Exploring challenges in revenue diversification for public higher education in vietnam

Hình 1 VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY --- NGUYEN THI THU HUONG EXPLORING CHALLENGES IN REVENUE DIVERSIFICATION FOR PUBLIC HIGHER EDUCATION IN... List of a

Hình 1

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY -

NGUYEN THI THU HUONG

EXPLORING CHALLENGES IN REVENUE DIVERSIFICATION FOR PUBLIC HIGHER EDUCATION IN

Acknowledgment

First and foremost I am extremely grateful to my supervisors, Dr Nguyen Thuy Anh, Program Director of Master’s Program in Public Policy – Vietnam Japan University, Associate Prof, Dr Kawaguchi Jun, University of Tsukuba for their invaluable advice, continuous encouragement, and patience throughout my master's program During the entire time of my academic research, I have been inspired by their vast knowledge and wealth of experience

Second, my profound appreciation goes to Prof Naohisha Okamoto, Program Director

of Master’s Program in Public Policy - VJU, and Dr Vu Hoang Linh Program Coordinator of Master’s Program in Public Policy - VJU, and all of the instructors during my master course at VJU for their time, effort, and understanding in helping me succeed in this program Their vast wisdom and wealth of experience have inspired me throughout my studies and practices

In addition, I’d like to thank Ms Nguyen Thi Huong, Program Assistant of Master’s Program in Public Policy - VJU, Ms Bui Thi Phuong Thao, Assistant of Global Initiatives, the University of Tsukuba and her colleagues for their assistance throughout

my study, my internship and master thesis development, in Vietnam and Japan as well

I’d like to express my gratitude to all participants in my in- depth interviews who took time to openly and sincerely share with me their observation and knowledge in the respective field

Last but not least, I would like to thank all of my friends who have spent time looking into my draft report and gave me advice based on their expertise and experience I am also much appreciated my husband for his accompany and support through my study journey Thanks to their generosity and encouragement, my time spent on this master thesis has been truly rewarding

Contents

Acknowledgment 3

Contents 4

List of figures 6

List of tables 7

List of boxes 8

List of abbreviations 9

CHAPTER 1: INTRODUCTION 10

1.1 Research background 10

1.2 Research problem 13

1.3 Research objectives 13

1.4 Research questions 14

1.5 Research scope 14

CHAPTER 2: LITERATURE REVIEW AND ANALYTICAL FRAMEWORK 16

2.1 Literature review 16

2.1.1 Challenges and barriers to diversify the revenue of higher education institutions 16

2.1.2 Recommendations for varieties of revenue generation activities 19

2.2 Analytical framework 22

2.2.1 University autonomy and its taxonomy 22

2.2.2 Financial sustainability and revenue diversification 25

CHAPTER III: RESEARCH METHODOLOGY 29

3.1 Data sources 29

3.2 Methodology 29

3.3 Limitations of the study 31

CHAPTER IV: RESEARCH FINDINGS AND DISCUSSION 32

4.1 Research findings 32

4.1.1 Vietnamese legal framework on PHEI’s revenue sources: 32

4.1.2 Challenges in revenue diversification in PHEIs in Vietnam 35

4.2 Discussion 53

CHAPTER V: IMLICATIONS AND CONCLUSION 55

5.1 Implications 55

5.2 Conclusion 57

REFERENCES 60

Appendix 1: State expenditures for higher education, 2018-2020 69 Appendix 2: Interview questionnaire 70 Appendix 3 Guidance on templates used for S&T projects and tasks at VAST 71

List of figures

Figure 1: Research background 13

Figure 2: Research problem, objectives, questions and scope 15

Figure 3: Recommendations on revenue diversification for PHEIs 21

Figure 4: Research framework 28

Figure 5: Qualification profile of the research participants 30

Figure 6: Vietnam’s result of scientific research from 2016 - 2020 36

Figure 7 Number of international publications of some ASEAN countries, period 2015-2020 37

Figure 8: Challenges in conducting S&T project funded by the state 41

Figure 9: BK-Holdings model 46

Figure 10: Challenges in donation and philanthropy 52

List of tables

Table 1: Key challenges and barriers in revenue diversification for PHEIs 18Table 2: Demographic profiles of the interview participants 30

List of boxes

Box 1: University autonomy was firstly translated into Education Law 1998 24Box 2: Revenue sources of higher education institutions as per regulated in Circular 36/2017/TT-BGDDT 26Box 3: Decree 60/2021/NĐ-CP regulates permission for public universities to to enter into joint venture, cooperation or association 33Box 4: Decree 77/1999/ND-CP on promulgating the regulation on organization and operation of the social funds and charity funds 34Box 5: Decree 60/2021/ND-CP regulates permission for public universities to access

to credit loans 35Box 6: Works/Activities not eligible for contract costs as per regulated in Joint

Circular 27/ TTLT-BTC-BKHCN 40Box 7: Decree 109/2022/ND-CP regulating scientific and technological activities in higher education institutions 42Box 8: Four methods of pricing asset value from S&T project funded by the state as regulated in Circular 10/2019/TT-BTC 43Box 9: Development Fund, VNU-HCM 51

List of abbreviations

ADB Asian Development Bank

ASEAN Association of South East Asian Nations

FTU Foreign Trade University

GDP Gross Domestic Product

HERA Higher Education Reform Agenda

HUST Hanoi University of Sciences and Technology

MOET Ministry of Education and Training

MOF Ministry of Finance

MOLISA Ministry of Labour - Invalids and Social Affairs

MOST Ministry of Science and Technology

OECD The Organisation for Economic Co-operation and Development

PPP Public-Private-Partnerships

PHE Public higher education

PHEIs Public higher education institutions

R&D Research & Development

S&T Science & Technology

STA Scientific and technological activities

T&E Training & Education

U.S United States of America

VASS Vietnam Academy of Social Sciences and Humanities

VAST Vietnam Academy of Science and Technology

VNU Vietnam National University

CHAPTER 1: INTRODUCTION 1.1 Research background

Reforms in the public sector that attempted to provide public institutions more independence from governments have been implemented throughout the previous three decades (Olsen, 2009) As a means of enhancing service delivery,

it has been suggested that political authorities should have less direct control over public institutions To alter the coordination between government and institutions, higher education reformers in several OECD countries and beyond established policies as part of broader public service and management reforms (Olsen, 2009)

