effective teaching, with varying levels of success The COVID-19 pandemic has underscored the importance of using technology effectively This note outlines four principles for investing in technology to support effective teaching and identifies six areas where technology can enhance teacher performance, with examples of successful, promising, and cautionary experiences with teacher technologies (K.Evans, 2021).
“Education Technology: An Evidence-Based Review” synthesizes experimental evidence on the effectiveness of technology-based approaches in education and identifies areas for future inquiry The review focuses on access to technology,computer-assisted learning, technology-enabled behavioral interventions, and online learning, drawing on research from both developed and developing countries The goal is to advance understanding of how technology can support education and drive improvements in policies, programs, and structures for successful teaching and learning (Escueta, 2017).
In the research “Importance of Education Technology in Teaching-Learning” published in 2020, M Ali and Sarfaraz Equbal explores the importance of technology in the teaching and learning process, which involves combining instructional and system approaches Education technology is the result of technological innovation in education, aimed at enhancing the learning environment, both in traditional and distance learning settings It involves organizing instructional material in technological tools to facilitate the teaching and learning process, while allowing for flexibility in modifying learning objectives for both teachers and learners (Ali & Equbal, 2020).
Damian Hinds in 2019 published “Realizing the potential of technology in education: A strategy for education providers and the technology industry” The goal is to assist the education sector in England in developing and utilizing technology to reduce workload, increase efficiency, promote inclusion, and ultimately improve educational outcomes However, schools, colleges, universities, and other providers face various barriers to integrating technology effectively This strategy aims to address those barriers and facilitate the integration of technology in education (Hinds D , 2019).
The review article “Upgrading Education with Technology: Insights from
Experimental Research” aims to further academic understanding of how technology can improve education, identify areas for new research, and drive improvements in policies, programs, and structures for successful teaching and learning The authors highlighted the potential for technology to transform learning It also examines the effectiveness of technology-based approaches to education in developed countries,focusing on randomized controlled trials and regression discontinuity studies across four categories: access to technology, computer-assisted learning, technology- enabled behavioral interventions, and online learning The potential for technology to transform learning has generated widespread interest However, with the expanding range of education technologies available, it is important to understand how technology can help or hinder learning (Escueta et al., 2020).
K Lawless in 2016 published the article “Educational Technology” New technologies offer opportunities to enhance learning in ways previously unimagined. The potential for technology to improve the effectiveness of the U.S education system has led to policies mandating technology use in schools and funding research on technology-enabled learning This article reviews the impact of contemporary technologies, such as digital games, social media, MOOCs, and augmented reality, on learners While not comprehensive, the findings aim to stimulate dialogue on how to redefine formal education in the United States and suggest research and policy implications to support new conceptions (K.Lawless., 2016).
- Factors affecting foreign investment in Vietnam
Vu Ngoc Xuan gathered data from 360 surveys conducted among 100 foreign technology companies in Hanoi, Da Nang, and Ho Chi Minh City in his research
“Factors affecting foreign direct investment: Evidence at foreign technology enterprises in Vietnam” Using SPSS software, the author found that the decision of foreign investors is significantly influenced by eight factors, including infrastructure, human resources, quality of public services, investment sector advantage, national brands, investment policy, living and working environment, and competitive input cost Among these factors, human resources and infrastructure have the most significant impact on the decision to invest in Vietnam Based on the findings, the author suggests that the government should introduce policies and services to attract foreign technology enterprises to invest in Vietnam, particularly as Industry 4.0 emerges (Xuan, 2020).
Existing literature on Edtech in Vietnam and worldwide has predominantly focused on defining and explaining Edtech or its role in teaching and learning activities However, there is a gap in the literature regarding the analysis of investment in Edtech or the attraction of foreign investment in Edtech in Vietnam.
As a result, this study was conducted to address this gap in the literature.
Objectives of the research
This thesis aims to provide an understanding of Edtech sector in Vietnam and its potential for foreign direct investment To achieve this, the study has the following objectives: First, identify the current state and potential for growth of Edtech sector inVietnam Second, analyze the factors that influence foreign direct investment in this sector Third, evaluate the policies and regulations that affect foreign investment inEdtech in Vietnam Fourth, propose strategies to attract foreign direct investment inEdtech in Vietnam Fifth, provide recommendations to promote the development of this sector The proposed strategies and recommendations for attracting foreign direct investment will aid in the advancement of the sector, ultimately contributing to the improvement of the country's education system The study will also contribute to the existing literature on Edtech in Vietnam, filling a gap in knowledge regarding investment in this sector.
Object and scope of the research
Object
Attracting foreign direct investment in the field of educational technology in Vietnam
Scope
- Geography: In Vietnam, China, India
- Timing scope for current research: The study will cover the period from 2018 to May 2023
- Timing scope for recommendations and solutions: 2030
Research questions
Some potential research questions could include:
- What are the driving factors for foreign direct investment in the educational technology sector in Vietnam?
- What are the challenges and barriers that foreign investors may encounter when investing in the educational technology sector in Vietnam, and how can they be overcome?
- How do government policies and regulations impact FDI in the education technology sector in Vietnam, and what changes could be made to attract more investment?
Research Method
The research methodology for this study is qualitative method The thesis also combines with other scientific research methods, such as the method of information collection, processing and comparison.
Using secondary sources of information: books, published documents, textbooks, newspapers, the Internet, summative studies related to attracting Edtech FDI.
Method of analysis and synthesis: on the basis of a system of documents,analyze, synthesize, and classify according to the purpose and structure of the thesis.
THEORETICAL BACKGROUND FOR ATTRACTING
Overview of FDI and Edtech
In Imperialism - the final stage of capitalism, Lenin pointed out that the export of capital in order to collect surplus value outside the national borders has become an economic feature of capitalism when it entered the stage of monopoly capitalism. Thus, the appearance and increase of foreign investment is associated with the development of productive forces and the internationalization of economic life in the world Lenin viewed foreign investment as a tool for the exploitation of weaker countries by the dominant capitalist powers, and as a symptom of the contradictions and instability inherent in the capitalist system (Lenin, 1917).
After the Second World War, FDI begins to play a significant role in the global economy and is a topic of numerous theoretical publications FDI, according to economists, is a crucial component of economic growth in all nations, but particularly in emerging ones.
(Hymer, 1960) defines FDI as the acquisition of assets in a foreign country with the aim of exercising control over them According to Kindleberger, FDI is the purchase of real assets in a foreign country with the intention of managing them (Kindleberger, 1969) FDI was defined as the acquisition of a controlling interest in a foreign enterprise (Buckley P J., 1981).
FDI is defined as an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (FDI enterprise or affiliate enterprise or foreign affiliate) (OECD, 1996).
