L.E.K. Consulting: Economic Development has Led to Strong Growth in Vietnam's Private Education Sector

Vietnam's private K-12 market grew at a CAGR of ~11% from 2016-2020 and is poised to witness a further uptick

Despite COVID-19,Vietnam's economy expanded by 2-3% in 2020 - one of the highest growth rates in the world

According to a new report by global consulting firm L.E.K. Consulting,the bilingual segment in HCMC and Hanoi alone has grown at ~17% p.a from AY16-20.

HCMC's private market size is estimated at ~EUR 560 million in AY20,with premiumbilingual schoolsaccounting for~25% ofthemarket

HANOI,Vietnam,Aug. 5,2021 --Global Strategy Consulting firm,L.E.K. Consulting,announced a new report on the impact of COVID-19 on the education sector today.

The report finds economic growth has led to strong growth in private education,with the market growing at a CAGR of ~11% from 2016-2020.

Despite COVID-19,Vietnam's economy expanded by 2-3% in 2020 - one of the highest growth rates in the world - driven by strong economic fundamentals,decisive containment measures and well-targeted government support.

Vietnam's private K-12 education market is set to experience significant growth in the coming period,given the fast-paced economic development.

L.E.K. Consulting's report segments Vietnam's K-12 ecosystem into distinct categories -international,bilingual,private national and public (See Figure 1).

As per the report,the bilingual segment in HCMC and Hanoi alone has grown at ~17% p.a from AY16-20. As disposable income levels rise and demand for English speaking curriculum surges,a higher proportion of the ~3 million K-12 students in the two cities gravitate towards the bilingual school segment.

Anip Sharma,Managing Director at L.E.K. Consulting explains,"The desire for quality English- based education is driven by the aspiration of Vietnamese students to pursue higher education in Anglophone countries. Bilingual curriculum schools tackle parents' demand for English language education better than public and private national schools. In addition,K-12 schools that offer international programmes have grown faster than overall private enrolments. From AY15-18,international programmes grew at 5-6% CAGR,while overall private grew at ~11% CAGR."

These schools are better equipped to prepare students for a higher education in key Anglophone countries,where Vietnam now represents the 4th largest Asian source country. In addition,they charge less dearly than some of newer international schools.

Vietnam Private K-12 Overview – Spotlight on Ho Chi Minh City

The international school segment,primarily offering British,American or I.B. curriculum,is largely expat-driven,with English as the sole medium of instruction. Parents from diverse backgrounds residing in the country can afford the premium price points. The appeal of a world-class education that will pave the way to overseas higher education is particularly relevant to this market.

HCMCandHanoiRemainStrongCentres forPremiumEducation

The report further delves into city-level data,elaborating on key trends in HCMC and Hanoi. The relevant age population in Hanoi for a premium education is ~1.3 million children which has grown at ~1.6% from AY16-20 and is forecast to continue growing at ~2% CAGR. Meanwhile,HCMC's private market size was estimated at ~EUR 560 million in AY20,with premium bilingual schools accounting for ~25% of the market and registering the strongest growth across segments.

Economic prosperity and government initiatives have enabled both cities to increase the affordability for the Vietnamese population while growing the expatriate population,hence creating sustainable demand and a robust growth outlook for the private K-12 market.

Investors and operators have been quick to address the opportunity at hand- prominent funds have invested in key assets,and prestigious international K-12 brands have set up shop through branch campuses.

Anip Sharma adds,"Stakeholders who are eyeing the market for expansion opportunities should be encouraged by Vietnam's response to the pandemic and overall positive market sentiment for private education. K-12 is inherently a reliable business model,and Vietnam especially holds significant opportunities for institutes and institutional investors."

AboutL.E.K.Consulting

L.E.K.Consultingisaglobalstrategyconsultingfirmthataimstohelpclientsachievehighimpactresultswith deepindustryexpertiseandrigorousanalysis.

www.lek.com