Additionally, changes in regulation and funding on tertiary education mirrored both the push for mass higher education and worries about how appropriate the outcomes of higher education and research would be for the economy and society (Naidoo, 2007) Governments, students, parents, businesses, and philanthropists are just a few of the stakeholders who today contribute to the expense of tuition fees Universities are increasingly behaving like private businesses as higher education system has evolved into a kind of quasi-market Universities are currently actively looking for revenue streams outside of government financing (Le et al., 2021)

Public universities in developing and emerging nations are under more pressure

to participate in cost-sharing than public universities in developed nations, in part because the budgets of developing and emerging governments are more constrained than those of developed nations (World Bank, 2000) This shift indicates that, in order to sustain operations, public universities now need to pursue new revenue streams beyond tuition fees, such as donations, knowledge transfer services, and other services and products

Such reforms in higher education have not been unfamiliar to Vietnam The Vietnamese government has consistently raised its spending in absolute terms over the past ten years on both higher education in particular and education in general (Pham and Vuong, 2019) However, this growth has not kept up with higher education's ongoing massification Higher education participation has grown from 162,000 students in 103 institutions in 1992–1993, to 1.54 million students in 322 institutions in 2006–2007, driven by an expanding economy and strong student demand, transforming the system that provided education to a wider cross-section of the population rather than one that primarily served the elite (Harman, Hayden, and Pham, 2009) However, the Vietnamese government has decreased its funding for public higher education (see Appendix 1) The

allocated budget does not align with the Party and State's policy on prioritizing investment in education (MOET, 2022)

In Vietnam, the higher education system has transitioned from a fully free system

to a cost-sharing scheme in 1997 (Vietnamese Government, 1997), which was followed by several policies allowing and promoting other sources of revenue for higher education institutions such as scientific research and technology transfer,

donation and philanthropy, borrowing, sales of services and productions

Notably, in October 2014, the Vietnam government issued Resolution No 77/NQ-CP on “Piloting renovation of operation mechanism for PHEIs in the period 2014-2017” The resolution regulates the university's autonomy in terms

of academia, organization and governance, staffing, and finance and responsibility within the national legal framework (Vietnamese Government, 2014) It is understandable that to be capable of revenue generation from diverse funding sources, universities need to be delegated a high degree of authority from the government, specifically autonomy in term of academia, organization and governance, staffing, and finance

self-However, up to now, the Vietnamese higher education is still over-relying on tuition fees, the income beyond tuition fees such as scientific research and knowledge transfer, donation accounts for a very low percentage of the total revenue (MOET, 2022) The problem of over-reliance on tuition fee at Vietnamese higher institutions has been realized and raised for a period along with the implementation of gradual funding reduction from state budget For example, the Former Minister of Education and Training, Phung Xuan Nha once stressed that Vietnamese tertiary institutions were over-relying on tuition fees and state subsidies, which may face many risks (Phung, 2019) According to the study conducted by Le and colleagues (Le et al., 2021), the 51 public universities

in Vietnam included in this analysis all displayed poor financial diversity On average in the period of 2015 – 2017, tuition fee accounted at 57.81 % of the sampled institution revenue Vietnamese universities are over-dependent on tuition fees from students, while the funding bases from the government, technology transfer, service or donations are very limited

The work of Tran and colleagues (2020) on Revenues and average training costs

of public universities at local level in Vietnam has the same findings Specifically, the sources of higher education’s income are largely based on tuition fees, and revenues from service provision is limited A lot of universities and colleges do not have any revenue from scientific research and technology transfer activities Some universities also have revenue from scientific research and technology transfer, but account for a low proportion of total revenue For

example, in 2018 the revenue from science and technology was at Tra Vinh University 13,958 million VND, accounting for 3.57% of the total revenue, Hong Duc University's revenue from research and technology was 5,958 million VND, accounting for just 3.77% of the total budget, Similarly at Quang Binh University the income was 520 million VND, accounting for 1 13% of the total and in Hai Phong University the revenue was 200 million VND, accounting for 0.13% of the total This shows that local universities in Vietnam have not had much development in scientific research and technology transfer nor in operating and providing services to the external partners

Thus, Vietnam’s PHEIs are under high pressure to expand their enrollment Research background size and increase tuition fees For instance, depending on their major, public university students had to pay a monthly tuition fee ranging from VND 50,000 to VND 180,000 (US$ 3.60 to US$ 12.95 in 1998) as of the academic year 1998–1999 (Le et al., 2021) Since that time, the Vietnamese government have eventually increased the tuition cap According to the Decree 81/ND-CP on tuition fee management, in the academic year 2022 - 2023, the ceiling on tuition fees of non-autonomous university ranges from 13.5 - 27.6 million VND/academic year (equivalent to US$ 575.4 to US$ 1176.5) (Vietnamese Government, 2015) Autonomous universities have tuition fees 2-2.5 times higher than non-autonomous ones

The substantially increase in tuition fees is a serious problem for students The GDP per capita in Vietnam in 2021 was just US$ 3,694 (Worldbank, 2022), and the country has still to address severe damage from the Covid-19 pandemic, as well as other global challenges including geopolitical conflicts, global energy crisis, and risk of soaring inflation This is a clearly foreseeable consequence that directly affects students, causing inequality in access to higher education among

people of different income groups

While attracting funds from different sources initiatives are being implemented

by public higher institutions widely around the world (Nik Ahmad el al., 2019), there are limited studies attempting to address this matter in the context of

