Vietnam’s booming economy has seen huge numbers of foreign firms enter the market and foreign tourists visit the country. This has created huge demand for English language courses and the proliferation of English language learning centres around the country.

Starting an English language centre in Vietnam however, can be tricky. There can be a lot of red tape and requirements and working with local authorities can be challenging. That said, firms and entrepreneurs can ease the stress and tension that comes with establishing an English language centre in Vietnam by understanding the process and its nuances ahead of time.

In this light, this article discusses the key steps and procedures that should be understood when opening an English language centre in Vietnam.

English in Vietnam

National Foreign Languages 2020 Project

In 2008, the Government of Vietnam approved the Foreign Language Teaching and Learning in the National Education System in the 2008-2020 Period plan with Decision No. 1400/QD-TTg. This decision outlined Vietnam’s foreign language learning aspirations. Specifically, Vietnam planned to implement a 10-year foreign language education program for 100 percent of students by 2020.

This target, however, was a tall ask, and in 2017, with this goal still well out of reach, the project was extended by Decision 2080/QD-TTg to 2025. This still seems unlikely and a further extension may be necessary. That said, this has partially contributed to the recent boom in English language learning centres, courses, and classes in Vietnam.

How much can you charge?

Rates for English centres in Vietnam vary widely. This largely depends on the location, the size of the class, and the quality of the teaching staff–English learners generally pay higher rates for native English speaking teachers.

It will also depend on the level of the English learner. Vietnamese consumers expect to pay less for younger students learning the basics than for more advanced classes–RMIT Vietnam offers 10-week English for University courses for VND 59,698,000 (US$2,493). This is, however, at the higher end of the spectrum.

Getting started

The process of establishing an English language centre in Vietnam can be time-consuming. That said, foreign individuals and firms looking to invest in Vietnam can pre-empt some of the challenges they may run into by familiarising themselves with the setup requirements for an English centre in Vietnam..

Capital contributions

To establish an English centre in Vietnam, businesspersons will need to contribute capital in line with the minimum capital requirements outlined in Decree No. 86/2018/ND-CP (Decree 86). 

Specifically, short-term training centres require a minimum capital contribution of VND 20 million (US$826) per student (excluding rental costs). This is calculated based on the expected capacity of the establishment. Note that contributed capital is separate from the fees and charges businesses need to pay to establish a company.

See: Vietnam’s Foreign Ownership Limits: Quick Guide 2023

Establishment procedures for English centres in Vietnam

English learning centres in Vietnam with foreign ownership are generally established as a limited liability company either as a wholly owned foreign enterprise or a joint venture with a Vietnamese partner.

Wholly foreign-owned businesses in Vietnam

A wholly foreign-owned English language centre in Vietnam allows a foreign investor complete control over a company’s operations. It is, however, generally more costly and time-consuming.

Specifically, before they can apply to register a business, foreign entrepreneurs who want to set up a wholly foreign-owned company will need to first apply for an Investment Registration Certificate (IRC) which they do not have to do with a local partner.

An IRC is basically required to ensure that foreign firms are not starting a business in restricted or forbidden business lines.

The conditions for approving an IRC are outlined in the Law on Investment which also states that IRCs should be issued in between 5 to 15 days. In reality, however, it is usually around 30 to 45 days.

Joint venture businesses in Vietnam

With a local partner foreign business persons do not need to file for an Investment Registration Certificate, but rather the Vietnamese partner establishes the company and the foreign investor buys a share. In this sense, working with a local partner can considerably reduce setup costs and application processing times. 

Joint ventures, however, can be risky. A mismatch in work ethics and management styles can cause conflict in the workplace, particularly in cross-cultural settings. For example, whereas in Vietnam it is common to financially penalise staff for arriving late or for using their phone during work hours, in Western countries, this would be unacceptable. Understanding these little nuances of cross-cultural communication, in a joint venture environment, may be crucial to a business’s success.

English centre franchises in Vietnam

English language centre franchises in Vietnam are not uncommon. There are a number of English language learning centre franchises spread out around the country. Buying into a franchise is an option for foreign investors but foreigners should be mindful that establishing an English language centre via a franchise has its own governing regulations.

These regulations are covered in Decree 35/2006/ND-CP and Decree 120/2011/ND-CP.

