Transitions to Marketization: Vietnam and Poland


Executive Summary

The following essay focuses on the challenges and successes of Vietnam’s higher education system since marketization in 1986. The essay explores the initial reforms, demands, and requirements of the knowledge economy on modern Vietnam. The essay draws on the experience of Poland’s post-soviet marketization to offer strategies of public-fees, expansion of the private sector, and loan incentives. The essay will justify how Vietnam could benefit from translating similar policies into its own context.


Introduction: Transitions to Marketization
The transition from a command to capitalist economy requires that government and society undergo a reorientation towards markets termed marketization. Marketization strategies range from the institutional break-up of state monopolies down to the consciousness of individual human capital sold on an open market. Since Vietnam’s marketization began in 1986, Vietnamese youth have pressed the higher education sector to expand to meet their demand for skills needed in the knowledge economy. I argue that Vietnam stands to benefit from policy borrowing from Poland. Poland and Vietnam alike emerged from the Soviet era eager for the market to expand their elitist higher education systems. Unique Polish policies that welcome the private sector, state-fees, and loan incentives offer Vietnam useful pro-market strategies. A Vietnamese translation of Polish policies could help the central government reach their codified objectives for higher education enrollment at 45% within age cohort, and 40% of that enrollment supplied by the private sector by 2020 (Sheridan, 2010, p.1).

Vietnam: From Soviet Era to Doi Moi
It is important to note that unstated agreement among disparate forces has been a historical reality throughout Vietnamese history from colonialism and nationalism, communism and capitalism, and now the centralized and de-centralized modes of the modern economy. Vietnamese society balances on the uneasy middle ground between opposing forces. Vietnam’s precarious balancing strategy has led to a culture of gradualism that seeks to placate extremes by ambiguously marrying forces together. It is with this in mind, that we should consider how Vietnam’s cautious support of market forces since Doi Moi or Market Rejuvenation has led to the current state of Vietnamese higher education.

During the Soviet Era (North: 1945-1986, South: 1975-1986) Vietnam adopted a mono-disciplinary Soviet higher education system. Universities were elitist, theoretical, industry-specific, governed by industrial agencies, and expected to produce only the human capital needs of the centrally planned economy (UNESCO Bangkok, 2006, p. 226). When Vietnam entered the market economy in 1986, their Soviet heritage left them with a narrowly focused, outdated, disaggregated system with poor curriculum and infrastructure (UNESCO Bangkok, 2006, p. 226). Vietnam’s academe, which conducted advanced studies in Eastern Europe, was likewise unprepared for the ideological shift and market orientation that would come with Doi Moi (Ziguras et. al, 2014 p. 172).

Doi Moi & Reform
Beginning in 1986, the 6th National Congress’ Doi Moi initiative followed the lead of China’s Open Door Policy and began the piecemeal marketization of the economy and allowed for a regulated private sector (UNESCO Bangkok, p. 225). Doi Moi is not a single policy, but rather an imperative that influences pro-market policies to this day. Although in the first decades of Doi Moi higher education opened to the private sector, the Communist party remained skeptical of the access inequalities inherent in the private sector and sought to keep some control over it (Ziguras et. al, p.178). The following sectors will illuminate Doi Moi reforms and the government’s ongoing skepticism.

Governance Reform
In 1990, Vietnam merged two government agencies to create the single Ministry of Education and Training (MOET). The MOET would be the supreme agency of all Vietnamese higher education responsible for setting enrolment, staff, salary, state funding, rector appointments, faculty recruitment, and total expenditure over the entire higher education system (Sheridan, p.15). The MOET’s first achievement was the consolidation of the Soviet universities into five diversified national universities (Clark, 2014 p.8). However, the depth of MOET control led to over-dependency, over-regulation, and the inability to meet local needs (UNESCO Bangkok, p.242). The overly centralized MOET had accountability and corruption concerns and there was pressure to de-centralize command (UNESCO Bangkok, p.225). By 1999, the MOET devolved some autonomy, i.e. student enrollments, graduation requirements, budget allocation, the election of senior administrators, and faculty recruitment to the universities (H. Tran, 1999 p.21). In a further reform the MOET handed control of universities to political and industrial agencies (UNESCO Bangkok, p.242). The MOET’s command fluctuations are symptomatic of a cautious political system during marketization. The inconsistency and lack of accountability of the MOET remains a factor in Vietnam’s slow marketization.