Vietnam In fact, the necessity for generating other sources of revenue rather than

tuition fee has already clearly asserted in Resolution 15/2005/NQ-CP on

“Fundamental and comprehensive renovation of higher education in Vietnam in the period 2006-2020” (Vietnamese Government, 2005) The Higher Education Reform Agenda (so called “HERA”) suggests that PHEIs manage their own spending and income, and diversify their sources of income by selling contract services and commercializing technological advancements” However, given the status quo in PHEIs’s financial sources mentioned above, the problem remains The issue of university autonomy or weak financial sustainability at HE in

Vietnam has been discussed in numerous scholarly works, but there are very

limited studies to address the generation of income options for PHEIs This study

will explore the challenges and barriers in revenue diversification for PHEIs in

Vietnam

Figure 1: Research background

Source: Author

1.2 Research problem

The problem of over-relying on tuition fees and limited revenue from other

funding sources creates negative consequences for Vietnamese HE system and

students as well This pressing issue affected education quality, PHEI’s

performance and operation and then the quality of the nation’s human capital in

general On the side of students, the continuously increased tuition fee causes a

huge financial burden for them, especially disadvantaged groups such as

low-income people, ethnic minorities, and students from rural areas

1.3 Research objectives

The issue identified from the above review is the lack of research on the

challenges and barriers to in revenue diversification for PHEIs in Vietnam

Hence, the purpose of this study is to fill the research gap by identifying the

challenges and barriers in revenue diversification for PHEIs in Vietnam Based

on this research, it is hoped to provide policy implications for policy makers and

university administrators in Vietnam for attracting funds from different sources for PHEIs

1.4 Research questions

Although university governance and the scope of university autonomy in Vietnam have been discussed widely among scholars, the research on public higher education’s revenue sources is relatively limited By conducting this study, the following questions will be addressed:

 What are the challenges and barriers in revenue diversification for PHEIs in Vietnam?

 What are the policy implications for policy makers and HE administrators to encourage the revenue diversification for PHEIs?

1.5 Research scope

The scope of this study is limited by a desk review of the Vietnamese legal framework on higher education and in-depth interviews of twenty officers from ten public universities in Vietnam Specifically, a comprehensive desk review of the Vietnamese legal documents on higher education, university autonomy and financial sources of PHEIs The review is designed to provide a broad picture of the legislative environment in which Vietnamese PHEIS operate and point out the scheme on how public universities generate incomes from different sources Furthermore, in–depth interviews of twenty university officials from managerial and non-managerial levels in ten Vietnamese PHEIs were conducted from the period of March to May, 2023 In detail, the participating universities are: the National Economic University; the Foreign Trade University; the Education University, VNU Hanoi; the University of Social Sciences and Humanities, VNU Hanoi; the University of Science, VNU, Hanoi; the Hanoi Law University; the Can Tho University; the Hung Yen University of Technology and Education; the Academy of Journalism and Communication; and the Hanoi University of Science and Technology

The study focuses on the legal revenue sources for PHEIs, excluding subsidies from the state budget and tuition fees The rationale is that the state funding is controlled and allocated by the government while tuition fee is a traditional income source that public education institutions has mainly exploited over the years

Figure 2: Research problem, objectives, questions and scope

Source: Author

CHAPTER 2: LITERATURE REVIEW AND ANALYTICAL FRAMEWORK This chapter is divided into 2 sections Section 1 reviews literatures on challenges in

revenue diversification and recommendations for varieties of revenue generation activities Section 2 develops an analytical framework of the study which covers a number of key concepts such as revenue diversification, financial sustainability, university autonomy, key dimensions of autonomy, sources of PHEIs’s revenue

Another barrier that is usually stressed in studies on revenue generation at higher education relates to management capacity of higher institutions’ board of management Specifically, in the study of Nik Ahmad et al., (2019) ninety-one percent of the respondents to this poll believed that a lack of business administration abilities was the main barrier to revenue-generating activities in higher education The majority of public higher education's financial management knowledge and exposure has been limited to budgeting and managing budgets, encompassing changes in governance structures and processes A study of OECD (2008) shows that most of nations' institutions don't appear

to be particularly active in looking for outside money Externally raised funds often make up a small portion of institutional budgets, which frequently indicates a lack of awareness of the potential for revenue diversification and growth as well as a lack of motivation to increase commercial or charitable incomes

In fact, in order to effectively operate like business sector, higher education institutions need to have a mind-set of entrepreneurship However, a drawback of university entrepreneurship is the possibility that entrepreneurial opportunities may not be equally distributed among the various faculties Majors or programs in business management, medicine, law, and other professional-based faculties have a much greater opportunity

for entrepreneurial activities than others such as philosophy, anthropology, and political science (Johnstone, 2002)

In Europe, the results of a study on university-based research finance by the European University Association (EUA) reveal that industry investment in higher education research in the EU is still not very significant In the European Union, cultural disparities between the academic and corporate sectors, regulatory restrictions, and a lack of incentives are the main roadblocks to better knowledge transfer (European Commission, 2007)

In Vietnam, although there are limited publications on the challenges in generating different sources of revenue for PHEIs, the topic has been raised in several official papers of Government agencies The assessment of pilot implimetation of Resolution 77/ND-CP shows that the universities assigned to implement the resolution did not receive specific instruction from state management agencies on how to go about it, nor were they informed about the extent of their authority This led to uncertainty about the task, to a difference in understanding and of thinking about the nature, extent and conditions for implementing policies on autonomy among universities and management agencies (MOET, 2017) In fact, university autonomy activities are directly influenced

by the Law on Education, Law on Higher Education, Law on Science and Technology, Law on Bidding, Law on Public investment, Law on Construction, Law on Land, Law

on management and usage of public assets, Law on Public officials and other laws on tax and finance; along with many decrees, circulars and other legal documents Hence,

it is found that although the promotion of university autonomy and accountability have been stressed and repeated in a lot of policies, all of these documents cannot go beyond the Laws mentioned above, resulting in limited results and effectiveness in implementing truly autonomy for higher education institutions (MOET, 2022)

