Investment in universities only a short-term bubble: expert

Created 27 November 2018
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Investments in tertiary education have become popular, creating an “education, or university, bubble”, according to Nguyen Quoc Toan from Ernst amp; Young Vietnam.
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Education proves to be highly profitable business field

Nguyen Hoang Group now owns Hong Bang, Hoa Sen, Gia Dinh and Ba Ria-Vung Tau universities, while Hutech, the company that runs the HCMC University of Technology, has taken over the University of Economics & Finance (UEF). 

Hung Hau Holdings, the owner of Van Hien University, has wrapped up procedures to take over a series of junior colleges and intermediate schools, including Van Xuan, Van Hanh, Van Tuong and Au Lac. Meanwhile, Thanh Thanh Cong Group owns Yersin University and Sonadezi Junior College.

Tertiary education is not more profitable than other fields if investors make heavy investment to provide high-quality training. The governments of other countries encourage not-for-profit school models and encourage private donations to universities.

Le Lam, rector of Dai Viet Sai Gon Junior College, is also the owner of Dai Viet Intermediate School in HCMC, Dai Viet Intermediate School in Can Tho and the Viet Tien Technology & Business Junior College in Da Nang City.

All of the investors who bought Phan Thiet University in 2013 are also members of the board of management of at least another university.

The wave of investment in universities indicates that tertiary education is a super-profitable business field. However, Toan said this is just the view of ‘amateurs’. In fact, education is never highly profitable, and the only advantage is that universities don’t have to have working capital, he said. 

If one school has 10,000 students or more and collects $2,000 from every student a year, it would have a relatively high revenue of $20 million, which means a profit margin of 8-10 percent per annum. 

However, only schools which have strong brands and good facilities, and provide many majors can obtain this. 

An education expert confirmed that the investment rate for tertiary education is very high with expenses on land, infrastructure, teaching staff and equipment. RMIT only began taking profit after 10 years of operation.

He noted that tertiary education is not more profitable than other fields if investors make heavy investment to provide high-quality training. The governments of other countries encourage not-for-profit school models and encourage private donations to universities.

However, in Vietnam investors see great potential in tertiary education because of the Vietnamese desire for a bachelor’s degree. Most high school graduates want to continue study at universities rather vocational schools.

Toan from Ernst & Young said that a so-called ‘university bubble’ exists and that the investment wave in universities is only temporary.

Chi Nam


Source: - Bridge

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