Public Reform
The introduction of the Doi Moi marketization of public higher education allowed for universities to accept fee paying students if enrollment demand exceeded the limit of state scholarships. The government was worried that the appeal of student fees would compete with the merit-based admissions system and undermine Vietnam’s major avenue for social mobility (Clark, para.7). Skeptical of the access equality the MOET offered affirmative action for hill tribes and the poor (UNESCO Bangkok, p. 236). Vietnam’s five national universities were the most prestigious, most desired, and the most likely to channel graduates into government jobs. The introduction of fee-paying students created competition between the Communist virtues of egalitarianism and the market imperative.

Other reforms were gradually enacted toward curricular diversification and systemic integration. General education courses were mandated to widen the narrow specifications of the mono-disciplinary courses (UNESCO Bangkok, p. 232). Beginning in 1993, the MOET began a piecemeal introduction of course credits. To exemplify the pace of Vietnamese reforms, course credits are not expected to become universal until 2020 (UNESCO Bangkok, p. 234). In signaling the government’s continued hold on education, Vietnam, unlike Eastern Europe, continues to mandate that 20% of public and private coursework is focused on Marxist-Leninist thought (H. Tran, p. 21).

Private Reforms
By 1993, the government allowed for the creation of the private sector in Vietnamese higher education (UNESCO Bangkok, p.228). The private sector, which receives no state funding and relies primarily on tuition fees, enrolls middle-class students who can’t enter the prestigious merit-based public universities, but can afford the fees (UNESCO Bangkok, p.220). The private HEIs (both universities & colleges) focus on majors which don’t require much equipment investment and serve the new economy; language, business, and ICT (UNESCO Bangkok, p.220). MOET regulations burden the private sector. The MOET impacts private sector revenues by setting enrollment quotas and maximum tuition fees (Sheridan, p.15).

Regulations continue to forbid the private sector from teaching politically sensitive majors such as medicine, journalism, and law (UNESCO Bangkok, p.249). Due to the revenue restrictions and MOET regulations the private sector struggles to afford quality infrastructure or prestigious faculty. Despite the constraints, demand for higher education from Vietnam’s population has encouraged the growth of the sector, albeit at a slower rate than government anticipated. By 2010, Vietnam missed its target of 30% of total tertiary enrollment by 8 percentages points (UNESCO Bangkok, p.230) (World Bank, 2015). By 2014, when total tertiary enrollment stood at 24.5% of age cohort, private sector enrollment amounted to 15% of the total tertiary enrollment (Clark, p. 9). To hasten the pace of total age-cohort and private enrollment the MOET ambitiously targets 45% total enrollment and 40% private enrollment by 2020 (Sheridan, p.1)

New Educational Demands
Despite the government’s intention to reform higher education, the system as a whole is constrained by invasive regulation, limited autonomy, and a political culture of gradualism. Vietnam’s youth population, with roughly 42% below age 24, is pressuring the government to expand education to meet their demand for massification. Since Doi Moi, tertiary enrollment by age cohort has grown from 2% in 1986 to 24.5% in 2014 (WEF, 2014, p.1). Even with its 2014 figures, Vietnam lags behind Thailand (43%) and Malaysia’s (32%) 2010 total enrollment proportions. In order for Vietnam to reach its student enrollment objective of 45% within age cohort, the MOET should address demands for enrollment capacity in HEIs, coursework relevance, and student loans incentives.

Demand for Capacity
Demand for enrollment capacity in HEIs is driven by population growth, per capita GDP growth, and regional catch-up. There has been a significant rise in higher education applicants from 133,136 in 1987 to 1.3 million in 2012 (Clark, para.9) With 2012’s 1.3 million applicants and a total enrollment capacity of all HEIs in Vietnam at 600,000, there is a significant unmet demand. Student demand continues to mount with higher education applicant figures rising to two million in 2014 (Clark, para. 3). Demand for access is regionally uneven; 43% of Vietnam’s new HEIs are in Hanoi and Ho Chi Minh City, whilst the majority of Vietnam’s population lives in the 61 other provinces (Do, p. 7). Vietnam is in need of pro-market policies that will allow the country to meet its nationwide surge in demand – wherever that demand resides.