In order to open a franchise in Vietnam approval must be granted by the Ministry of Industry and Trade. Said approval requires traders to compile an application including the following:

• A franchise brochure containing the full details of the agreement to be entered into between the franchisor and the franchisee.
• Documentation proving the existence of the foreign trader as a legal entity.
• Documentation outlining the protection titles of any industrial property rights.
• Audited financial statements of the franchisor for the previous year.
• Evidence of sub-franchise approval (if applicable).

According to Decreed 35/2006/ND-CP after submitting a franchising application to either the Ministry of Industry and Trade or the provincial Department of Industry and Trade, applicants should receive a response in five working days.

For assistance with establishing a legal entity in Vietnam see: Consulting Firms in Vietnam: A Directory

Visas for foreign English language centre proprietors 

Foreign English language centre owners in Vietnam will likely qualify for an investor visa. The length and cost of an investor visa will depend on the value of the investment.

Vietnam investor visas for English language centre owners

Investor visas in Vietnam are known as DT visas. There are four types of investor visas which vary in length depending on the value of the investment.

Investor visas in Vietnam 2023

Source: Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam

Vietnam work visas for teachers at English language centres

Foreign English centre owners should also be mindful that should they employ foreign staff, these staff will likely need a work permit and work visa, too. Work visas in Vietnam are known as LD visas. They allow a foreign worker to work in Vietnam for up to two years. 

On paper, a work permit can cost anywhere from US$10 to US$40 depending on where the application is made–each province has its own Department of Labor, Invalids and Social Affairs which sets its own fees and charges.

That said, in reality, firms usually go through a visa agent. Visa agents are generally well-connected and familiar with the nuances of the different rules and regulations of the different departments in the different provinces. These services generally run at a few hundred dollars.

Choosing a location for an English language centre in Vietnam

Choosing the right location for an English language centre can be the difference between success and failure. Firms and individuals looking to establish an English language centre in Vietnam should consider the best market for their products and services. 

Market research

Market research is essential when choosing a location for a new English language centre in Vietnam. Given the number of centres in Vietnam’s biggest cities and the propensity for consumers to frequent establishments closest to their home or place of work, the right location depends greatly on the individual establishment and therefore offering broad advice can be difficult. That said, In the case of English centres, near a school or youth centre is a good idea.

Online teaching

During the pandemic online English teaching services became very popular in Vietnam. This is still a service or medium that many Vietnamese English language learners still choose to utilise. That said, there has been a big shift back to in-person learning with English language classes also a means to give parents a break from their kids. A hybrid model would not be a bad idea.

That said, future English language centre proprietors, wherever they choose to establish themselves, will very likely have to sign on to a commercial lease. 

Commercial real estate rents in Vietnam

Rental costs can be a significant factor in choosing the right location and these will depend on a broad range of factors, however, the following ballpark figures for Hanoi and Ho Chi Minh City from CBRE may be useful as a rough guide as to what to expect.

Average rent, ground/first floor, per-square-metre

Commercial leases in Vietnam

The Law on Real Estate Businesses 2014 regulates leases broadly and this includes commercial leases. A typical lease agreement in Vietnam will have several key features:

• The length of the lease: In Vietnam a commercial lease typically runs for about five years;
• The payment terms: How often rent payments will be made and how. Typically, rent payments are made quarterly, however, they can also sometimes be monthly, every six months, or yearly; and
• The division of responsibilities: who is responsible for what and when between the landlord and the tenant.

These are just the broad strokes but are also the most pivotal components of the agreement. Other aspects of the agreement can generally be negotiated between the landlord and the tenant without too much direction from the Law on Real Estate Businesses.

Key regulations for new English centres in Vietnam

In Vietnam, almost every type of business is regulated in some shape or form. How it is regulated will depend largely on what type of business it is. In the case of an English language centre key regulations business persons should be aware of are around facilities, equipment, and staff.

Specifically, Article 36.1 and 36.2 of Decree 86, outlines the following provisions for short-term learning centres:

• Classrooms must provide at least 2.5 metres-square of space for each student and and teacher; 
• Teachers must have a minimum of a college degree or equivalent; and
• There can be no more than 25 students per teacher.