(Caves, 1996) defines FDI as referring to the investment by a firm in a foreign country with the purpose of acquiring or creating a lasting interest in an enterprise operating outside the investor's home economy FDI is a form of international investment in which the investor and the user of investment capital are an entity in which foreign investors contribute a sufficient amount of capital to the permitted production and business fields and directly participate in operating the object in which they invest capital (Mai, 1998).
FDI is a type of business in which foreign private investors invest capital to establish production and business establishments in the host country, thereby allowing them to have the right to manage and operate the objects they invest capital for the purpose of profiting from such investment activities (Tham, 2000).
According to the Law on Foreign Investment in Vietnam 2006, FDI is understood as the fact that foreign investors bring into Vietnam capital in cash or any property to conduct investment activities In essence, FDI is a type of international investment in which the investor invests capital to build or buy a large part or even an entire business establishment in a foreign country to be the owner of the whole or part of the establishment and directly manage or participate in the management and operation of the object in which they invest capital.
The World Trade Organization (WTO) is primarily concerned with the regulation of trade among its member countries However, it also recognizes the importance of foreign direct investment (FDI) for economic development and the integration of countries into the global economy.
In general, the WTO defines FDI as a cross-border investment in which a resident in one country obtains a lasting interest in an enterprise in another country The lasting interest implies a significant degree of influence over the management of the enterprise.The WTO supports a rules-based and non-discriminatory system for FDI that seeks to prevent barriers to investment, such as discriminatory regulations, restrictions on the repatriation of profits or investments, or expropriation without compensation The organization also encourages its members to adopt policies that promote transparency, predictability, and the rule of law in the management of FDI.
Overall, FDI refers to the investment made by a company or an individual in one country, in order to establish business operations or acquire assets in another country This type of investment involves a long-term relationship between the investing company and the foreign country where the investment is made The investing company may choose to either establish a new business entity in the foreign country or acquire an existing one The main objective of FDI is to gain access to new markets, resources, or technologies, as well as to benefit from lower labor and production costs in the foreign country.
Long-term Investment: One of the characteristics of FDI is that it is a long- term investment According to (Kogut & Singh, 1988), FDI is a long-term commitment of capital and resources by a firm to a foreign market This investment is made with the intention of establishing a long-term presence in the host country and to gain access to its markets, resources, and technology As such, FDI is not a short-term investment Instead, it requires a significant commitment of resources, time, and effort to establish and maintain a presence in the foreign market.
Control: Another characteristic of FDI is that it provides the investing company with a significant degree of control over its foreign operations According to Dunning
(1981), FDI involves the transfer of ownership and control of assets from one country to another This transfer of ownership and control allows the investing company to have a significant say in the management and operations of its foreign subsidiary This degree of control allows the investing company to make strategic decisions that are in line with its overall business objectives (Dunning J , 1981).
Technology Transfer: FDI is also associated with technology transfer.
According to Buckley and Casson, FDI involves the transfer of technology and knowledge from the investing company to the foreign subsidiary This transfer of technology and knowledge can take many forms, including the transfer of patents, trademarks, and copyrights The transfer of technology and knowledge from the investing company to the foreign subsidiary can help to improve the competitiveness of the subsidiary and enhance its ability to compete in the global market (Buckley & Casson, 1985).
Risk: FDI is also associated with risk According to Rugman and Verbeke, FDI involves a significant degree of risk due to the uncertainty associated with operating in a foreign market This uncertainty can be caused by factors such as political instability, economic volatility, and cultural differences As such, investing in a foreign market requires a significant degree of risk assessment and management (Rugman & Verbeke, 1993).
In conclusion, FDI is a long-term investment that provides the investing company with a significant degree of control over its foreign operations FDI is also associated with technology transfer and risk These characteristics of FDI are essential in today's global economy, where companies are increasingly looking to expand their operations into new markets As such, understanding the characteristics of FDI is critical for companies that are looking to invest in a foreign market.
The state of investment in Edtech in the world and factors affecting FDI on Edtech 23
1.2.1 The state of investment in Edtech in the world
Figure 3: Global Education Venture Capital Funding, 2021-2022 in USD Billions
During the pandemic, there was a significant decrease in EdTech VC investment from Chinese investors, resulting in lower levels of Chinese VC investment than a decade ago in 2022 However, the US experienced a significant increase in VC funding, including in the EdTech industry, as mainstream investors became more interested in the transformational potential of technology in education, but the market eventually slowed down in 2022 Europe and India also saw significant growth in EdTech VC investment, driven by a few successful startups and a broader base of early stage startups Meanwhile, local leaders in Africa, Latin America, the Middle East, Southeast Asia, and Oceania have scaled to fill gaps in their markets and find new customers globally The rise and moderation of mega-rounds (> $100M) explain much of the structural changes in the market, with 2021 being driven primarily by these large rounds However, there has been a consistent increase in investment in
3 https://www.holoniq.com/notes/2022-edtech-vc-funding-totals-10-6b-down-from-20-8b-in-2021 rounds between $20-50M and below, even as investment in rounds greater than
Figure 4: Global Edtech Venture Capital Funding, 2022 in USD Billions and number of funding rounds
With $10.6B and 1,400+ deals of EdTech Venture funding for 2022, nearly half focused on management systems and learner/ teacher support.
All major funding markets are down on 2021’s record investment totals In
2021, the United States experienced a tremendous increase in funding which decreased by almost half in 2022 Nevertheless, it was still 2.5 times higher than the funding levels in 2019 before the pandemic Europe experienced the biggest increase in funding during the pandemic, and this trend continued into 2022 India has emerged as a strong market In contrast, China has been significantly impacted by significant regulatory changes announced in mid-2021, which have required the market to shift its focus to post-secondary and workforce education rather than its
4 https://www.holoniq.com/notes/2022-edtech-vc-funding-totals-10-6b-down-from-20-8b-in-
2021#:~:text=Sponsors,2022%20EdTech%20VC%20funding%20totals%20%2410.6B%2C%20down%2049
%25%20from,of%202021's%20record%20funding%20total previous emphasis on K12 education, particularly in the areas of tutoring and English language learning.
Figure 5: Education Venture Capital Funding, 2010-2022 in USD Billions
China's dominance in EdTech investment globally was evident through the last decade, as indicated by the red wave, before experiencing a sudden collapse During that period, the US lost its share, but it has since regained the lead, with India and Europe expanding during the pandemic The three regions now comprise 45% of global funding.