Demand for Relevance
Demand for higher education is also a result of the ideological shift from Communism to Capitalism. During the Soviet-era higher education graduates had a “100%” employment rate because after graduation they were assigned to meet industrial needs. Since Doi Moi, the connection between higher education and direct employment has been disconnected. Vietnamese graduates now own their human capital and sell it on an open market (H.Tran, p 2). The imperatives of capitalism created a high demand for soft and creative skills such as marketing, advertising, sales, and professionalism (H.Nguyen, 2015, p.2). The need for creative skills doesn’t match with the top-down Soviet structure, the Confucian emphasis on rote learning, and the value placed on lectures over experiential (T.Tran, 2013 p.633). The emphasis on theoretical learning vs. hands-on learning disconnects Vietnamese pedagogy from modern job skills (H.Nguyen, p.2).

Evidence of this disconnect came to light when a 2009 survey revealed 50% of HEI graduates responded that they were unable to find jobs in their specialization (Wikinson, 2009, p.2). This disconnect is detrimental to Vietnamese growth and relevance in the global economy. In 2008, when Intel outsourced a production plant to Ho Chi Minh City only 8.5% of 2,000 Vietnamese applicants passed the admissions exam. This forced Intel to bring in staff from overseas and subsequently Vietnam lost the intended jobs growth (Ziguras et. al, p. 172). With the opening to the world market, Vietnamese youth are pushing for their education system to be professionally relevant in order to give them a chance to participate in the global economy.

Demand for Private Finance
In order for Vietnam to reach 40% private sector enrollment, students need access to educational loans. Although Vietnam began offering loans in 1998, the scheme has proven insufficient for common educational costs. The loans scheme is primarily budgeted to help rural students attend rural HEIs. A typical loan disburses approximately $21 USD a month, which only covers up to one fifth of the living expenses in a city. Therefore restricting lower income rural students to attend local HEIs (Pham, 2012, para. 12). Additional loans must be secured from private banks at higher rate, and bureaucratic entanglement can a student’s annual repayment burden from 12 to 80 percent of the loan’s total (Chapman, para.7). Between 2007 and 2012, 2.4 million students participated in the student loan system. These figures are low because financial awareness is low and burden is high (Pham, para.12). Even in the face of further need for financial support, in 2012 the Vietnamese government reduced the amount of available loans by one third (Pham, para. 2). For Vietnam to successfully expand private enrollment it needs financial awareness and incentives to loan participation.

Poland: Policy Borrowing
Poland and Vietnam both inherited soviet-era educational institutions with the spread of Soviet educational development into their territories at the end of WWII. During the Soviet-era, Poland and Eastern Europe hosted Vietnamese scholars in an effort to develop Vietnam’s academia (Ziguras et. al, p. 172). Although Poland is an imperfect role model and context translations must scrutinized, I propose that once again Vietnam look to Poland for inspiration in meeting its demands for capacity, relevance, and private finance.

Limitations to Policy Borrowing
The socio-political atmosphere surrounding Vietnam and Poland are distinct. Vietnam is a poor agricultural state recovering from a devastating war that impacted its political evolution throughout the 20th century. The peacetime generation has grown up in a globally linked and entrepreneurial society. The Communist gerontocracy is skeptical of economic decentralization in light of a preference for control. Vietnam tends to cautiously follow China’s footsteps once the methods have proven successful. Unlike the EU’s influence on Poland, Vietnam doesn’t have particularly strong regional links that impact educational development or political thought.

After the fall of the USSR, Poland was deliberately integrated through policies and partnerships to insure its Europeanization. Poland unlike Vietnam is expected to soon experience a “demographic hole” with the student population decreasing from 1.80 million in 2010 to 1.17 million in 2025 (Kwiek, 2013, p.2). Hence Polish demand is not driven by population demographics as much as by economic imperatives.

The major difference between Vietnam and Poland is that once Poland ascended into the EU their educational policies were guided by European initiatives such as the Bologna Process and the Schengen labor market. Vietnam has no such partnership and is still at odds with regional and global powers over contentious issues. ASEAN does not provide similar benefits as in EU membership.

Granted that the unique context, experience, and motivations of the two nations, it is not surprising that Poland’s marketization has been significantly faster than Vietnam’s. A comparison between Poland and Vietnam will focus on the Polish policies that expanded capacity, relevance, and loan incentives in preparation for Poland’s entry in the EU in 2004. It is in this time of independence and optimism Poland offers strategies for rapid marketization.

