Under the new government decree, the required minimum capital does not include land for school campuses.

According to Le Truong Tung, president of FPT University, if investors inject VND1 trillion into a school, they will need to make a profit of VND100 billion (10 percent). 

The expected profitability in the educational sector is 20 percent at maximum, so in order to make a profit of VND100 billion and have money for the development fund, the school needs to have 15,000 students and collect tuition of $2,000 a year.

Some analysts commented that such investment is quite risky because it is not easy for schools, especially new ones, to enroll 15,000 students. It takes about five years to enroll 10,000 students. 

However, some educators said it is a necessery to set such a requirement in order to ensure training quality. 

Do Van Dung, Rector of the HCMC University of Technique Education, commented that VND1 trillion would still not be enough for polytechnic and medical schools.

Tran Van Hau, president of Hung Hau Development JSC, also thinks that VND1 trillion is just a minimum requirement, and that the real investment capital needed must be much higher. 

However, he warned that with the required huge investment capital, it would be more feasible to set up schools in Hanoi and HCMC, while investors would face high risks if opening schools in other localities.

An analyst said that opening schools in provinces would be difficult because the required investment capital is too high, while the number of students expected would be low.

“Students prefer studying at schools in large cities instead of schools in their localities,” he said.

Recent surveys found that many private schools still have not fulfilled the commitments they made when opening schools in the last 20 years.

Under current regulations, schools must build campuses at addresses registered with the state management agencies within three years since the day of establishment. If not, they will be forced to stop operation. 

However, many schools have ignored the regulations.

Tung of FPT University commented that while the new decree sets strict requirements on newly set up schools or new schools in the future, it is "forgetting" the existing schools.

Tung said the decree should give existing schools three years to raise minimum capital to VND1 trillion.

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