In 2021, the global Edtech market was worth $106.46 billion, and it is predicted to see significant growth in the coming years It is expected to grow at an annual rate of 16.5% from 2022 to 2030, and reach $404 billion in 2025, which is 2.5 times more than its value in 2019 North America holds the largest share of the market, accounting for 35% of global revenue due to its significant investment in Edtech The Asia Pacific region is growing the fastest, with a compound annual growth rate of 19% expected from 2022 to 2030, thanks to an increase in smart devices in developing countries like India The number of Edtech unicorns is increasing rapidly,
5 https://www.holoniq.com/notes/87bn-of-global-edtech-funding-predicted-to-2030 with 36 globally as of July 29, 2022 They have raised over $30 billion in the past decade and have a total market value of $105 billion There are eight Edtech unicorns in China, 16 in the USA, and seven in India Edtech has seen impressive growth over the years, with global venture capital increasing from $500 million in
2010 to $16.1 billion in 2021 (a growth of 32x) (Kozhevnikova, 2022).
Figure 6: Global Education Venture Capital Funding, 2010-2022 in USD Billions
Source: HolonIQ, 2 Jan 2023 6 1.2.2 Factors affecting FDI on Edtech
The Edtech industry has experienced significant growth over the past decade, fueled by advancements in technology and increased demand for online education. FDI plays a crucial role in shaping the growth and development of the Edtech sector Several factors influence FDI in Edtech:
A large population: One key factor that determines the attractiveness of a market for Edtech is the size and potential of the target market Countries with large populations are highly desirable for investors in the Edtech sector A significant population means a greater number of potential users for Edtech services and
6 https://www.holoniq.com/notes/87bn-of-global-edtech-funding-predicted-to-2030 products This offers a substantial customer base and revenue opportunities for investors Additionally, a growing population indicates potential for ongoing demand and market expansion, ensuring long-term sustainability for Edtech businesses.
High internet penetration rates: High internet penetration rates are also an important consideration for investors A strong online presence is crucial for the success of Edtech companies, as their services and products are primarily delivered through digital platforms Countries with high internet penetration rates indicate a greater likelihood of widespread access to online education platforms, which in turn increases the market potential for Edtech investors.
A strong demand for education: A strong demand for education is another factor that attracts foreign investors to the Edtech space Countries where education is highly valued and sought after provide a favorable environment for Edtech companies to thrive This demand can stem from various factors, such as a competitive job market, a focus on skills development, or a desire for lifelong learning A robust demand for education ensures a ready market for Edtech solutions and creates opportunities for investors to capitalize on this demand.
Scalability and profitability: Scalability and profitability are key considerations for investors entering the Edtech market The potential for scalability implies that an Edtech business can easily expand its operations and reach a larger customer base This is particularly important for investors seeking significant returns on their investments Alongside scalability, profitability is equally crucial. Investors need to assess the potential for generating sufficient revenue and achieving profitability in the Edtech market A market with high growth potential and favorable market dynamics, such as limited competition or high willingness to pay for educational services, presents a more attractive investment opportunity.
Policy and Regulatory Environment: Investor-friendly policies, such as tax incentives, simplified business registration processes, and clear guidelines for foreign investment are important to attract foreign investors These policies create a favorable environment for companies to establish and operate their Edtech businesses.
Additionally, regulations that ensure data privacy and protection, intellectual property rights, and fair competition are essential for building investor confidence. Companies want to ensure that their investments are protected and that they can compete on a level playing field with other players in the market.
Skilled Workforce: The availability of a skilled workforce is a significant factor influencing FDI in the Edtech industry Investors look for countries with a large pool of talented teachers, instructional designers, software developers, and other professionals who can contribute to the development and delivery of Edtech solutions A skilled workforce allows companies to efficiently develop and implement their products and services Furthermore, government initiatives to promote skill development and education in areas relevant to Edtech can attract foreign investors These initiatives can include partnerships with educational institutions, training programs, and scholarships to encourage the growth of a skilled workforce in the Edtech sector.
Market Competition: The level of competition in the Edtech market is an important consideration for foreign investors Countries with a balanced competitive landscape, where local and foreign players have equal opportunities to operate, are more likely to attract FDI Investors may be discouraged if the market is saturated with dominant local players or if there are significant barriers to entry A healthy level of competition encourages innovation and fosters a dynamic market where companies can thrive and grow.
THE STATE OF ATTRACTING FOREIGN DIRECT
Overview of Edtech market in Vietnam
2.1.1 The development of Edtech in Vietnam
The evolution of EdTech in Vietnam can be divided into five stages During the first stage (2000-2004), the Internet became popular and online learning platforms emerged, resulting in the development of innovative teaching methods such as e-books, interactive videos, and online quizzes and exams These platforms were mainly developed by student groups and instructors The second stage (2006-
2008) saw the emergence of companies like Hocmai, Topica, and Truongxua, which were the first educational technology companies in Vietnam The third stage (2010-
2012) saw the rise of over 100 EdTech projects and products, but customers were not yet willing to pay for them During stage four (2015-2017), technology integration in education became more popular, and consumers were willing to pay for online education Finally, during the fifth stage (2020+), the COVID-19 pandemic accelerated the adoption of technology in education, resulting in the expansion of video conference tools, online evaluations, and virtual classroom platforms The government also started funding the expansion of digital networks and online educational resources (Hien N T., 2020).
In 2018, Edtech Vietnam received a record year of investment with a total capital of about 55 million USD (Hien N T., 2018) Many forms of marketing and distribution are promoted, more foreign units are interested in Vietnam's Edtech market, e-learning for B2B thrives, Edtech products come into better quality, and Edtech segments are implemented Topica Edtech Group is in the Top of the world's largest investments in education technology in 2018, bringing Vietnam into the Top
5 largest investment recipients in this field, behind China, India, the US and on par with France.
Figure 7: 2018 Global Edtech Mega Deals
According to the latest 2019 statistics of Tracxn Technologies, Vietnam has
109 start-ups operating in the Edtech field, these start-ups belong to 11 different segments, including learning management systems, educational models for children, platforms that provides mass online courses, learning aids, foreign language learning platforms, educational platforms for businesses, blended education models, school support tools, school management systems, information technology learning platforms and exam preparation models.
According to the Foreign Investment Agency (Ministry of Planning and Investment), in the first nine months of 2020, the total registered foreign investment capital in the training field reached US$78.89 million, up nearly 58% over the same period in 2019 In which, capital contribution and by share purchase foreign investors in education reached US$51.41 million, nearly double compared to the same period
7 https://www.holoniq.com/notes/2018-mega-edtech-deals in 2019 Korea, Japan, Australia, and China are stepping up their penetration into Vietnam's Edtech market According to Do Ventures' Vietnam Tech Investment Report 2019-H1/2020, Edtech was the third most invested field in Vietnam, after financial technology and e-commerce In 2020, the edtech sector in Vietnam received about 8 million USD in investment, there is a slowdown in investment speed due to the epidemic This number can only be an estimate because there are many hidden deals that have not been announced Some typical investment deals: Onluyen received investment from Insignia Ventures Partners, Edu2Review received about $200,000 through SharkTank, Elsa received $7 million from Gradient Ventures and other investors, Topica internally invested $3.5 million in Kidtopi, Navigos makes strategic investments in Kyna.vn and Kynabiz.vn, taking control of Kyna's two online learning platforms.