Post-Soviet Transition
From 1947 to 1989, Poland operated a Soviet style higher education system with focused disciplines and industry-specific universities. The education system was a means to the ends outlined in the Party’s economic plans. The egalitarian ethos of Communism made admissions merit-based and tuition free. Education remained elitist with 10% of the population participating and student enrollment, between 1970 to 1990, fluctuating between 300,000 and 470,000 (Kwiek, p.7)(Dakowska, 2014, p.134). After the dissolution of the USSR, Poland made a series of decrees that led to the rapid massification of higher education.

On September 12th 1990, the Republic of Poland decreed the Education Act of 1990. The 1990 Act was a legal framework to grant universities autonomy and to open up to the private sector (Dakowska, p.133). The effect of the 1990 Act was the rapid expansion of fee-paying public and private education in Poland. By 2012, Poland attained a 55% total tertiary enrollment rate. This made Poland 16 percentage points above the OECD average in 2012 (OECD, 2012). In the wake of the 1990 Act, the gross participation rate in tertiary education grew from 12.9% in 1990 to 51.8% in 2013 (Dakowska, p.134). 51.8% is nearly twice Vietnam’s 24.5% gross enrollment rate for 2014. The Polish government has made educational spending a long-term priority, exemplified in Poland’s GDP spending on education comparable to Western Europe at 11.5% (OECD, 2012).

Productive legal frameworks such as the 1990 Act, allowed for the demand driven expanse of public and private higher education to grow unhindered. The end of the Soviet employment system and the appeal of higher salaries in the market economy were the economic drivers the of 1990 Act (Kwiek, p.8). This growth was made possible by the exemplary policies of the 1990 Act.

Exemplary Policies
In the following section, we will explore three policies that spurred Poland’s growth in access to higher education. These are the three policies that I argue could be translated to Vietnam to help Vietnam reach its targeted objectives. They are by no means the only policies that Poland has to offer. They are the few that could transcend social and political culture. Much of Poland’s expansion was due to the autonomy granted to the HEIs through the 1990 Act. This autonomy made them agile toward market pressures and accountable to outside stakeholders. These policies may not yet be applicable or agreeable to Vietnam’s staunch political framework that views education for its human capital production and ideological control.

Exemplary Policies: The Non-regular Course Provision
For our purposes we will call a provision within the 1990 Act that allowed public institutions to accept fee-paying evening students the Non-regular Course Provision. The Non-regular Course Provision allowed public HEI to enroll diploma-seeking fee-paying students, up to 50% of their student capacity for non-regular course work after the merit-based courses were complete in the afternoon. The non-regular courses allowed HEIs to double their enrollment without making the merit-based and tuition-based students compete for capacity. The non-regular courses were profitable because they used the same infrastructure as the regular state-funded courses. The non-regular courses maintained the HEIs meritocratic prestige, and likewise used that as a selling point for would-be fee-paying students (OECD, 2007, p.450). The non-regular course matched the egalitarian sentiments of the government whilst meeting the needs of the public. The non-regular courses allowed education to be constitutionally free in parallel with the reality that by 2010 58% of students were paying tuition fees (Herbst, 2013 p.213).

If translated to the Vietnamese context, the Non-regular Course Provision would allow for enrollment in the prestigious public universities to expand without increased government spending or intruding on the merit-based capacity. In Vietnam’s current public fee-based system, merit and tuition students compete for capacity. Under the Non-regular Course Provision these two segments of the student market are taught separately. Since the state has already provided the infrastructural needs to conduct a course, a non-regular course provision could create surplus operating revenue for the schools. The ability to rapidly increase the supply of capacity through the cost-effective non-regular course provision could be pivotal for Vietnam to reach its 2020 45% enrollment objective.

Exemplary Policies: Private Sector
The 1990 Act also allowed for the advent of the private sector. Poland’s embrace of the private market was one of the strongest in Europe. In 2010, 51.6% of Polish students were paying fees. By 2013, private HEIs made up roughly 75% of all Polish HEIs and 27.4% of HEI enrollment (Dakowska, p. 133-134). The private sector’s search for untapped markets spread HEIs throughout the country, effectively undoing the institutional centralization that concentrated universities in Polish cities (Herbst, p. 213). The private sector was particularly popular because offered tuition-paying part-time programs in industrially relevant subjects. The private sector was spurred on by the need for vocational training in the new economy. The vocational sector in the Polish context refers to vocational, bachelors, and masters programs. The vocational sector was allowed to design its own course work in order to tailor to the needs of local industry (Butler, 2008, p.3). The new linkage between training and local industry encouraged more Poles to enter higher education, with 2009 entry rates at 85% (Kwiek, p.5). The vocational workers educated in Poland’s private sector became the high skill Polish migrant workers that entered the Schengen labor market in 2004 and became a significant source of remittances for Poland.