The report of MOET, 2022 also highlights the ongoing challenges and constraints that affect higher education's scientific research efforts Even research facilities, particularly the laboratory system, have greatly improved, they still fall short of what is needed, and investment expenditures for research at universities in general remain extremely low Furthermore, scientists still need to manage lengthy administrative processes and laws when handling disbursement procedures The scientific research activities are limited

by the contemporary legal documents' numerous restrictions Universities have little opopportunities to participate in interregional and multidisciplinary scientific research initiatives to benefit from funding outside the government funding due to the current mechanism of ministries and localities

Regarding the exploitation of public assets and the use of non-state budget revenues, also according to a survey results from this report, several universities commented that the management of the use of public assets, management of public investment, and

exploitation and use of non-state budget revenues are still not favorable (MOET, 2022) Likewise, Johnstone (2002) explains that iniversities occasionally possess huge amounts

of coveted land or other assets (such as China) that might boost institutional revenue The ownership of university infrastructure is one of the problems, especially in the former Communist countries It is unclear how free a university is to sell, lease, develop (for resale), or otherwise dispose of university assets without the proceeds being claimed

by the state unless there are well-developed non-profit legislation

In Western nations, charitable giving is a significant source of cash that supports both universities and students (Wharton, Kail and Curvers, 2016) In Vietnam, available data

on universities’ revenue, however shows that this type of revenue only contributes a very small share of the total According to Johnstone (2005), philanthropy is a “costly, time- and resource-consuming activity” Moreover, Vietnamese people prefer giving money to religious organizations over schools (Institute for Studies of Society Economy and Environment, 2015) The research of Pham and Vu (2019) demonstrates that there have been insufficient policies encouraging privileged people to participate in charitable endeavors for a number of years

Table 1: Key challenges and barriers in revenue diversification for PHEIs

No Key challenges and barrier in revenue

diversification in PHE

Studies

1

Potential conflicts with academic integrity, or

"mission confusion" that is created by revenue

diversification and entrepreneurialism in

general

Nik Ahmad et al., 2019 Johnstone, 2002

2

Lack of awareness of the potential for revenue

diversification and growth, lack of motivation

and incentives in to increase commercial or

charitable incomes, and lack of management

capacity of higher institutions’ board of

management

OECD, 2008 European Commission,

2007 Nik Ahmad et al., 2019

3 Entrepreneurial opportunities may not be

equally distributed among the various

faculties

Johnstone, 2002

4

Lack of specific instruction from state

management agencies, or regulatory

restrictions

European Commission,

2007 MOET, 2017

5

Research facilities are limited and in low

condition; lengthy administrative procedures

for scientific research activities funded by the

state

MOET, 2022

6

Exploitation of public assets and use of

non-state budget revenues are still not favorable,

the ownership of university infrastructure in

sell, lease, develop is still unclear

MOET, 2022 Johnstone, 2002

7

Lack of sufficient policies encouraging

donations and philanthropy for education, as

well as distinct on Vietnamese culture on

charity and philanthropy

Johnstone, 2005 Pham and Vu, 2019

by a system that promotes “self-reliance, initiative, transparency, accountability and efficiency” (Harman, Hayden and Pham, 2009)

The work of Le and colleagues (2021) also provides recommendations for makers and university administrators to improve financial sustainability, including the implementing performance-based budget allocations and carrying out initiatives to strengthen universities' fundraising and entrepreneurial capacities Furthermore, market-based approaches are inevitable in U.S higher education (Hearn, 2003)

decision-Through technology transfer, the commercial exploitation of information, and collaborations with industry, higher education institutions can also make additional cash from their research potential The connections between the two sectors are where issues pertaining to the growth of university-industry interactions and the function of government are found Hence, one of the key solutions is a favorable legal framework (Koryakina, 2018) In fact, the relationships between universities and businesses can provide higher education institutions with a reliable source of funding from technology transfers and selling research outcomes to corporations (Dinh, 2016) However, there is limited institutions that can form this linkage in Vietnam, except for universities that have their own firms like FPT Polytechnic University, and Hoa Sen University Hence, the partnership between businesses and academies needs to be strengthened, expanded, and connected

At organizational level

Higher institutions in the USA, Australia, and Canada have all started different revenue diversification initiatives in an effort to generate income and become less reliant on government funding, but numerous studies also show that for a revenue diversification initiative to be successful, a significant change at the organizational level is required (Nik Ahmad et al., 2019) In order to better enable them to explore efforts for revenue diversification, the government must offer support Therefore, the government must be proactive and give higher education the support it needs to successfully implement revenue diversification initiatives if it wants public higher education to be less relying

on state funding The remedies can involve encouraging an entrepreneurial mindset in academia and facilitating staff exchanges between research institutions and business (European Commission, 2007)

There are other potential avenues for generating additional funds outside of an institution's mission of teaching and research, such as renting out residence halls for summer camps Besides, consideration should be given to offering the general public non-degree programs designed to upgrade or help individuals to acquire new skills and compencies Universities may also offer test-preparation for students challenges by misceallnous (employment /academic) opportunities In addition it is incumberent on University to be cognizant of emerging needs and interests of students and be willing to offer appropriate academic education (Koryakina, 2018)

An additional significant revenue for universities is philanthropy and private donations, many coming from the university's own alumnis, their parents as well as large cooperations and foundations American and European universities have a long history

of such large and significant philanthropic donations Indeed many universities and colleges have set up development offices that are dedicated to the continuation and

expansion of these private and corporate donations, with creation of extended data-bases

of their graduates (Koryakina, 2018)