According to Report on Vietnamese Education Technology Male 2021 coordinated by Edtech Agency in cooperation with Management Consulting Company OCD implementation, Vietnam EdTech market attracts a large capital flow from investors with a total investment capital of up to 20.2 million USD in startups, ranked in the top 10 Edtech markets with the largest growth rate in the world with 44.3%. According to a report released by Do Ventures in 2021, EdTech is the 3rd most invested field in Vietnam in the past 8 years in the technology sector More than $158 million is the estimated total investment in Edtech Vietnam in 2021 Edtech continues to be in the top 3 industries that investors care about and pour money into In 2020, the revenue of the edtech industry in Vietnam reach 1.5 billion USD (Edunet.vn, 2023).Many edtech investment deals (11+ announced and dozens of deals have not been announced), many educational technology alliances were built, and foreign units penetrated the Vietnamese market more strongly The biggest Edtech & E-Learning deal of the year belonged to EQuest Education Group, which raised $100 million fromKKR English learning app ELSA also received $15 million In addition to EQuest andELSA, most of the remaining Vietnamese Edtech & E-Learning companies received investments of less than 3 million USD such as MindX
(3 million USD), Coder School and Clevai (2.1 million USD), Marathon Education
(1, 5 million USD), Manabie (3 million USD).
Figure 8: Top 50 Edtech platforms in Southeast Asia in 2022
Source: Vietnam Edtech report 2022 (Hien T N., 2022)
Edupia, Elsa Speak, MindX and Edmicro are four companies that have just entered the top 50 of the HolonIQ global education data platform rankings in 2022. Among the four Vietnamese companies in this year's ranking, the highlight is Edupia (Language Learning category ) - a high-quality online English program In particular, the news that Edupia successfully raised 14 million USD in capital in September was also considered by HolonIQ as one of the most notable deals in the Edtech field of Southeast Asia In 2022, Vietnamese education technology startups received 8 investments with a total amount of 46.8 million USD (Edunet.vn, 2023)
According to Ken Research, Vietnam is among the top 10 fastest growing online education markets globally, Vietnam's e-learning market is expected to reach revenue of around US$3 billion by 2023 with a compound annual growth rate of about 20.2 percent from 2019-2023.
2.2.2 Edtech market segments and customers analysis
Learning Management System: A learning management system is a digital-based platform that functions as a classroom management system for teachers It provides tools and features to help teachers connect with parents and students, manage their learning progress, and share lecture content Some examples of popular learning management systems in Vietnam are Vooy, VNPT School, and Kids online.
Early Childhood Education: Early childhood education platforms offer educational exercises and games specifically designed for young children These platforms aim to provide interactive and engaging learning experiences to support early childhood development Monkey Junior is a popular example of an early childhood education platform in Vietnam.
Broad Online Learning Platforms: Broad online learning platforms offer a wide range of courses and resources in various fields such as math, science, career skills, and life skills These platforms cater to learners of all ages and provide flexibility in terms of course selection and learning schedules Some examples of popular online learning platforms in Vietnam include Edumall, Kyna.vn, FUNIX, and Unica.
Next-Gen Study Tools: Next-gen study tools are innovative learning tools that incorporate technology to enhance studying and improve learning outcomes LIKA and Bigschool are examples of next-gen study tools that offer features such as personalized study plans, interactive learning materials, and progress tracking.
Language Learning: Language learning platforms are specifically designed to support users in learning foreign languages in a simple and convenient way In Vietnam, there are several notable companies in this segment including Topica Native, ELSA Speak, 123 Tieng Anh, Rockit online, and Antoree These platforms often utilize features such as speech recognition technology, interactive lessons, and personalized learning paths to facilitate language learning.
Enterprise Learning: Enterprise learning platforms cater to organizations and businesses, offering tools and services to design and distribute training content.
MANA is a notable company in Vietnam that provides enterprise learning solutions, helping businesses effectively train their employees and enhance their skills.
Online to Offline: Online to Offline platforms bridge the gap between online and offline learning experiences GotIt! is a pioneer in this segment in the Vietnamese market, offering a solution to connect users, mainly students, with study experts through smartphone applications This allows students to receive personalized assistance and guidance from experts in real-time.
Overview of FDI in Edtech in Vietnam
2.2.1 Factors affecting FDI in Edtech in Vietnam
The reasons behind the increasing investments in Edtech in Vietnam align with the overall trend of growth in Asia and Southeast Asia One of the main factors is the growing need for multimedia content and affordable and efficient learning options Additionally, the demographic and economic factors in Vietnam, such as a significant young population, high ownership of devices, high internet usage, and a stable economy, all contribute to the thriving EdTech industry in the country.
A large population: With a population of 98.56 million, a significant portion of which (45,1%) falls within the 5 to 34 years age group, there is a sizable market for Edtech companies to target (KEMP, 2022) These individuals are more likely to be tech-savvy and open to utilizing digital learning platforms, making the Edtech sector highly attractive This age group is generally more open to utilizing technology in various aspects of their lives, including education They are more likely to be familiar with digital devices, comfortable with online platforms, and eager to explore new ways of learning.
High internet penetration rates: The fact that internet users make up 73.2% of the total population indicates a high level of internet penetration in your country This suggests that there is a strong digital infrastructure in place, which is crucial for the success of Edtech businesses Foreign investors may be more inclined to invest in a country with a high internet penetration rate as it enables easier access to online education platforms The average daily time spent using the internet by each internet user, which is 6 hours and 39 minutes, demonstrates a significant level of engagement with digital resources This implies a high demand for online education services and content Investors are likely to see this as an opportunity to capitalize on the growing demand for Edtech solutions The education technology industry in Vietnam is being boosted by the growing demand for online learning The COVID-19 pandemic has led to a surge in acceptance of online learning among Vietnamese people, prompting schools and institutions to adopt distance learning to comply with social distancing measures As a result, 79.7% of students in Vietnam have engaged in online learning, and over 50% of higher education institutions have implemented online learning platforms (Dat, 2021)
A strong demand for education: Vietnam has been recognized as having the highest level of investment in education and training worldwide in recent times As per Bain & Company, the average Vietnamese family spends approximately 20% of their disposable income on their children's education, a rate higher than other Southeast Asian countries, except for Malaysia The General Statistics Office reveals a 2.3 times increase in yearly education spending over the past decade, with an estimated increase to 7.3 million VND/student in 2021 According to the Vietnam National Institute of Educational Sciences, Vietnam devoted 4.9% of its GDP to education between 2011-2020, exceeding the percentage spent by neighboring countries like Singapore, Laos, and Cambodia Parents' willingness to invest in their children's education is a factor attracting Edtech investors in Vietnam.
