Breakthroughs in Vietnam’s 2026 Education Regulations: Implications for FDI

Vietnam’s education sector is poised for a transformative shift with groundbreaking amendments to its education laws, effective January 1, 2026, that not only enhance regulatory frameworks but also catalyze foreign direct investment (FDI) by aligning with the nation’s digitalization and workforce development goals.

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Facilitating seamless market entry and global expansion

On December 10, 2025, Vietnam’s National Assembly approved landmark amendments to the Law on Education, Law on Vocational Education (amended), and Law on Higher Education (amended). Effective January 1, 2026, these laws not only remove long-standing barriers but also establish critical legal frameworks for education to adopt digital transformation and technology transfer.

This reflects Vietnam’s national strategy to transition from labor-intensive manufacturing to a “new generation” FDI-attracting strategy that focuses on digitalization and increased added value. As such, developing higher-quality human resources remains an indispensable pillar. For foreign investors, these changes create a favorable environment for deeper engagement in Vietnam’s education value chain and for developing in-house human resource training.

Regulatory breakthroughs in Vietnam’s education sector

Recognition of digital diplomas and certificates

The 2025 amended Law on Education recognizes digital diplomas as legally equivalent to paper versions. This enables educational institutions to enhance smart management systems, prevent fraud, and help both students and employers quickly verify educational qualifications.

The legalization also removes bottlenecks in transferability to higher education for learners and large-scale hiring for enterprises, since diplomas would be centralized in the national education database, significantly reducing lead times or forgery risks.

Formalizing “Educational Support Personnel” to improve school governance

For the first time, positions necessary to educational institutions, including accountants, treasurers, librarians, and equipment staff, are legally defined, necessitating frameworks for fairer salary and bonus regimes.

The new provisions allow teachers to focus on their specializations, who were historically tasked with performing unnamed, underpaid tasks due to the absence of a legal framework for this workforce, while compelling schools to improve their operational management.

Formalizing “Vocational High Schools”

The 2025 Law on Vocational Education (amended), developed based on the principles of Resolution 71-NQ/TW (“Resolution 71”), formalizes the “Vocational High School” and recognizes its diploma as legally equivalent to that of standard high schools. This update significantly improves vocational streaming after secondary education, enabling graduates to be directly admitted to universities in relevant majors without detours, while meeting the “middle-skill” labor demand of manufacturers.

Strengthening the public-private partnership

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A major focus of the 2025 Law on Vocational Education is to strengthen the partnership between enterprises and vocational institutions, shifting enterprises from “end users” to “trainers.” The establishment of the Human Resource Training Fund permits and encourages firms to allocate a portion of their internal budget, which may be tax-incentivized, to training and scholarships for vocational schools.

Tax, land, and other preferential treatments are also available to personnel who participate in vocational high school training. FDI businesses should note that the Fund’s target investment focus aligns with national strategies, with key pillars including digital transformation, green growth, AI, and workforce modernization.

Streamlining administrative procedures

The 2025 Law on Vocational Education abolished 27/74 administrative procedures, representing 36 percent of the total, including registrations for additional vocational training activities and procedures for FDI institutions. Simultaneously, 42 other procedures are simplified.

Higher education: Enhancing autonomy and R&D commercialization

In alignment with Resolution 71, which requires “eliminating intermediate levels” to ensure efficient governance, the 2025 Law on Higher Education (amended) promotes decentralization and grants self-determination to universities regarding academic programs, research and development (R&D), and financial and personnel policies, instead of the previously administrative-only autonomy.

The new legislation formalizes the integration of academic research with commercial enterprise through several key mechanisms:

• Establishment of R&D Centers: Firms are now legally permitted to establish dedicated Research and Development (R&D) centers within university ecosystems to foster direct collaboration.
• Commercialization via Spin-offs: Faculty and students are encouraged to launch spin-off companies to commercialize academic research, transforming lab-scale innovation into market-ready products.
• IP Monetization: By establishing a clear framework to monetize university-developed intellectual property (IP), the law enables top-tier institutions to accelerate innovation output.

