Ly Pham (2014)

 The recent disputes over the power of controlling university governance in Hung Vuong University[1] have left a sorrow to its students. More importantly, the disputes seriously hurt the reputation of non-public universities in Vietnam. In the long run, it causes trouble for the future development of all higher education, because it is necessary that the non-public sector should be expanded to meet the need of the people because publicly financed resources are unable to cover the expenses for the massification of higher education. The Hung Vuong scandal as well as other disputes happening in other private universities, show the gaps in national policies on higher education that need to be addressed.

From the past to the present

Vietnam’s Higher Education Law issued in 2013 makes a great step forward when it affirms the distinction between for-profit and not-for-profit private universities. As Article 4 defines them “Not-for-profit private/foreign invested higher education institutions are those who do not distribute annual profits but use the surpluses for reinvestment into the school. Shareholders either do not receive the profits at all or they receive an amount less than the government savings interest”. Article 11 section 7 also states that there will be favorable conditions granted to not- for-profit schools: “Favors will be given in term of provision of land grants, generous tax breaks, loans, and training faculty to encourage not-for-profit private/ foreign investment institutions;” and “All acts of commercialization of education are forbidden.”

This can be seen as progress in terms of “perception evolution” if compared to previous documents such as Decision 14/2005-Ttg dated 17.1.2005. This document, Decision 14/2005-Ttg created a legal foundation for making profit in private universities based on seeing all private universities as completely commercial enterprises. Article 15 section 1 in the same document states that “Shareholders General Meetings include shareholders who have the right to vote,” exactly as a corporation. In other words, those who have the most money are those holding the greater power.

From legal documents to reality

The New Higher Education Law affirmed the distinction between for-profit and not-for-profit private HEIs and provides their definitions. This definition only talks about the distribution of profits but neglects much more fundamental issues such as ownership and power. The division of the surpluses is the consequence of ownership and power. The conflicts and disputes happening in private universities recently, including Hung Vuong University, derives from the gaps between policy on power/ownership and the reality.

Most private universities in Vietnam nowadays were established at the end of the decade 1990-2000. They were originally “people –founded universities”, because at that time there was no legal framework for establishing private universities. A people-founded university was a naturally collective ownership, created by a group of founders in name of a state organization. The capital was not so huge at first. These institutions have grown up over time and have become bigger and bigger, thanks to student tuition fees and contributions of several generations of faculty and administrators. When the Ministry of Education and Training requested all people-founded universities to transform to private universities, conflicts appeared due to translating from collective to private ownership; disputes were inevitable.

Within the recent legal framework, private universities unavoidably operate as for- profit organizations. The new Law on Higher Education has taken effect, but there have been no Decrees or Decisions giving instructions for implementation. Therefore, there is no way to confirm the status of a for-profit or a not-for-profit institution. The favorable conditions yet to be specified. The Regulation for Organizing and Operating of Private Universities issued in 2005 and amended in 2009 is still in effect. If the government takes no action on policy instructions concerning the issue of transferring collective ownership to private ownership, then disputes like those at Hung Vuong and Van Hien will not just continue but increase.

Policy gaps

There are two policy issues that need to be addressed. First, the ownership and power issue. Second, the intellectual contributions as an intangible capital in private universities.

Ownership and structure of power

In order for a robust system of non public sector institutions in higher education to be developed, it is necessary to perceive non-public higher education institutions (HEIs) as special organizations which are not only training service providers but also make contributions to long term benefit of the society. To make this happen, non-public institutions should not operate exactly as a corporation, because corporations have only one objective and that is providing products and services to make a profit. A true university will not only aim for short term benefits and emphasize generating profit for the investors but also will serve the society at large. A university, either public or non-public, is respected as an invaluable asset of the society when it has a commitment not only to the present but also to noble obligations to the future. To fulfill this mission, professionals, educators, and social activists, who represents public interest must have a say.

Therefore, the distinction between for-profit and not-for-profit HEIs should not be based merely on the distribution of profits, as it is only the consequence of power and ownership.

We suggest that legal framework for non-profit HEIs versus for-profit HEI’s should be base on three important criteria: the nature of ownership, the power structure, and the distribution of surpluses.

  Criteria For profit institution = Private university Not- for- profit institution = People founded university Public university
1 The feature of ownership Private ownership (including group of individuals)

Shares are private asset, and transferable, inheritable.


Community ownership

Initiate capital devoted to the university is spontaneous contribution as a donation. There is no share and shareholders. There is no private ownership therefore transferability and inheritance of university assets is not allowed or impossible.

State ownership


Government invests in infrastructure and provides funding for operation expenses following public financing principles. University assets belong to the state.