Vietnam could benefit both in capacity building and relevance from allowing a more open private market. For instance, Vietnam could make the private sector more appealing by reducing regulation and giving the field the ability to design its own course work. Vietnam should follow in Poland’s footsteps and eliminate the mandatory Marxist course work, as it comprises 20% of public and private curriculum and has no job relevance (H.Tran, p. 1). I propose that they replace Marxism courses with soft skill and professional development coursework. Government regulations that cut into the autonomy of the private sector should also be eliminated to allow the sector to grow. Most importantly, the private sector should be given further autonomy to produces its own materials and to meet local industrial needs. Vietnam’s private sector remains concentrated in the cities. A Polish inspired shift toward local integration could meet the educational demands of the countryside. Most importantly, Poland’s part-time vocational system lowered the forgone earnings barrier that full-time study incurs. The growth in the private sector in Poland amounts to roughly 75% of all HEIs, while in 2010 Vietnam’s private HEIs accounted for only 19.1% of HEIs (Do, p.6). In order for the Vietnamese private sector to increase quality it needs to have the autonomy and flexibility to meet the demands of the new economy.

Exemplary Policies: Student Loan Incentive
In order to support the fee-paying public and private sectors, Poland began offering student loans to low-income HEI applicants in 1998. The loan system is primarily used for non-regular courses at prestigious public universities (Herbst, p.10). By 2011, the Polish government expanded that system from 70% to 100% government underwriting of tuition costs for low-income students (Herbst, p.10). The possibility of a 100% tuition loan puts private education in the reach of all Poles. Starting in 2011 to encourage further participation in the loan scheme, the Polish loan system would forgive 30% of the loan’s principal for students graduating in the top 5% of their program.

To expand private enrollment to 40% by 2020, Vietnam could apply a similar scheme of funding for performance in the loan system. Funding for performance would encourage hard work and grade awareness amongst the students. Hence invigorating academic competition in the less prestigious private sector. This could in turn increase the perception of private education, which could inspire further participation in the sector and help Vietnam reaches its objective.

The Vietnamese MOET continues to view education policy in terms of control. Their continued political legitimacy is contingent on their delivery of successful national development. This makes them cautious to experiment and gradual in enacting change. That is why borrowing policies, that have proven merit, from China and the West has been the mode of operation for much of Vietnam’s marketization. Poland’s rapid massification validates the merit of the 1990 Act.

I argue that the MOET would find the Non-regular Course Provision particularly attractive because they can remain in control of the participating HEIs while rapidly expanding capacity. The Non-regular Courses Provision simply repurposes existing infrastructure without much additional government spending and doesn’t create competition between merit based and fee-paying admissions. Also the job openings in the non-regular evening courses could encourage public HEI professors not to moonlight in outside evening courses. I recommend that if the MOET enacts their own Non-regular Course provision, they should do so with a corresponding de-regulation of the private sector. Otherwise they risk exacerbating the inequality of rural/urban capacity. The private sector could move into the educational periphery in search of markets whilst the MOET controlled, high prestige, fee-paying Non-regular courses dominate the urban market. Since the expansion of both sectors requires fees, the loan forgiveness incentive should also be offered as a catalyst for loan participation and academic competition. Vietnam has five more years to reach their enrollment objective – with Poland’s 1990 Act as a guide they may just be able to reach that goal.

In conclusion, I argue that in the market economy, which values results over rhetoric, the MOET’s aspirational targets seem out-of-touch with economic reality. For the MOET expectations for 15 percentage points in six years (2014-2020) seem divorced from reality. Given that it took 21 years for Vietnam’s enrollment to grow by 15% from 1986 to 2007, unless exceptional measures are taken, it is unlikely Vietnam will reach its objective. Given the wide enrollment gap they aim to fill within the next six years, further privatization, improved loan incentives, and the Non-regular Course Provision are proven strategies for low-cost rapid enrollment expansion.



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