As one of the nations that strongly believe investing in education will bring a better future, Vietnam has always been a big market for this industry. Vietnam has seen a dramatic increase in educational services such as studying abroad, teaching, training, and coaching programs. The country has a population of almost 100 million people, the majority of whom are in the younger generation, and the parents who can invest more in their children’s schooling.
Vietnamese parents also believe, it is always better for their kids to receive an education in an advanced and developed country than in Vietnam. Therefore, since the kids are at a young age, the parents usually make the plan to send them to study abroad when the time comes. This mindset has been the driving force behind the need for overseas study advisory and consulting services in Vietnam over the past few decades, and it will continue to do so for the foreseeable future.
The potential of Overseas Study Consulting business in Vietnam.
According to research published by HSBC in June 2017, Vietnamese parents put a high priority on their children’s education, allocating 47% of their total household expenditures to children’s education alone.
Furthermore, statistically, 90% of Vietnamese students studying abroad are self-funded (by their parents/family). In addition, the number of Vietnamese students going abroad to study grew significantly by about 46% from 130,000 to 190,000 from 2013 – 2021.
How to open an Overseas Study Consulting business in Vietnam
To open an Overseas Study Consulting business, you would first need to have a business entity (a company) with a proper business code registered (Educational Service ) in your license, as the first step. This is subject to DPI approval (Department of Planning and Investment).
The 2nd step is to require a sub-license called a Certificate of registration for overseas study counseling service which is the subject of the Department of Education before you put your business into actual operation.
Following is a more detailed description of both:
Step 1 – How to establish a foreign-owned business entity in Vietnam for Educational service
To set up a foreign-owned company (either 1% or 100% owned by a foreigner) in Overseas Study Consulting business, you need to obtain 02 licenses called IRC (Investment Registration Certificate) and the BRC (Business Registration Certificate). And the IRC of the company must contain the code for the Educational Service business to start (Business codes 85600 and 85590).
The good thing is, Educational Business is under Vietnam WTO’s commitment. Therefore it is open to 100% foreign ownership. The requirement to set up the entity is similar to all other companies. Read more from here 10 steps to open a company in Vietnam
You would need to prepare:
- A business address (where the company will be located): The old regulation requires you to have a physical office with specific rooms and size. However, with the new rules, you do not need to have an actual office for both incorporating and applying sub-license in the next step. Hence, you can utilize the Virtual Office for setting up the business saving you rental fee and resources.
- A resident director: This individual may be Vietnamese or non-Vietnamese who resides in the country minimum 183 days a year.
- The capital of the company: Not specified by the law, but to obtain the Overseas Study Consulting sub-license in the future, the capital is suggested not being too low. USD 100,000 is considered a feasible start.
In fact, the company needs to explain the financial capability matching with its business plan. As the sub-license requirements are pretty demanding, it is believed that only a significant amount of capital will be sufficient to start the business properly.
The timeline to establish the entity takes 3-4 weeks from the submission date.Â
After the company is successfully registered, it is time to start obtaining the sub-license before the Overseas Study Consulting service can be actually started.
Step 2 – Apply for the Certificate of Overseas Study Consulting service in Vietnam
To apply for this certificate, the company must prepare itself to meet the requirements as of following:
- Requirements for the HR (staff):
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- Must hold at least a bachelor’s degree
- Consultants must have a command of a foreign language at the 4th level or higher as specified by the 6-level Foreign Language Competency of Vietnam.
- Consultant must hold a certificate of Overseas Study Consulting training course mandated by the Ministry of Education and Training of Vietnam.
- Requirements for the head of business: must hold a bachelor’s degree or higher.
- Financial capability: not specified by the law but practically being advised from USD 100,000 to start.
What are the alternatives?
Education-related businesses require sub-licenses, which must be obtained under stringent restrictions. It can be difficult for small-capital investors or those hesitant to commit substantial sums in a new industry to launch this kind of firm. If you are in this situation, what are the alternatives available to you?
Running a nominal local company
It is always simpler for a local business to obtain the required Overseas Study Consulting business code and sub-license than it is for a foreign-owned business in Vietnam. Local and foreign firms are not subject to separate legal requirements. The law is the identical for both parties, but local enterprises are subject to significantly less regulation than those controlled by foreigners. This makes it much simpler for a local firm to secure the appropriate license to operate.
Therefore, one strategy available to foreign investors is to establish a local company under a nominee arrangement and operate the business through such an arrangement. The goal is to choose a dependable local partner, preferably a corporate partner with whom you can legally bind them through a service contract.
In the future, when the company’s performance is stable, you can organize a transfer of ownership to yourself (after obtaining all licenses and permissions in the company’s name). It can be regarded as a transfer of the entire package. This M&A strategy has been utilized by numerous multinational corporations across a variety of sectors, including e-commerce, real estate, and hospitality, among others.
Running your team through Employer of Record arrangement
Market penetration without forming a legal business is an alternative strategy for investors who are unsure whether Vietnam is the correct market for Overseas Study Consulting. With this strategy, you can test the market by establishing a team, which will work and bring clients directly to your overseas mother company. The question is how to manage the team in Vietnam if you do not have a physical presence in the market.
The EOR (Employer of Record) service is the answer. The EOR service enables a service provider to host your team. This service provider will manage your salaries and other HR-related expenses. Utilizing the human resources in Vietnam to achieve your business’s goals allows you to enter the market at a lower cost and without sacrificing market access.
How can VNBG assist with this?
VNBG, as a top-notch business consulting firm in Vietnam, can support you in any direction of this business. We can help you incorporate the company and obtain the necessary sub-license to run the business. We also can provide a local arrangement establishment with strict legal guarantee of your control over the business. We can also offer our EOR service to host your team at any size and level of operations.
Over the last 4 years, VNBG has helped thousands of companies apply for business licenses, investment licenses, and other licenses. Moreover, we support them to recruit and manage employees and doing operations (accounting, paying taxes, finding location and address, and so on).
Combining an understanding of the business environment in Vietnam and valuable experience supporting thousands of businesses, VNBG is proud to be the most efficient and cost-effective business solution in the Vietnam market.
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