2 Power structure Governing Board or Board of Management holds the supreme power on critical issues regarding financing, personnel, and so on.

(Governing Board is elected by shareholders at a general meeting. The Chair is also elected by Governing Board members).

University Council or Board of Trustees holds the supreme power.

(This University Council combined representatives of stakeholders of the university including central/local government, donors, industries, politicians, educators, professionals, social activists, faculty members, students, etc. The Chair is elected by Council members).

University Council holds the supreme power.


(This University Council combined representatives of stakeholders of the university in which the representative of government will be Chair and appointed by the government)

3 Using surpluses Surpluses are distributed to shareholders. Surpluses are not distributed but used for reinvestment to the school as accumulation. Surpluses are not distributed but used for reinvestment to the school as accumulation.

The new Law on Higher Education identified the distinction between for-profit and not-for profit institutions by the third criteria but not the first and second criteria noted above which are the roots of the problem. A not-for-profit university does not belong to private ownership or owned by a group of individuals or businesses; but belongs to a collective ownership and serves the whole community. This feature has not been identified in the New Law on Higher Education though it is extremely important. Non-public institutions might have huge accumulations of assets over time, especially when it has favorable conditions such as land grants or tax exemptions. Acknowledging private ownership of these institutions has implications of enabling public resources transferring to private assets.

Naturally a non-public not for profit institution is not owned by individual donors, therefore it is nonsense to define it as a private university. We suggest a classification that includes three types of school as following:

–        Public university belongs to state ownership, funded by state budget to serve implementing national strategic planning and priorities. Leadership and senior administrators might be appointed by government or selected by University Council, which depending on state regulations.

–        Private university, belongs to private ownership, is created by private capital, covering it expenses by legitimate revenues. Leadership and senior administrators are selected by Governing Board and approved by Ministry of Education and Training. All private universities are for-profit institutions. School assets are private assets which depend on the percentage of shares. A private university operates by Corporation Law with some certain limited favorable conditions. Shares can be transferred or inherited.

–        People-founded university belongs to collective/community ownership, created by an individual or group of individuals as donors. These donors do not hold the ownership of the school assets. There is no transferability, no inheritance. This model represents not-for profit non-public university and it should have provided land grant. It’s expenses are covered by legitimate revenues of the school. Leaders and senior administrators are selected by University Council.

Intangible properties of non- public university  

            For HEIs established under Regulations of Organization and Operation for Private Universities, intangible properties are not an issue. The for-profit institution model implies that all faculty members and administrators are employees. Branding generated by their performance can be seen as the outcomes of labor contracts and therefore it belongs to the school owners. The problem is that institutions like Hung Vuong University were originally people-founded universities in which founders contributed the two properties: financial resources and intellectual properties such as their reputation and expertise. Such intangible properties have not measured appropriately when these schools are privatized. This produced inevitable conflicts and disputes.

In addition, many properties of private universities are not generated by investor capital at the beginning of establishing a school under the people-founded university model. These were accumulated by tuition fee over time. Privatization of such properties also results in conflict and disputes. This can be seen as a consequence of the historical development of non-public university in Vietnam.

It is needed a special legal framework to deal with this situation before we can establish an system of higher education with combined diverse ownerships and types of school. This is an urgent task to prevent the downfall of reputation of private universities. The disputes that have happened in private universities recently have created a serious negative attitude toward private universities in public. The lamentable position in term of decreasing enrollments that private universities was driven into can be attributed to the fact that public trust towards them has been losing seriously.

Instead of “saving” private university survival, Vietnamese government should provide a transparent policy in term of ownership and equality accessing to public resources such as research grants, student loans, scholarship, etc. This transparency will open opportunities for social contributions, to help avoiding avoidable disputes, to create appropriate room for all kinds of schools to develop and supplementing each other.

In the long run, the government should support and encourage non-public universities, because they are needed to provide training services for the massification of higher education which public resources is unable to afford. The loss of reputation among private universities is also a loss for the whole system. These problems are unable to be dealt with by ad hoc solutions. More studies on policy issues need to take place to address unprecedented problems arising out of the evaluation of higher education policy in Vietnam.


The author of this report would like to thank Dr. Le Viet Khuyen, and Prof. Lam Quang Thiep for their contributions in discussing this issue with her.  Special thanks go to Prof. Dennis Berg for giving comments, feedback and review English version of this article. 


[1] A serious dispute among officials at a HCM City private university has led to a deadlock, following a decision by its management board to transfer the school to another site. Source: http://english.vietnamnet.vn/fms/education/92790/university-row-leads-to-security-chaos.html