Scalability and profitability: the scalability and profitability of an Edtech company in Vietnam depend on factors such as market potential, competition, revenue streams, operational efficiencies, monetization strategy, regulatory environment, and financial performance The young population and the demand for high-tech applications will help Edtech companies be ready to invest in the Edtech Vietnam market and the market has the ability to scale up However, in terms of profit, investment in education is a long-term investment, investors will take a while before earning a profit Cao Xuan Hoai Vuong, CEO of start-up Unica, said that businesses need to determine that this is a long-term "adventure", which may take 5-
10 years or even longer to succeed (An, 2023) However, most venture capital funds are not patient enough because the pressure to profit is always heavy Therefore,Edtech startups need to have clear goals and strategies to overcome that challenge.
The more vibrant the Edtech market, means that more and more startups will join and compete at all costs.
Policy and Regulatory Environment: The Vietnamese government has recognized the importance of technology in education and has taken steps to support the development of Edtech in the country For example, the government has launched initiatives to promote the use of technology in classrooms and has provided funding to Edtech startups However, more support is needed to help the sector reach its full potential Elements of Policy and Regulatory Environment will be further analyzed and clarified later in the thesis.
Skilled Workforce: The total number of human resources in the entire IT- electronics and telecommunications industry reaches more than 1 million people. However, IT human resources are not enough to meet the needs of the market, it is forecasted that from now to 2024, Vietnam will lack about 150,000 to 200,000 IT engineers per year (Chung, 2023) According to experts, this shortage is partly caused by the quality of the labor force, which, although large, has not met the recruitment requirements of domestic and foreign enterprises One of the weaknesses leading to limitations of IT workers is foreign languages, especially English.
Market Competition: The key players in the Vietnamese Edtech market include both local and international companies Local companies have established a strong presence in the market International players such as Coursera, Udemy, and Khan Academy have also entered the Vietnamese market, offering globally recognized courses and certifications The competition in the Vietnamese Edtech market is fierce, with both local and international players vying for market share Foreign enterprises are allowed to participate in a fairly fair playing field when investing in Vietnam market, thus increasing the attractiveness of the market to foreign investors.
2.2.2 Typical FDI deals in Edtech in Vietnam
EdTech in Vietnam now inherits a lot from the world Edtech background.Besides the products of foreign companies imported into Vietnam, domestic companies also gradually asserted the position of domestic products in the home market Companies registering new businesses in this area are growing rapidly In which, many companies have experience in developing products and transforming learning models to suit the economic and educational conditions of domestic schools.
Table 1: Top investments on Edtech in Vietnam
Company Investment Investors Country of value origin
≈ $22M Gradient Ventures, SOSV, SIG United States
Elsa Venture Capital, SIG Venture
Edupia ≈ $16M Redefine Capital Fund, Jungle Singapore
Everest ≈ $5M Hendale Capital Hong Kong
Strategy Year Holdings Hong Kong
≈ $2,6M Strive Venture, iSeed Ventures United States
Coder school Monk's Hill Ventures, XA Singapore
Source: Compiled by the author
Topica Edtech Group is a leading online education technology company based in Vietnam It was founded in 2008 with the aim of transforming the education landscape in Southeast Asia by leveraging technology to provide accessible and high-quality education solutions One of the key reasons why Topica Edtech Group has succeeded in attracting foreign direct investment (FDI) is its innovative approach to online education The company has developed a range of interactive learning platforms and digital tools that cater to various educational needs These platforms include Topica Uni, which offers university-level courses, Topica Native, an English language learning platform, and Topica Founder Institute, a startup accelerator program The success of Topica Edtech Group can be attributed to several factors The education industry in Southeast Asia is witnessing significant growth, driven by the region's young population and increasing demand for quality education Topica Edtech Group has capitalized on this market potential and positioned itself as a key player in the online education space The company has demonstrated a deep understanding of technology and its potential to enhance learning outcomes By leveraging technologies such as artificial intelligence, machine learning, and big data analytics, Topica Edtech Group has been able to provide personalized and engaging learning experiences to its users. Topica Edtech Group has formed strategic partnerships with leading educational institutions and organizations both within and outside Vietnam These partnerships not only enhance the company's credibility but also provide access to a wider network of resources and expertise Over the years, Topica Edtech Group has established a strong track record of success The company has received numerous accolades and recognition for its innovative solutions and commitment to quality education This track record has instilled confidence in investors and has made the company an attractive investment opportunity In addition to its domestic market in Vietnam, Topica Edtech Group has successfully expanded its operations to other countries in Southeast Asia, such as Indonesia, Thailand, and the Philippines This expansion has not only increased the company's market reach but has also attracted foreign investors looking to tap into the growing education markets in these countries Overall, Topica Edtech Group's success in attracting foreign direct investment can be attributed to its innovative approach to online education, strong market potential, technological expertise, strategic partnerships, track record of success, and expansion into new markets.
Elsa, also known as English Language Speech Assistant, is a leading app-based English learning platform that has successfully attracted foreign direct investment (FDI) in Vietnam First, it is important to note that Vietnam has been an attractive destination for FDI due to its rapidly growing economy, favorable business environment, and a large pool of young, tech-savvy population These factors have made it an ideal market for tech-focused companies like Elsa to enter and flourish Elsa Vietnam's success in attracting FDI can be attributed to several key factors Elsa leverages cutting-edge technology, including artificial intelligence (AI) and machine learning, to provide personalized English language learning experiences Its speech recognition technology helps users improve their pronunciation and fluency in English, making it a unique and effective tool for language learners Vietnam is a country with a high demand for English language proficiency The English language learning market in Vietnam is estimated to be worth billions of dollars, and this potential has attracted foreign investors who see the opportunity to tap into this growing market Elsa Vietnam has formed strategic partnerships with various local and international organizations. These partnerships have helped them expand their reach, gain credibility, and attract foreign investors For example, Elsa has collaborated with Vietnam's Ministry of Education and Training to provide English learning resources to schools across the country Since its entry into the Vietnamese market, Elsa has experienced significant growth in terms of user base and engagement The app has been downloaded millions of times, and users have reported significant improvement in their English language skills This impressive growth and positive user feedback have further attracted the attention of foreign investors The Vietnamese government has implemented several policies and initiatives to attract and support foreign investment in the country These policies include tax incentives, simplified procedures for setting up businesses, and various forms of support for technology-driven startups Elsa Vietnam has benefitted from these policies, making it an attractive investment opportunity for foreign investors In conclusion, Elsa Vietnam's success in attracting foreign direct investment can be attributed to its innovative technology, strong market potential, strategic partnerships, impressive growth, and supportive government policies These factors have made Elsa an attractive investment opportunity for foreign investors looking to tap into Vietnam's growing English language learning market.
