Vietnam’s cash economy and study abroad

Vietnam is increasingly recognised as an important emerging market for international education. Outbound mobility has grown strongly over the past decade and demand for study abroad continues to be driven by concerns over capacity and quality in the domestic education system, but also by a hot economy and rising family incomes. The Ministry of Education and Training reports that 125,000 Vietnamese students studied abroad in 2013, with just five international study destinations – Australia, the US, Japan, China, and Singapore – accounting for about two thirds of total outbound enrolment that year. Quynh Nhu Vu is the Vice-Director and Co-Founder of the Phuong Anh International Education Consultancy and Training Company Limited in Vietnam (AIT), an education agency with offices in Hanoi and Ho Chi Minh City. In the following video interview, she highlights some of the practical challenges for Vietnamese students planning to study abroad, particularly with respect to visa requirements. As Ms Quynh points out, Vietnam remains very much a cash economy today, with families often preferring to hold savings outside of the banking system and with many transactions, large and small, conducted in cash. In that context, visa application guidelines with respect to proof of funds or other deposit requirements are a hurdle for many families that may not normally keep such funds on deposit with a bank several months in advance of their student’s planned programme of study. The share of cash transactions across the economy is certainly shifting as GDP per capita continues to increase in Vietnam, effectively bringing more and more of the population into the country’s financial systems. The government has also taken steps to strengthen the country’s banking system in recent years, and even to require that certain types of transactions (such as securities transfers or private lending) be conducted via non-cash means. "Even though Vietnam remains a highly untapped financial services market, economic growth is enhancing the number of people gaining access to bank accounts," notes one recent study. "Consequently, as more people and businesses are brought into the financial mainstream and are becoming aware of the benefits of electronic transactions, the use of cash as a payment method is decreasing."

Financial requirements for agents too

Education agents in Vietnam also operate under a system of deposit requirements as a result of the national government’s Decision No. 05/2013/QD-TTg ("Regulation on Overseas Study of Vietnamese Citizens"). Issued on 15 January 2013, the regulations established a new set of reporting and certification requirements for education agents in Vietnam. In particular, they specified that education agents must meet the following requirements (as of 10 March 2013) in order to operate legally in the country:

• The agency must be legally established within Vietnam, with appropriate offices, facilities, and equipment to carry out overseas study consulting services.
• The agency must have "sufficient financial capacity to ensure the settlement of the cases of risk" and must demonstrate this capacity by meeting minimum deposit requirements of VND500 million (US$23,000) with a commercial bank.
• The owner of the agency, along with staff directly involved in student counselling, must have a university degree, be fluent in at least one foreign language, and have completed a professional training course with the Ministry of Education and Training.

Dr Mark Ashwill is an international educator and the Managing Director of Capstone Vietnam. He noted in 2013 that the new regulations for agents were a result of the rapid expansion of the study abroad sector, and the correspondingly rapid growth of the number of agents operating in Vietnam. "The winds of change are blowing in the regulation and oversight of education agents in Vietnam," he wrote at the time. "This is the result of recent scandals and demands from the public for closer scrutiny of education agents [and] is good news for students, parents and those companies that conduct their business in an ethical and transparent manner." Vietnam’s Ministry of Education and Training also maintains provincial-level Departments of Education and Training (DoET) and it is these departments that are responsible for implementing and enforcing the regulations. Not all DoETs currently publish a list of certified agents but the process of certifying agents appears to be unfolding, and it seems as well that Vietnamese families are becoming more demanding consumers of study abroad consulting services.

"More and more parents and students are becoming educated consumers," says Dr Ashwill. "This means that there is both official (i.e., government) and grassroots (i.e., consumer) pressure for [education agents] to become better."

Of the deposit requirements arising from the 2013 regulations, he adds, "The bottom line, quite literally, is that companies without sufficient [financial] resources will no longer be able to operate legally. Of course, bigger isn't always better. One potential drawback is that this financial requirement will exclude small companies that are trying to run a good business but don’t yet have the money to deposit for each office."