Human resources for English centres in Vietnam

Entry-level staff in Vietnam who do not have university degrees or some form of higher education are generally paid around minimum wage. In the context of an English language centre, this might include cleaners or teacher’s aids. Minimum wages in Vietnam are different for each of one of four key regions. These are outlined in Decree 38/2022/ND-CP. 

That said, wages for English language teachers in Vietnam can be much higher than the average wage. This is particularly true of foreign staff. 

English teacher wages in Vietnam

Glassdoor puts wages for English teachers in Vietnam at between VND 24 million (US$990) to 65 million (US$2,682). At the lower end are generally the local English teachers at independent language centres, and at the higher end are professional English teachers working in big international institutions usually teaching high-level English courses. For example, University level English or to students looking for International English Language Testing System (IELTS) accreditation.

With this in mind, teaching staff are likely to be the biggest expense for a good quality English learning centre.

Intellectual property protection

Protecting intellectual property in Vietnam can be challenging. It is common for local businesses to use brand names and logos of other more well-established businesses. As of 2022, Vietnam remained on the Office of the US Trade Representative’s Special 301 Report which labelled IP enforcement as ‘a serious challenge’ for the burgeoning nation. That said, it is a signatory to most international intellectual property treaties and it has made a number of key reforms in recent years to strengthen IP protections.

Trademarking a business’s intellectual property in Vietnam

With respect to establishing an English centre in Vietnam, there are a number of items of intellectual property that English centre owners may want to consider trademarking. A unique course name, a brand name, or a company logo could all be the subject of a trademark application.

Note that Vietnam is a signatory to the Madrid Agreement and therefore, firms with trademarks approved in other countries that are also party to the agreement will automatically have their trademarks recognised in Vietnam.

Likewise, businesses that register a trademark in Vietnam will automatically have protection in the other countries party to the agreement.

Filing a trademark application in Vietnam

In order to apply for a trademark a firm must first complete an application that includes:

• A trademark registration declaration,
• An image of the trademark between 3cm x 3cm and 8cm x 8cm,
• A list of products and services that are to be registered,
• A power of attorney, if necessary, and
• Proof of payment of all necessary fees and charges.

Trademarks in Vietnam are then filed with the Intellectual Property Office of Vietnam (IPVN). It can take 12 to 18 months for a trademark application in Vietnam to be approved.

Fees and taxes for businesses in Vietnam

New businesses will need to register with the General Department of Taxation in order to pay their taxes and ensure they are tax-compliant. There are also a number of recurring fees and taxes that new English language centre owners in Vietnam should be aware of.

English language centre business licence fees

Limited liability companies in Vietnam are required to pay a business licence fee annually. This must be paid by January 30. These fees depend on the registered capital of the firm.

English language centre business licence fees, 2023

Source: Decree No. 20/VBHN-BTC

Value-Added tax (VAT)

The specifics of the VAT are outlined in Law No. 13/2008/QH12. Broadly, this is a consumption-based tax on goods and services in Vietnam. It is generally charged at the point of sale. There are some exceptional circumstances in which VAT declarations and payments can be made quarterly, however, payments are usually made to the General Department of Taxation each month. VAT is generally charged at 10 percent of the sale price, though for select specialty items, it is only 5 percent, and some items are also exempt.

Personal Income Tax (PIT)

PIT is levied on a worker’s wages in Vietnam. The amount to be collected is on a sliding scale, the more a worker earns the more PIT they pay. Employers are required to collect PIT on an employee’s wages and pay said tax to the General Department of Taxation each month. If approved by the authorities an enterprise may be able to make tax payments quarterly instead. The PIT is governed by Law No. 04/2007/QH12.

Corporate Income Tax (CIT)

CIT is the tax a company pays. The standard CIT payment is 20 percent of assessable income, however, on large investments foreign firms have been known to receive tax breaks. This tax is paid yearly though firms can make payments quarterly. The CIT is governed by Law No. 14/2008/QH12

Getting help starting an English language centre in Vietnam

For assistance opening an English language centre in Vietnam let us connect you with a market entry expert.

For up-to-date information on what is happening in Vietnam’s education sector at any given time, English language centre owner-aspirants should make sure to subscribe to the-shiv.

🡇 Get education sector news via your inbox 🡇