Overall, a wide variety of activities can be used to promote revenue diversification: (i) Educational efforts include test preparation classes, programs for lifelong learning, retraining for the workforce, distance and online learning, etc (ii) Projects involving research and analysis, such as technology transfer offices, business alliances (iii) Franchising, licensing, collaboration with outside parties, (iv) and actions by the development office such fund-raising and donor appeals

Figure 3: Recommendations on revenue diversification for PHEIs

Source: Author

2.2 Analytical framework

2.2.1 University autonomy and its taxonomy

The writings on university autonomy is rich and numerous In its classical meaning,

“autonomy refers to ‘auto’ (self) and ‘nomos’ (rule or law) and ‘autonomia’ refers to the right to self-government” (Enders, Boer and Weyer, 2013) Historically, the academic freedom to pursue teaching and research without worrying about interference or punishment was closely related to the problem of the professional autonomy of universities (Enders, Boer and Weyer, 2013)

Various dimensions of autonomy were also identified, illuminating what a high or

low amount of autonomy might entail A taxonomy of "autonomy" is provided by the conceptual distinction between management autonomy, policy autonomy, structural, financial, legal, and interventional autonomy (Verhoest et al., 2004) In this work, Verhoest and colleagues has studies various concepts of autonomy and created a map

on this matters with two elements: (i) autonomy as the degree of the agency’s decision

making competencies, with regard to management on the one hand and concerning

agency policy on the other hand and (ii) autonomy as the “exemption of constraints on

the actual use” of the agency's decision-making abilities, with reference to structural,

financial, legal and interventional constraints on the agency’s decision making competencies

In Vietnam, the concept of university autonomy is regulated in Article 32, of the Law

on Higher Education No 08/2012/QH13 (Vietnamese National Assembly, 2012) and

then amended in the Law 34/2018/QH14 as follow: “Autonomy is the right of a higher education institution to govern its own goals and decide how to achieve them; self-determination and accountability for professional, academic, organizational, human resources, financial, property and other activities on the basis of the provisions of law and the capacity of the higher education institution” (Vietnamese National Assembly, 2018) Overall, “university autonomy” has been officially addressed by the Vietnamese government in a number of legal documents Most of them accept that universities have the freedom to plan their own growth, educational and training programs, scientific and technical endeavors, finances, international relations, organizational structures, and staffing Furthermore, the explanation of dimensions of university autonomy are specified in the Law on Higher education 2012, and the Decree 43/2006/ND-CP and now Decree 60/2021/ND-CP In general, according to Mai et al., (2020), the 4 dimensions of university autonomy are explained below:

Academic autonomy concerns the university having the capacity to set up or

discontinue degree programs, deciding what content of courses it will offer and choosing

a language from which instruction is being taught It also involves the ability to

determine admission procedures, quota requirements, and external quality assurance providers

Organizational autonomy covers issues related to institutional structures, i.e the

appointment of managing board members, selection process, terminations and term of office for university presidents and other matters related to university’s boards (a governing board and an executive board) Besides, this kind of autonomy also has a bearing on the university’s ability to set up its own academic and administrative structure as well as create legal entities

Financial autonomy focuses on how block-grant, line-item budgets are distributed to

universities, the ability of the university to sell its property, the power of the university

to collect tuition, the choice of sources for self-generated revenue, and the ability of the university to borrow money on the financial markets

Staffing autonomy indicates the university’s ability to choose the hiring/firing

processes, pay, and promotions for both academic staff and administrative personnel Autonomy and accountability are the two parallel sides that are required to delegate authority from government to universities while remaining effectiveness and

transparency of the universities’ performance Accountability was defined as “the

obligation to report to others, to explain, to justify, to answer questions about how resources have been used, and to what effect” (Trow, 1996) In Vietnam, the concept of accountability of higher education institutions is mentioned in the Law 34/2018/QH14

as follow: “Accountability is the responsibility of a higher education institution to report and transparently disclose information to students, society, competent authorities, owners and stakeholders on its compliance of regulations” It could be understood that

a financially autonomous university must be accountable and should possess transparency towards stakeholders’ interests including the government and the community of students, faculties, donors, investors and employees

An overview of implementing university autonomy in Vietnam

In Vietnam, the higher education system has transitioned from a fully free system to a cost-sharing one since the first cost-sharing scheme was introduced in 1997 This regulation was considered as the initial step for the Universities to become self-reliant After that, the Education Law 1998 stipulates a number of autonomy and self-responsibility rights of colleges and universities (Vietnamese National Assembly, 1998) and these directions are subsequently specified in the regulation on University's Charter issued in the Decision No 153/2003/QD-TTg (Prime Minister, 2003) The higher education institution’s charter states that the School Council was the governing body of

the university; decided on major policies to exercise the university's autonomy and responsibility as assigned by the State in accordance with respective laws

self-Box 1: University autonomy was firstly translated into Education Law 1998

3 Arranging the school's equipment

5 Cooperating with organizations engaged in economic, educational, cultural, athletic, medical, and scientific research both domestically and internationally, as instructed by the government To fulfill the purpose of education, various funds must

be raised, managed, and used.”