Mindx is a technology park located in Vietnam that has successfully attracted foreign direct investment (FDI) The park was established with the aim of fostering innovation, collaboration, and entrepreneurship in the technology sector One of the reasons why Mindx has succeeded in attracting FDI is its strategic location Vietnam has become an attractive destination for technology companies due to its young and tech-savvy population, competitive labor costs, and favorable government policies. Mindx capitalizes on these advantages by providing a conducive ecosystem for tech companies to thrive Additionally, Mindx offers state-of-the-art infrastructure and facilities that are essential for technology development It provides modern office spaces, research and development labs, and access to cutting-edge technologies This infrastructure, combined with a collaborative and vibrant community, creates an environment that is highly appealing to foreign investors Furthermore, Mindx has established strong partnerships with both local and international organizations It actively collaborates with universities, research institutions, and industry leaders to promote knowledge exchange and skill development These partnerships enable Mindx to offer a wide range of support services such as mentorship programs, training workshops, and networking opportunities, which are vital for attracting FDI Moreover,the park offers various incentives and benefits to foreign investors These include tax breaks, streamlined business registration processes, and access to government support programs Such incentives significantly reduce the barriers to entry and create a favorable business environment for foreign investors Lastly, Mindx actively promotes itself as a gateway to the Southeast Asian market The park assists foreign companies in expanding their operations beyond Vietnam and tapping into the regional market This market potential, coupled with a supportive business environment, makes Mindx an attractive destination for FDI In summary, Mindx has succeeded in attracting FDI due to its strategic location, state-of-the-art infrastructure, strong partnerships, attractive incentives, and its positioning as a gateway to the Southeast Asian market These factors have collectively contributed to the park's success in fostering foreign investment in the technology sector.
Edupia is an EdTech company based in Vietnam that has gained significant attention and success in attracting Foreign Direct Investment (FDI) in recent years.The company focuses on providing technology-driven solutions to enhance education and learning experiences for students in Vietnam One of the main reasons behind Edupia's success in attracting FDI is its innovative approach to education The company leverages advanced technologies, such as artificial intelligence (AI), virtual reality (VR), and augmented reality (AR), to create interactive and engaging learning platforms By integrating these technologies into their educational products and services, Edupia addresses the evolving needs and preferences of students in the digital age Edupia's commitment to offering personalized and adaptive learning solutions has resonated well with Vietnamese students and parents, leading to increased interest from FDI investors Furthermore,Edupia has established strong partnerships and collaborations with local educational institutions, both public and private By collaborating with schools, universities, and training centers, Edupia has been able to reach a wider audience and understand the specific needs of the Vietnamese education system This localized approach has played a significant role in attracting FDI, as it demonstrates an understanding of the local market and a commitment to addressing its unique challenges Edupia's success in attracting FDI can be attributed to its innovative approach to education,the increasing demand for quality education in Vietnam, strategic partnerships with local educational institutions, and the favorable business environment By leveraging advanced technologies and addressing the unique needs of theVietnamese education system, Edupia has positioned itself as a leading EdTech company in Vietnam, attracting both local and foreign investors.
Government policies in attracting FDI in Edtech in Vietnam
2.3.1 Legal framework for FDI in education
Decree 06/2000/ND-CP dated 06/03/2000 regulating the operation of FDI- invested education and training institutions; Decree 18/2001/ND-CP dated May 4,
2001 regulating the establishment and operation of foreign cultural and educational institutions not for profit in Vietnam and Decree 165/2004/ND -CP applies to international cooperation activities in the field of education (mainly development cooperation) Such regulations make the determination of the permitted scope of activities of FDI education and training institutions as well as the management agencies of these institutions very complicated, in many cases it cannot be applied or applied inconsistent.
Decree 06/2000/ND-CP was issued in 2000 based on the Law on Foreign Investment in Vietnam, which the Law on Foreign Investment in Vietnam has now been replaced by the Law on Investment that applies to both domestic and foreign investors domestic and foreign investors.
Decree 108/2006/ND-CP dated September 22, 2006 guiding the implementation of the Law on Investment stipulates thorough decentralization of the issuance of investment certificates to localities Therefore, the order and procedures for investment have also changed There are also separate regulations for the vocational training sector.
No: 73/2012/ND-CP: This decree outlines the regulations for foreign cooperation and investment in the education sector in Vietnam It covers the scope of foreign investment, the procedures for establishing and operating educational institutions, and the responsibilities of both foreign investors and Vietnamese authorities Under this decree, foreign investors are allowed to establish and operate educational institutions in Vietnam, either through joint ventures or as 100% foreign-owned entities However, they must meet certain requirements such as having a minimum capital contribution of VND 50 billion (approximately US$2.2 million) for establishing a university, and VND
5 billion (approximately US$220,000) for other educational institutions Foreign investors must also obtain a license from the
Vietnamese authorities before establishing an educational institution, and comply with Vietnamese laws and regulations on education and investment They are also required to provide high-quality education and contribute to the development of the Vietnamese education system The decree also outlines the procedures for establishing and operating educational institutions, including the requirements for infrastructure, teaching staff, curriculum, and accreditation It also covers the responsibilities of Vietnamese authorities in granting licenses, monitoring and supervising educational institutions, and ensuring the quality of education Overall, this decree aims to promote foreign investment and cooperation in the education sector in Vietnam, while also ensuring the quality of education and protecting the interests of both foreign investors and Vietnamese students.
Decree 48/2015/ND-CP guides the implementation of the Law on Vocational Education Key provisions include: diverse and modern vocational education system, private investment encouragement, Ministry and agency responsibilities, vocational education institution accreditation and quality assurance criteria, occupational standards development, national vocational qualifications framework, employer, worker, and institution responsibilities for on-the-job training and apprenticeships, and guidelines for certification issuance.
Decree No 118/2015/ND-CP dated November 12, 2015 of the Government detailing and guiding the implementation of a number of articles of the Investment Law, Education is considered as an industry and profession on the list of investment incentives Accordingly, investment projects in the field of education are entitled to corporate income tax incentives, import tax incentives and land tax incentives This Decree stipulates foreign cooperation and investment in the field of education, including: linking education and training with foreign countries; foreign-invested educational institutions; representative office of foreign education in Vietnam.
Decree No 46/2017/ND-CP: This decree was issued by the government of Vietnam and outlines regulations for investment and operation in the education sector.
It covers various aspects such as conditions for setting up educational institutions,licensing and certification requirements, quality assurance measures, and standards for teachers and students The aim of this decree is to promote quality education in Vietnam and ensure that all educational institutions operate in a transparent and accountable manner.
Resolution No 86/NQ-CP: This resolution aims to improve the quality of higher education in Vietnam by encouraging foreign investment in this sector It sets a target of having at least one Vietnamese university in the top 500 universities in the world by 2020.
