Vietnam’s education technology (edtech) market has shown strong growth in part due to the pandemic, which pushed online learning as well as the consumer’s appetite for additional learning.
Vietnam has a population of 98 million, of which around 70 percent are under 35 years of age. Currently, it has about 17.5 million students at primary and secondary education levels, with approximately 1.7 million students enrolled in universities.
Edtech market overview: A primer
Edtech is the combination of education and technology using technological tools to facilitate education. It uses IT tools to enhance the individual learning experience.
The Vietnamese edtech market is estimated to exceed US$3 billion by 2023. According to Tracxn Technologies, there are about 260 edtech businesses in Vietnam, most are start-ups and business to consumer (B2C) businesses.
Edtech startups are luring the interest of both local and foreign venture capital funds as they bring new business models to tap into the online student consumer market. Investment deals in edtech were estimated to reach US$45 million in 2020. South Korea, the US, and Singapore are among the top investors in the market.
In Vietnam, edtech companies focus on three main areas such as digital content, learning management systems (LMS), and integrating advanced technologies such as augmented reality (AR), virtual reality (VR), and artificial intelligence (AI).
The digital content market is crowded with service providers offering various products, such as English language subjects and game-based learning content for early childhood education, test preparation, self-study options, e-books, and tutoring service searches for general education. A notable foreign player in this segment is Snapask, a Hong Kong-based startup which entered Vietnam in 2020 and provides a tutoring app for students in education.
There are also several English teaching products for students and adults, such as Elsa or Duolingo. Some local edtech companies have also attempted to diversify their product content to other skill development areas such as Mathematics.
This aligns well with the emerging desire of Vietnamese parents for their children to develop STEM skills. CoderSchool, a startup providing online training in programming, has recently announced that it has raised US$2.6 million in a Pre-Series A funding round led by Monk’s Hill Ventures.
The edtech market for digital content in Vietnam has also attracted foreign edtech groups in the growing trend of utilizing digital content by local schools. They have managed to access the market through their local sales agents which have strong relationships with education authorities.
Some applications widely used in Vietnam include Quiver 3D Coloring in early childhood education and Merge Cube, a digital platform that helps students learn science and STEM effectively with 3D objects and simulations. Private school operation EQuest Education Group and AI-powered Clevai secured investment from Singapore and the US.
Apart from digital content provision, edtech businesses also provide LMS platforms ranging from school administration, teaching and learning innovation, to tutoring and assessment services, and so on. Notable companies providing this solution in Vietnam are Wewiin, Ai Vietnam, and Topica Group.
There are 237 universities in Vietnam of which 22 currently deliver distance learning programs, with e-learning as one of the delivery modes. Nevertheless, not all institutions have their own, in-house-developed platform for e-learning programs.
Some universities that cannot afford their own LMS platform opt to partner with firms like Topica Group. The group owns a cyber university that delivers bachelor programs using Topica’s platform, with technical and academic support provided for learners.
Local start-up and domestic tech companies also offer solutions incorporating AR/VR or AI technologies. FPT, a top provider of IT services in Vietnam, has developed an app using AI to deliver a learning experience tailored to each student’s strengths and weaknesses.
Geniebook from Singapore offers a suite of online learning solutions for primary to secondary school students that includes signature AI-personalized worksheets and live classes. Meanwhile, there are also some foreign providers integrating AR/VR technologies such as CO-WELL Asia (Japan) and Hiverlab (Singapore).
Opportunities for foreign investors
Vietnam has significant potential for edtech market development. Key growth drivers include a high rate of internet users at 70 percent of the country’s population and a tech-savvy community, accompanied by the rising demand for multimedia content, as well as learning options that are low-cost and time-efficient.
In addition, the education sector plays an important part in the digital transformation agenda of the Vietnamese government; therefore it is strongly supported by all key stakeholder groups, including policymakers, educational managers, lecturers, teachers, and students.
Accelerated by the pandemic, several edtech companies have been experiencing strong growth, but there is no dominant player in the local market. Experts say that Vietnamese edtech firms still lack breakthrough technologies to grow stronger. This presents attractive opportunities for investors to look at.
Higher education and vocational training
Blended learning has gained popularity and has become an effective tool in Vietnam as the country adapts to the new normal of living with the pandemic. By combining traditional face-to-face teaching and e-learning with computer-mediated support, this hybrid method is expected to achieve higher efficiency.
As many Vietnamese educators shift towards this education method, blended learning offers opportunities for Vietnamese businesses to partner with foreign investors; local partners can play the role of a recruiting hub while assessing the market.
An initiative collaboration in this segment has been the undergraduate degree in ICT jointly delivered by Swinburne University of Technology (Australia) and FPT University (Vietnam). The blended learning experience was based on the courseware and the ICT system by Swinburne, while FPT University would provide mentors and other learning support, as well as marketing the courses locally and administering admissions and enrollment.