Source:

https://vanbanphapluat.co/law-no-11-1998-qh10-of-december-02-1998-education-law

The Law on Education 2005 continued to affirm the State's policy on autonomy at

PHEIs(Vietnamese National Assembly, 2005) Afterward, the Government and MOET issued resolutions and regulations to innovate higher education management and create comprehensive reform of higher education, including guidance on autonomy and self-responsibility for the performance of tasks, organizational structure, and human resources

This direction builds on repeated expressions of government policies over recent years The Law on Higher Education 2012 affirms the autonomy of higher education institutions

in Vietnam in Article 32 in terms of of administration, people, finances, capital and assets, education, research and technology, international cooperation, and quality control The Central Committee's Resolution No 29-NQ/TW, dated November 4, 2013, calls for a fundamental and thorough reform of education and training to meet the demands of industrialization and modernization in the context of a market economy with a socialist orientation and global integration (The Central Committee's of Communist Party of Vietnam, 2013) The policy of autonomy is affirmed in the Resolution: “Delegating

autonomy and self-responsibility to education and training institutions; promote the role

of school council”

On the basis of these orientations, the Government issued Resolution No 77/NQ-CP,

2014 on “Piloting renovation of operation mechanism for PHEIs in the period 2017” The resolution specifies the contents of the university's autonomy and self-responsibility within the legal framework prescribed by current law, and plays a particularly important role in promoting university autonomy in Vietnam According to Resolution No 77/NQ-CP, 23 public universities submitted request to the Prime Minister and were approved the pilot autonomy mechanism, committed to self-financing for recurrent expenditures and investment expenses, and will be fully autonomous and self-responsible for training and scientific research; organizational structure and personnel; finance; scholarship and tuition fee; investment and procurement Resolution No 77/NQ-

2014-CP was allowed by the Government to extend after the 2014-2017 period in Resolution

No 117/NQ-CP dated October 9, 2017 The pilot mechanism ensures that the PHEI operate according to the market mechanism but is still subject to supervision and intervention to a certain extent by state management agencies (MOET, 2022)

In 2015, the University's Charter promulgated together with the Prime Minister's Decision No 70/QD-TTg once again defines the authority and autonomy of universities The autonomy and accountability are also addressed in the Law on Higher Education

2012 and the document of the 12th Party Congress in 2016, affirming the policy and direction of giving autonomy to education and training institutions, especially higher education institutions Law No 34/2018/QH14 dated November 19, 2018 amending and supplementing a number of articles of the Law on Higher Education (Law No 34) is an important legal basis to promote higher education institutions nationwide to implement deeper and broader autonomy At the same time, the autonomy of higher education institutions must be associated with accountability for stakeholders and society to monitor their operation Following that, the Government and line ministries have basically issued several policies to implement the direction of promoting the autonomy and accountability

of Higher education institutions including Decree No 60/2021/ND-CP, 2021 on

“Stipulating the mechanism of financial autonomy of public non-business units” (Vietnamese Government, 2021), Decree No 109/2022/ND-CP, 2022 regulates on

“Science and technology activities in higher education institutions” (Vietnamese Government, 2022)

2.2.2 Financial sustainability and revenue diversification

Financial sustainability in public sector entities can be understood as its ability to

control its short-and long-term financial capacity while maintaining the quality of services, and the income earned by the institution is greater than the operating expenses (Pollinger, Outhwaite and Cordero-Guzmán, 2007) Financial sustainability, in the

context of higher education institutions, refers to the institutions' ability to earn more income than is required to support their educational operations In other words, the money these colleges bring in is greater than what is needed to pay for staff salaries, employee wages, and purchases (Almagtom et al., 2019) Thus, financial sustainability

includes both sides of revenue and cost management Within the scope of this study,

it focuses on revenue side and income diversification in particular

Revenue diversification in the higher education sector has been defined as the

generation of income outside of government appropriations through commercialization

of research, technology transfer, consulting, lifelong learning, and customized courses,

in addition to other activities like creating cash from assets and altering financial decision-making and management (Ziderman and Albrecht, 1995)

In Vietnam, the reform agenda in the Resolution 15/2005/NQ-CP on “Fundamental and comprehensive renovation of higher education in Vietnam in the period 2006-2020” proposes that PHEIs should control their own spending and revenues, diversify their sources of income by selling contract services and commercializing technical advancements In detail, financial sources of public universities are mentioned in several legal documents such as Law on Higher education 2018, Circular 36/2017/TT-BGDDT

on promulgating regulations on public disclosure for educational institutions in the national education system, and Decree No 60/2021/ND-CP on stipulating the mechanism

of financial autonomy of public non-business units (which replaced the two previous ones

of Decree 43/2006/ND-CP and Decree 16/2015/ND-CP) The detailed level and structure

of HEI’s income sources in these regulations are little different Circular BGDDT provides a structured guide by which most of Vietnam’s higher education institutes disclose their financial sources (MOET, 2017) These include the following categories: (i) state funding, (ii) tuition fee, (ii) scientific research and technology transfer, and (iv) other sources These “other sources” may include income from services related

36/2017/TT-to training and education, consultancy, and production activities within the legal

framework; donation; and borrowings

Box 2: Revenue sources of higher education institutions as per regulated in Circular

Each educational institution shall be required to make the public disclosure of levels

of tuition fees and other financial obligations by school years; the state budget’s grants for the educational institution; financial aid, grants, gifts and donations that the educational institution receives; other payables to the state budget

b) School fees and other financial obligations that students have to pay: levels of

school fees and other receipts by academic years and in the next 2 academic years c) Expenses incurred in each academic year: salaries, wages, allowances paid for participation in professional training courses, conferences, seminars, domestic and overseas study tours; monthly income of teachers and administrators (the highest, average and the lowest level); recurrent expenditure/student; construction, repair and equipment purchase expenses

d) Contents and results of implementation of annual policies on tuition fee subsidies, relief and exemption for students eligible for social welfare policies

…

Article 7 Public disclosure practices implemented at higher education

institutions, pedagogical colleges and pedagogical post-secondary schools

3 Revenues and expenses:

a) Public disclosure practices are the same as those stipulated in regulations laid down in point a, c, d and dd of clause 3 of Article 4 herein

b) Amounts of tuition fees and other payments that educational institutions receive

by academic years and in the entire course (using the Form No 21)

c) Revenues from contracts for training, scientific research, technology transfer, production, consulting and other lawful ones

d) Scholarship policies and performance results in each academic year.”

