The private education sector is arguably one of the most complex industries for investment. Its difficulties stem not from a lack of demand, but from three critical, interconnected bottlenecks: stakeholder conflict, labor scalability, and capital-intensive land policy.
I. The impossible stakeholder conflict
Education is unique because the payer (parents) and the receiver (students) have fundamentally conflicting demands, creating permanent tension for school administrators.
- Parental demand (Ego): Parents (the payers) demand that their children become child prodigies, achieve perfect scores (9s and 10s), look pristine, and attend specialized, elite schools. Their expectations are often driven by prestige and ego.
- Student demand (Need): Students (the consumers) need holistic development, critical thinking skills, time for rest, physical activity, and social interaction. Children need to play and get messy; parents demand genius and perfect cleanliness.
This fundamental difference means schools are perpetually subjected to high-intensity scrutiny. A private school that is not resilient will be spun like a top by vocal parents who take their dissatisfaction to social media, regulators, and reporters. Unlike other service industries, you cannot tell a parent to simply “eat what’s served” or “take another flight.” The conflict is continuous, making balance and consensus extremely difficult.
II. The scalability trap (The 10-year teacher)
Unlike airlines or hospitality, which can train staff in 3 to 6 months, education faces a brutal scalability barrier: quality teaching talent cannot be mass-produced.
- The 10-year expert: Training a truly competent teacher requires a minimum of 3 to 4 years of university, 2 years of practice, and 4 years of field experience—at least 10 years total. Since every new school requires new teachers, and technology cannot replace the educator’s “soul and enthusiasm,” scaling up quickly is virtually impossible.
- Labor cost distortion (The bias): The labor crisis is exacerbated by Vietnam’s implicit racial bias (sính Tây) in education. To meet parental demand for “international quality,” schools must hire Western expatriates. The salary required for an expatriate teacher (often $1,600 to $2,500 USD per month) is often triple the salary of a highly capable Vietnamese teacher, unnecessarily inflating operational costs and exacerbating the labor shortage. Many regulatory bodies are also inexplicably obsessed with “white Western” staff, further complicating the deployment of excellent, cost-effective Vietnamese talent.
III. The capital barrier and the land speculation crisis
Investing in private education is financially grueling due to immense CAPEX (Capital Expenditure) and a catastrophically long payback period.
- Land speculation and policy failure: The most severe policy failure is land management. Land designated for education is often hoarded by speculators (“squatters”) who sit on it for 5 to 10 years, driving the price up to $500 to $600 per square meter in prime areas. This adds huge, unnecessary costs (a decent 1 hectare school site can cost over $4 million USD just for the land).
- The Mandate for Reform: The government must impose strict deadlines for construction and penalize speculators by auctioning or re-allocating unused educational land.
- Bank hesitation: Vietnamese banks are reluctant to lend to PEIs because most do not own fixed assets; founders must use personal homes as collateral. This severely restricts large-scale growth capital.
- The long payback: The investment model is financially brutal. A quality school requires at least $10 to $15 million USD in total CAPEX (land and construction). With a slow student ramp-up (maybe 200 students in Year 1, gradually increasing), it often takes 12 to 15 years just to recoup the initial investment, assuming a very high profit margin.
Given these structural flaws, the high tuition fees charged by private and international schools are not a matter of profit-mongering; they are a direct consequence of these massive, policy-induced operational and capital costs. Investing in education is not for the faint of heart.