Regarding vocational education and training (VET), partnerships with vocational colleges which have been recognized as high-quality institutions, and have a long-term vision on skill development, may provide an entry point for exploring new collaboration for online VET delivery. Foreign businesses and Vietnamese partners could explore collaboration in the delivery of micro-credentials or mini-qualifications recognized by industries, such as tourism and hospitality, IT, design, and communication.
Early childhood education
The early childhood education sector is a niche market in Vietnam, which offers potential business opportunities in private kindergartens responding to the Government’s strategic sector development plan.
Opportunities for edtech businesses in this segment include designing digital content for children to learn a foreign language as well as fundamental soft skills, teacher training solutions provided on digital platforms, or sharing experience and professional expertise in curriculum development, quality assurance, and managing digital agenda implementation at an institutional level.
Recently, Japanese Gakken Holdings has partnered with Vietnamese edtech company KiddiHub Education Technology, an information provider for kindergartens. Gakken is planning to use KiddiHub’s established online presence to promote non-cognitive learning that focuses on critical thinking skills.
The Vietnamese government has undertaken significant education system reforms, seeking to bring Vietnam’s quality of human resources in education to international standards. General education has undergone tremendous reform in all areas recently. In particular, the country has a new general education program associated with basic changes in student assessment methods, teaching methods and materials, and changes in criteria for teacher assessment.
For instance, a new competency-based curriculum has replaced conventional delivery based on a single set of textbooks and attempted to integrate STEM/STEAM into the curriculum has put a strong emphasis on innovative delivery modes and methods.
In this segment, potential business opportunities for edtech partners include digital content, particularly in STEM/STEAM subjects, e-textbook, teacher training, and assessment products, particularly for English language training.
E-learning in corporate training
Vietnam’s e-learning market also offers the potential for online training products for business customers. There is a rising demand for the use of LMS to integrate conventional in-house corporate training processes that effectively deliver to large numbers of staff in Vietnam. Examples include state-owned Vietnam Electricity (EVN) and Vietcombank which have set up their own e-learning centers in order to achieve effective human resource development. Potential industries are banking, tourism, and hospitality.
Market entry strategies in edtech
To capitalize on the full potential of the edtech market in Vietnam, foreign edtech providers need to navigate existing challenges, such as the regulatory landscape for setting up and operating an edtech entity in Vietnam.
Edtech remains a vague area under the Vietnamese legal framework since it has not been explicitly specified in legal documents. Investors who seek to undertake edtech related business activities should review the requirements on a case-by-case basis.
Relevant laws governing foreign investment in edtech include the Law on Investment, the Law on Education, Commercial Law, as well as a number of decrees and circulars regulating specific activities.
These include Decree 86/2018/ND-CP on foreign cooperation and investment in the educational sector, Circular 21/2018/TT-BGDDT on organization and operation of foreign language and IT centers, and Decree 09/2018/ND-CP on the sale of goods by foreign investors and foreign-invested business entities in Vietnam.
The Vietnamese government has recognized certain inconsistencies in the legal framework regulating edtech and is thus is working on a draft circular that provides unified guidance on E-learning activities.
For now, investors are required to satisfy various investment conditions and obtain relevant sub-licenses to operate in Vietnam, depending on specific edtech activities and business models. In general, foreign investors in edtech must register their business lines to cover some or all of the following:
- Educational activities;
- Technological activities; and
- Trading activities.
For educational activities, investors are allowed to form 100 percent foreign education entities such as short-term training institutions, pre-schools, compulsory education institutions, higher educational institutions, and branch campuses of foreign-invested higher education institutions, with conditions on minimum capital applied.
Registering for trading activities with the Ministry of Industry and Trade (MoIT) is required if companies distribute online courses with curriculum or programs developed by another party or provide an e-commerce platform for education.
While education and trading are conditional for foreign investors, ICT is one of the encouraged special investment sectors by the Vietnamese government. Upon registration for IT and computer programming activities, edtech companies are entitled to a corporate income tax exemption for up to 4 years, followed by a 50 percent tax reduction for up to 9 years.
Subsequently, a preferential CIT rate of is applied (compared to the traditional 20 percent for a period of 15 years). Further, there is also a privileged policy for workers employed in the IT sector, including a 50 percent reduction in personal income tax.
Foreign edtech businesses can also consider entering the Vietnamese market by collaborating with a local partner to avoid complex setup procedures. Potential partners for foreign investors can be an education entity, a technology firm, or a local sales agent. Working with a local partner can be beneficial as they will help enhance market access and strengthen foreign brands’ footprint in Vietnam via their local experience and wide network with domestic stakeholders.
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