Source: quy-che-cong-khai-co-so-giao-duc-thuoc-he-thong-giao-duc-quoc-dan-368000.aspx

https://thuvienphapluat.vn/van-ban/Giao-duc/Thong-tu-36-2017-TT-BGDDT-As mentioned above, financial sustainability at HE includes both sides of revenue and expenses Within the scope of this study, it will address the revenue side Since private universities are not bound by regulations related to financial control in public non-business units and the management of public officials like the public university system, they have bigger room and potential in flexibly generating revenue sources Hence, this study focuses on the legal revenue sources for public universities, excluding subsidies from the government and tuition fees since the state funding is controlled and allocated

by the government, while tuition fee is a traditional income source that public education

institutions have mainly exploited over the years

In summary, the research framework of this study could be expressed in the following

chart:

Figure 4: Research framework

Source: Author

CHAPTER III: RESEARCH METHODOLOGY 3.1 Data sources

The report is based on both primary data and secondary data The primary data is collected from in-depth interviews with 20 senior officers and lecturers at 10 PHEIs in Vietnam, which were conducted from March to May, 2023 The secondary data is gathered from Vietnamese legal documents, publications, studies and Government ministries’ official reports regarding the topics on higher education, university autonomy, financial sources of higher education, and income generations for public higher education

3.2 Methodology

A qualitative approach, which is often utilized to discover hidden insights, was employed in this study Specifically, 20 senior managers and lecturers at ten PHEIs were invited for in-depth and semi-structured interviews The PHEIs were selected in this study includes National Economic University (NEU); Foreign Trade University (FTU); Hanoi University of Science and Technology (HUST); University of Education (UE), VNU Hanoi; University of Social Sciences and Humanities (USSH), VNU Hanoi; University of Science (US), VNU Hanoi; Hanoi Law University (HLU); Can Tho University (CTU); Hung Yen University of Technology and Education (UTEHY); Academy of Journalism and Communication (AJC)

These public universities have different levels of financial autonomy, in which NEU, FTU, and HUST have been granted for full autonomy (or belongs to group 1 according

to the classification criteria of Decree 60/2021) For example, institutions under group

1 have greater degree of autonomy in determining their tuition fees for undergraduate, MSc and Ph.D level, and the ceiling of the autonomous university is higher than the ceiling of other public universities However, the questionnaire applies to all participants, so the results of the interviews will reflect the common problems occurring

at public universities, regardless of financial autonomy groups

The author tried to approach public universities with different disciplines on both basic science and applied science In addition, there are different state management structure

at the sampled institutions They may be under the direct management of the Government, i.e the Prime Minister (for example: VNU Hanoi), under the management

of MOET (such as NEU, FTU, CTU), under the management of other line ministries (such as HLU under the management of Ministry of Justice), under the management of other state agencies (for example: AJC under the management of Ho Chi Minh National Academy of Politics, a non-business unit under the Central Committee of the Communist Party)

The interviewees in this study are at both managerial positions and non-managerial positions for an objective assessment and diverse viewpoints They have different qualification levels from Master degree to Professor, partly reflecting the various number of year of professional experience The detailed information of participants in the interviews is shown in the Figure 5 below

Figure 5: Qualification profile of the research participants

Table 2: Demographic profiles of the interview participants

3

5 11

1Qualification of participants

to offer further insight (See the Appendix 2) The interviewer conducted each of these

interviews in Vietnamese before translating each of them into English

3.3 Limitations of the study

The author has made every effort to ensure that the evaluation results are honest and reliable, clearly reflecting the assessment results However, the report may also have a number of limitations below:

As the interviewees are involved in a number of certain activities at public higher institutions, they are not able to provide information for all of the questions in the Interview questionnaire

Second, although the author aimed to diversify the samples in terms of disciplines from fundamental science, applied science, liberal arts, it depends a lot on the willingness of the surveyed institutions

Third, since there is a huge number of legal documents regulated on university autonomy and operation, financial sources, revenue activities which are under management of different government agencies such as MOF, MOST, MOET and have been amended or replaced in a regular basis, the author tried to collect, codify and visualize this legislation in an easy way for understanding However, it is difficult to ensure that all critical legal documents are collected and mentioned in this paper

CHAPTER IV: RESEARCH FINDINGS AND DISCUSSION

4.1 Research findings

4.1.1 Vietnamese legal framework on PHEI’s revenue sources:

The system for charging tuition in public higher education: Since the scheme of

cost-sharing mechanism replaced the fully free system in 1997, the tuition cap of higher education in Vietnam regulated by the government has rise eventually In 2014 and

2015, the Vietnamese government formally authorized the opening of the system of entirely self-funded students at public universities and colleges through the Circular 23/2014/TT-BGDDT stipulating the conditions for higher education institutions to open fully self-paid track, or the “advanced programs”, so-called “high-qualified courses”, and in Vietnamese “chương trình chất lượng cao” (MOET, 2014), and Decree 86/2015/ND-CP allowing public universities to regulate its own tuition fee of “advanced programs” based on the calculation of the whole instruction cost (Vietnamese Government, 2015)

The national credit program for students: The Vietnamese government initially

introduced a credit policy for students with financial difficulty to cover tuition fee with the issuance of Credit fund for Education which was regulated in Decision 51/1994 (Prime Minister, 1994) Since then, the policy was amended by following regulations as Decision 107/2006, Decision 157/2009 and Decision 09/2022 for underprivileged students to access the credit program to cover their instruction-related costs, for examples: tuition fees; the cost of buying studying materials, school stationery, food, accommodation and transportation The credit ceiling has been risen over the years to correspond the inflation rate By 2022, the loan limit for each student borrower is VND 4,000,000 per month Over 3.3 million students received aid through the program between 2007 and 2016 for a total of over 56 trillion VND in loans (The State Bank of Vietnam, 2016)

Scientific research and technology transfer:

Scientific research is one of the two main missions of higher education system, while technology transfer is a channel to knowledge transfer to the society and knowledge application into reality The commercialization of research results also generate income for research institutions including universities and colleges The Vietnamese government has technology transfer regulations just like many other governments Two noteworthy laws allow public universities to use their properties for joint ventures, cooperation or association, and waive corporate income tax for investments in research and development as specified in the Law on Corporate Tax 2008 (Vietnamese National Assembly, 2008) and Decree 60/2021/ND-CP (previously the Decree 43/2006/ND-CP)