• Gateway for Foreign Investors: This integration provides foreign investors with streamlined access to in-house patents and high-value IP at a significantly reduced R&D cost.

Why these laws matter to Vietnam’s education sector

A growing market for long-term investors

Vietnam’s demand is structural:

• A population exceeding 100 million, of which over 90 percent are under 65, creating an aspirational consumer base.
• The middle class is young and growing, and is expected to expand to 26 percent of the population by 2026, up from 13 percent in 2023. This demographic is willing to spend a large share of its income on education, driven by a cultural belief that education is key to future stability and wealth.
• Vietnam is set on moving up the value chain, necessitating demand for higher-quality human resources. With realized FDI reaching US$18.8 billion by September 2025 (up 8.5 percent YoY), nearly 30 percent of this capital is allocated for high-value sectors, including semiconductors, data centers, renewable energy, and Artificial Intelligence (AI).

In this context, education is a key pillar of national security and economic growth, as 20 percent of the national budget is allocated to this sector.

Addressing long-standing bottlenecks

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Investors have long faced a skilled labor shortage, with nearly 47 percent of employers struggling to find experienced workers and 42 percent reporting shortages in basic skills.

Despite this market gap, vocational and higher education institutions, especially those established by foreign businesses, have historically faced complex, lengthy licensing processes and restrictive land-use policies, which are significant barriers to training a globally standard workforce for both the state and institutions.

Therefore, the Politburo’s simultaneous approval of three amended education laws signals Vietnam’s determination to align the labor market with international standards and streamline complex procedures to enable education-driven FDI:

• Talent pipelining: The legalization of vocational high schools, digital diplomas, and transferability from vocational to higher education will create a more transparent and predictable human capital pipeline, addressing demand for both middle skill and high skill labor.
• Removing barriers to entry: The simplification of procedures, along with tax and land incentives, will remove the industry’s long-standing barriers to entry.
• Emphasizing the role of enterprises: For the first time, there are legal frameworks explicitly encouraging investors to engage deeper in the education value chain, from post-secondary training, corporate re-skilling, to higher-education R&D partnerships. This allows MNCs to build integrated training ecosystems that address their specific needs.

Recommendations for foreign businesses and investors

For enterprises aiming to elevate human resources supply:

• Funding vocational high schools: Consider establishing a Human Resource Training Fund; offer scholarships and training programs to ensure a steady pipeline of workers trained to the company’s specific needs, while capitalizing on tax profit deductions. Offer company experts as contract lecturers/trainers.
• Academic R&D partnerships: Position your firm as a strategic partner or investor for major Vietnamese universities to gain early-stage access to research and patents in priority areas. Financial support goes directly to benefit local talent while firms benefit from lower R&D setup costs.

For foreign education providers looking to establish educational institutions:

• Vocational programs: Establish specialized schools and programs that offer students standardized technical training.
• Strategic partnerships and scholarships: Collaborate with businesses to organize orientation events, invite industry experts to be guest speakers and trainers, and offer business-funded internships and scholarships.
• Digital governance: Invest early in smart administrative systems and digitalization of diplomas and certificates, thereby enhancing compliance and transparency as Vietnam advances toward education digitalization.

Conclusion

Vietnam’s regulatory breakthroughs in education offer a promising landscape for international investment and partnerships. By laying clear, autonomous, and incentive-based mechanisms for the private sector and foreign businesses to engage in the education value chain, Vietnam demonstrates a strong commitment to modernizing the national workforce to achieve high-value, technology-driven growth.

For FDI businesses, timely engagement with these new opportunities will be critical to securing competitiveness in Southeast Asia’s fast-growing landscape.

See also: Vietnam’s New Strategies for Education, Training, Science & Technology

Setting up a business in Vietnam requires navigating company registration, local approvals, and work permit processes. We help FDI companies by preparing and submitting documentation, coordinating with authorities, and ensuring compliance, so they can start operations smoothly and focus on growth.

Tam Nguyen

Senior Manager

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