Decree No 135/2018/ND-CP amends and supplements some articles of Decree No 46/2017/ND-CP, which provides provisions on investment and operational conditions in education The decree includes changes to regulations on investment and management of education and training institutions, including foreign-invested ones, and on the establishment, recognition, and operation of higher education institutions It also adjusts the conditions for foreign teachers and managers working in educational institutions in Vietnam The goal of these amendments is to improve the quality of education and training services in Vietnam.
Decree No 86/2018/ND-CP: The decree aims to provide a framework for the management and operation of foreign investment in education to ensure the quality of education and the interests of Vietnamese students The decree outlines the types of foreign investment that are allowed in Vietnam's education sector, the requirements for foreign investors to set up education institutions in the country, and the process for obtaining licenses and permits It also sets guidelines for the management of foreign teachers and staff, as well as the curriculum and teaching materials used in foreign-invested schools Overall, Decree No 86/2018/ND-CP serves as an important tool in attracting foreign investment in Vietnam's education sector while ensuring that the quality of education is not compromised.
Decree No.15/2019 took effect from 20 March 2019 Stipulates criteria for the establishment of educational facilities receiving foreign investment The minimum capital for setting up a vocational centre, a secondary school and a college are VND
5 billion, VND 50 billion and VND 100 billion, respectively In urban districts, land for building a vocational centre, a secondary school or a college must be at least 1,000 square metres, 10,000 square metres and 20,000 square metres, respectively.
In outlying districts, this rises to 20,000 square metres for building a secondary school and 40,000 for a college.
Resolution No 35/NQ-CP of the Government aims to increase the mobilization of society's resources for investment in education and training development in Vietnam from 2019 to 2025 The resolution highlights the importance of education and training in enhancing the country's human resources and promoting sustainable socio-economic development.
The resolution sets out specific targets for improving the quality of education and training, such as increasing the rate of trained workers to 60% by 2025 and improving the quality of vocational training programs It also aims to increase the level of investment in education and training, with a target investment rate of 6% of GDP by 2020 and 6.5% by 2025.
RECOMMENDATIONS AND SOLUTIONS TO ATTRACT
Opportunities and challenges in attracting FDI in Edtech in Vietnam
3.1.1 Opportunities in attracting FDI in Edtech in Vietnam
Vietnam has been steadily growing in the Edtech sector, presenting a multitude of investment opportunities for foreign investors The country's young population, rapid urbanization, and increasing demand for quality education create a conducive environment for innovative tech-driven education solutions.
One of the most significant opportunities for foreign investment in the Vietnamese Edtech sector is the growing demand for online education The Covid-
19 pandemic has accelerated the demand for virtual learning, with many schools and universities forced to switch to online platforms quickly This sudden shift has highlighted the need for more advanced and user-friendly online education solutions This trend has opened up a considerable investment opportunity for foreign Edtech companies to enter the Vietnamese market and provide innovative online learning solutions.
Another attractive aspect of the Vietnamese Edtech market is the increasing number of young consumers The country's population is one of the youngest in the world, with a considerable percentage of the population under the age of 35 (WorldPopulationReview, 2022) This demographic is tech-savvy and increasingly seeking more efficient and modern ways of learning This trend presents a substantial investment opportunity for foreign EdTech companies to develop and provide innovative digital learning solutions.
Although the government's legal corridor on attracting foreign investment is still problematic, the government is making step-by-step efforts to improve this issue and create favorable conditions for foreign investors The Vietnamese government is actively promoting the development of the EdTech sector, providing a conducive regulatory environment for foreign investors The government has shown significant support for the sector by allocating resources and implementing policies and initiatives to encourage the development of innovative Edtech solutions This support creates a favorable environment for foreign investors to establish and grow their businesses in the country.
Vietnam's burgeoning middle class presents an attractive market for EdTech investors The country's economic growth has led to an increase in disposable income, resulting in an increased demand for quality education The middle class is willing to spend more on advanced education technologies that can provide better learning experiences for their children This growing market presents a considerable investment opportunity for foreign EdTech companies to provide innovative learning solutions tailored to the Vietnamese middle class.
In conclusion, Vietnam presents an excellent opportunity for foreign Edtech investors looking to expand their businesses The country's young population, increasing demand for online education, strong government support, and growing middle class create a conducive environment for innovative tech-driven education solutions These investment opportunities provide a promising future for the Vietnamese Edtech sector, making it an attractive destination for foreign investors.
3.1.2 Challenges in attracting FDI in Edtech in Vietnam
Vietnam has been investing heavily in education and technology in recent years, with the aim of becoming a regional hub for Edtech innovation However, despite the government's efforts and the country's potential, Vietnam faces several difficulties in attracting FDI in the Edtech sector:
Lack of Infrastructure: Infrastructure and connectivity are also issues that need to be addressed While Vietnam has made significant progress in developing its infrastructure, there are still gaps in broadband coverage and connectivity,particularly in rural areas Issues with power supply can also affect operations,making it difficult for Edtech companies to establish a reliable and efficient platform for their services This results in higher costs of doing business and lower efficiency, which makes it less attractive for foreign investors.
Regulatory Environment: The regulatory environment in Vietnam is also a challenge for foreign investors The legal system in Vietnam can be complex and opaque, and it may take a long time for foreign investors to navigate the regulatory process Additionally, the government's policies and regulations related to Edtech are still in the early stages of development, which creates uncertainty and risk for foreign investors This can be a deterrent for foreign investors, who prefer a streamlined and transparent regulatory environment.
Limited Market Size: Another difficulty in attracting FDI in Edtech in Vietnam is the limited market size Vietnam's population is around 96 million, but the penetration of Edtech is still low The market potential for Edtech in Vietnam is significant, but it may not be large enough to attract significant foreign investment.
Cultural Differences: Cultural differences can also pose a challenge for foreign investors in Edtech in Vietnam Vietnam has a unique culture and education system, and foreign investors must understand and adapt to these differences to succeed in the market Failure to do so can result in a lack of demand for their products and services.
Language barriers: Language barriers can also be a hindrance Although many
Vietnamese professionals speak English, there is still a significant language barrier to overcome in terms of cultural differences and nuances This can lead to misunderstandings or miscommunications, which can affect partnerships and investments.
Lack of Skilled Labor: Another significant challenge is the shortage of skilled human resources While Vietnam has a large pool of young, tech-savvy workers,there is a shortage of experts in Edtech-specific fields such as instructional design,curriculum development, and educational psychology This talent gap can make it difficult for foreign investors to find the right partners or employees to help them establish and grow their businesses This also limits the potential for Edtech companies to scale up and expand their operations in Vietnam.