The effectiveness of the aforementioned incentive programs, however, is now constrained because financial contributions from this group still make up a small portion

of the total income of Vietnam's higher education institutions The newly issued Decree

No 109/2022/ND-CP regulating scientific and technological activities in higher education institutions stipulates that higher education institutions may establish enterprises in accordance with the law on enterprises, the development orientation of higher education institutions, and enterprises in higher education institutions that satisfy the prescribed conditions may register for the certification of science and technology enterprises However, as the decree was promulgated in 2022 it is not yet possible to assess the impact of this policy

Box 3: Decree 60/2021/NĐ-CP regulates permission for public universities to to

enter into joint venture, cooperation or association

Source:

https://thuvienphapluat.vn/van-ban/Bo-may-hanh-chinh/Nghi-dinh-60-2021-

ND-CP-co-che-tu-chu-tai-chinh-cua-don-vi-su-nghiep-cong-lap-478766.aspx?anchor=dieu_26

Donation and endowment fund: Universities in Vietnam are eligible to receive social

and charitable funds, which was first regulated in Decree 177/1999/ND-CP on Social and Charity Fund (Vietnamese Government, 1999), then amended by a number of documents such as Decree 128/2007/ND-CP, Decree 30/2012/ND-CP, Decree 93/2019/ND-CP These measures seek to increase societal contributions and other public service sectors to higher education Moreover, they allow HEI to establish its own funds to mobilize resources and receive donations for education and development purposes Actually, this is an additional self-fundraising for higher education institutions Besides, the Circular 16/2018/TT-BGDT on financing for public education system, issued in 2018 once again emphasized the state’s encouragement on philanthropy into education sector, specified the donation activities of public education such as the process to mobilize social resources, the disclosure of information on

donation usage (MOET, 2018) In general, HEI can receive donations via its own funds

or in a direct manner, as long as it is in compliance with state regulations on public disclosure and so on

Box 4: Decree No 77/1999/ND-CP on promulgating the regulation on organization

and operation of the social funds and charity funds

Decree No: 177/1999/ND-CP

“Article 2 Reasons for establishment and operation

The social funds and charity funds (hereafter referred to as the funds for

convenience) shall be established and run for humanitarian and charitable objectives

to further the development of culture, sport, science, and society.”

…

“Article 8 The funds’ authorities and responsibilities

A fund shall have the following powers and responsibilities:

1 To encourage local and international businesses and people to donate money to projects that adhere to the fund's guiding principles and objectives;

2 To accept funds and assets that have been legally supplied by institutions and people to the fund as financial support;

3 To develop and carry out financial support initiatives in line with the fund's values and objectives;

4 To use the fund's resources strictly in line with its principles and objectives;

5 To publicize the fund's earnings and how they are used, and to provide the State's functional agencies with the information they need when they ask for it in

accordance with the legislation;

6 To strictly abide by the Fund's Charter, which has previously been approved by the appropriate State agency;

7 To be subject to the inspection and examination by State agencies as required by law;

8 To exercise additional rights and fulfill other legal obligations”

Source: december-22-1999-of-the-government-promulgating-the-regulation-on-organization-

https://english.luatvietnam.vn/decree-no-177-1999-nd-cp-dated-and-operation-of-the-social-funds-and-10186-doc1.html

Borrowings:

Although public universities are allowed to access to loans as regulated in the Decree 60/2021/ND-CP (first regulated in Decree 43/2006/ND-CP), in practice this activity, however is extremely rare The main form of these borrowings, if any, are preferential loans from international organizations under the government loans In addition, the law states that public universities are not allowed to use public property as collateral for loans

Box 5: Decree 60/2021/ND-CP regulates permission for public universities to access

b) The public administrative unit shall not be allowed to use public assets as collateral for loans as prescribed in Clause 5 Article 54 of the Law on management and use of public assets;

c) Projects financed by borrowed or raised funds must be carried out in compliance with legal requirements, be broadly disseminated, and adhere to the unit's democracy norms.”

Source:

https://thuvienphapluat.vn/van-ban/Bo-may-hanh-chinh/Nghi-dinh-60-2021-

ND-CP-co-che-tu-chu-tai-chinh-cua-don-vi-su-nghiep-cong-lap-478766.aspx?anchor=dieu_26

4.1.2 Challenges in revenue diversification in PHEIs in Vietnam

Overall, the interview procedures revealed the most six important factors causing challenges in revenue diversification for PHEIs in Vietnam

4.1.2.1 Barriers to increasing revenue from scientific research activities

The investment in facilities for research & technology activities, especially the laboratory system is not appropriate

The Higher Education Reform Agenda (HERA), 2005 outlines specific planning goals for higher education for the years 2006 to 2020 with the express goal of developing a higher education system that is advanced by international standards, fiercely competitive, and suitable for the market system that is socialist oriented Making sure that increasing S&T activities are carried out within universities; developing important higher education institutions into major scientific centers for the entire country; and increasing income from science and technology activities to account for at least 15% of total higher education income by 2010 and 25% by 2020, are some of the specific goals (Vietnamese Government, 2005)

Scientific research and technology transfer is one of the missions of Vietnam higher education institutions system in order to improve the quality of training and contribute

to socio-economic development in the region and the country as a whole In addition, these activities are always closely related to resource management, financial and facilities management, learning resources such as library resources, equipment, online databases, etc Improving scientific research and technology transfer also enhance the reputation of universities and institutes and is an important criteria for university ranking

as well

Although higher education institutions now publish a greater number of international journals than ever before., the national average rate is still quite low compared to the common standards of universities in the region and around the world

Figure 6: Vietnam’s result of scientific research from 2016 - 2020