Intellectual Property Rights: Uncertainty around intellectual property rights can deter investors from entering the Edtech market in Vietnam Edtech companies heavily rely on developing and delivering innovative digital content, platforms, and technologies Without proper protection of their intellectual property, investors may hesitate to invest as they risk losing their competitive advantage to copycats or unauthorized use of their assets.
Data Privacy Regulations: The protection of user data is crucial in the Edtech industry Investors need assurance that their investments comply with robust data privacy regulations to mitigate risks associated with data breaches or misuse of personal information Inadequate data protection laws or a lack of enforcement can undermine investors' confidence in the market and deter them from making significant investments Vietnam currently lacks regulations on data security. Investors face additional compliance costs and legal uncertainties when operating in a market with unclear intellectual property rights and data privacy regulations They may need to invest in legal expertise, establish internal processes to ensure compliance with evolving regulations, and allocate resources for ongoing monitoring and auditing of data privacy practices Such costs and uncertainties can make the investment less attractive and discourage potential investors Edtech companies operating in a market with weak intellectual property rights and data privacy regulations may face significant reputational harm if they are unable to protect their users' data or if their intellectual property is infringed upon Investor confidence can be greatly affected if a company's reputation is tarnished, leading to potential financial losses and hindering future investment opportunities.
Recommendations and solutions to attract Edtech FDI in Vietnam
3.2.1 Recommendations for Government and local authorities in attracting Edtech FDI
3.2.1.1 Recommendations for Government in attracting Edtech FDI
To attract foreign direct investment (FDI) in the Edtech sector, the Vietnamese government can consider implementing the following recommendations:
Develop a clear Edtech investment strategy: The government should create a comprehensive strategy that outlines its goals, incentives, and policies to attract foreign investors in the Edtech sector This strategy should include specific measures to support Edtech startups, foster innovation, and enhance cooperation between local and foreign companies.
Provide fiscal incentives: Offering fiscal incentives, such as tax breaks or reduced tax rates, can attract foreign investors to the Edtech sector The government can consider providing incentives for R&D activities, technology transfer, or job creation in the edtech industry The US government has implemented the Small Business Administration's Early Stage Innovation Fund (ESIF) to leverage raised private capital, providing additional investment capacity for venture capital funds in the US Silicon Valley, New York and Boston, which attract three-thirds of venture capital China established the Innovation Fund with the goal of providing grants ranging from
$150,000 to $250,000, subsidizing loan interest and equity investments The fund is designed to connect startups in the field of modern technology and good market potential The Fund's goal is to bring startups to the next level in technology and clearly position the market for other financial sources of enterprises such as banks, venture capital funds and partners Singapore establishes an Early Stage Venture Fund (ESVF) to finance early-stage technology startups by working with venture capitalists to invest in public start-ups technology at an early stage with a 1:1 ratio The maximum amount of capital that enterprises can receive from the fund is 3 million SGD In Malaysia, each ministry and industry has programs to lend capital to start-ups Financial support for start-ups to develop new services in terms of fixed assets and working capital.
Establish Edtech-specific investment zones: Creating dedicated investment zones or technology parks specifically for Edtech companies can attract foreign investors These zones can provide infrastructure, resources, and regulatory support tailored to the needs of Edtech startups, making it easier for foreign businesses to establish a presence in Vietnam.
Streamline regulatory processes: Simplifying and streamlining the regulatory procedures for foreign investors can significantly attract Edtech FDI The government should ensure that the process of setting up a business, obtaining necessary licenses, and complying with regulations is efficient, transparent, and investor-friendly.
Foster collaboration between academia and industry: Strengthening the collaboration between universities, research institutions, and the Edtech industry can encourage FDI The government can facilitate partnerships between foreign Edtech companies and local educational institutions to promote knowledge transfer, research collaboration, and innovation.
Invest in infrastructure and digital connectivity: Improving the country's digital infrastructure, including high-speed internet connectivity and access to technology, is crucial for attracting Edtech FDI The government should prioritize investments in these areas to ensure a conducive environment for Edtech companies to operate and thrive.
Enhance skills development and talent retention: Investing in talent development is essential to attract Edtech FDI The government should focus on improving the quality of education, promoting STEM (Science, Technology, Engineering, and Mathematics) subjects, and fostering a skilled workforce to meet the demands of the Edtech industry.
Promote international partnerships and collaboration: Actively engaging with international organizations, foreign governments, and global Edtech players can help attract FDI The government should seek opportunities for collaboration, knowledge exchange, and investment partnerships to facilitate foreign investments in the Vietnamese Edtech sector.
By implementing these recommendations, the Vietnamese government can create an attractive investment environment for Edtech FDI, stimulate innovation, and position the country as a regional hub for educational technology.
3.2.1.2 Recommendations for local authorities in attracting Edtech FDI
Here are some recommendations for local authorities in Vietnam to attract Edtech FDI:
Develop a robust Edtech ecosystem: Local authorities should focus on building a strong ecosystem for Edtech companies to thrive This includes creating incubators, accelerators, and co-working spaces that offer support and resources for Edtech startups Additionally, providing access to funding, mentorship programs, and networking opportunities will attract more FDI in the sector.
Offer attractive incentives: To attract foreign Edtech companies, local authorities should consider providing attractive incentives such as tax breaks, grants, and subsidies These incentives can help reduce the cost of doing business and encourage foreign companies to invest in the local Edtech market.
Foster partnerships between local and foreign educational institutions:
Collaboration between local educational institutions and foreign partners can help attract Edtech FDI Local authorities should actively facilitate partnerships and joint ventures between local universities, colleges, and schools with foreign educational institutions This will create opportunities for knowledge sharing, technology transfer, and investment in the local Edtech sector.
Focus on talent development: A skilled workforce is crucial for the success of the Edtech sector Local authorities should invest in developing and enhancing the skills of the local workforce, especially in fields such as technology, software development, and digital learning This can be done through partnerships with educational institutions and vocational training programs tailored to the needs of the Edtech industry.
Streamline regulations and reduce bureaucratic barriers: Creating a favorable business environment is essential for attracting FDI Local authorities should simplify and streamline regulations related to Edtech investments, making it easier for foreign companies to set up operations in Vietnam Reducing bureaucratic barriers and enhancing the ease of doing business will make the country a more attractive destination for Edtech FDI.
Promote Vietnam's potential as an Edtech hub: Local authorities should actively promote Vietnam's potential as an Edtech hub through marketing campaigns, participation in international conferences and exhibitions, and hosting industry events This will showcase the country's strengths, such as its talented workforce, affordable operating costs, and growing domestic market, to potential foreign investors.
By implementing these recommendations, local authorities in Vietnam can effectively attract Edtech FDI and stimulate the growth of the sector in the country.
3.2.2 Recommendations for domestic Edtech companies in Vietnam to attract FDI
3.2.2.1 Recommendations to improve Edtech sector in Vietnam