Good morning! Welcome to the latest free edition of the Vietnam Weekly, written by Ho Chi Minh City-based reporter Mike Tatarski. On Wednesday, I published an article for paying supporters about the proposed death sentence for Trương Mỹ Lan and the slow-motion collapse of FLC Group.
If you haven’t already, you can become a supporter for US$8/month or US$90/year below. Group subscriptions are also available at a 20% discount per reader.
Don’t forget to catch up on the latest episode of The Vietnam Weekly Podcast, featuring Mai Nguyen discussing resilience, inclusive urban planning, and much more. A new show on financing Vietnam’s energy transition will be posted Monday morning.
On to the news.
Education Gets Ugly
In 2018, the American International School Vietnam (AISVN) in Ho Chi Minh City’s Nhà Bè District started pursuing an audacious business strategy based on so-called ‘education agreements’: the school would ‘borrow’ up to VND5 billion (US$215,000) from parents so their students could study for ‘free.’
Upon a student’s graduation - or so parents were led to believe - the school would repay the loan in full within 90 days, in addition to a 90-day grace period during which the ‘loan’ would gain interest at Vietcombank’s deposit rate.
In theory, as VnExpress notes, this would give these loans a rate of return for parents higher than any investment category other than stocks.
If that sounds too good to be true - it was.
Last September, a group of parents began wondering where their money was. Parents with multiple children had gotten their ‘loan’ back when older students graduated in 2019 or 2020, but now people were going months without repayment.
VnExpress highlighted one mother who had ‘lent’ AISVN over VND10 billion (US$420,000) for her four children to study there.
Fast-forward to this month: on the evening of Sunday, March 17, the school notified parents that it would be closed the following day. News emerged that foreign teachers hadn’t been paid for two months, while Vietnamese teachers hadn’t been paid for even longer - and the teachers had gone on strike.
At least half of those teachers have since quit (and are still owed a lot of money), while the HCMC education department forced the school to reopen even though there were no teachers: reports emerged of students sitting in the cafeteria with nothing to do.
Nguyễn Thị Út Em, chairwoman of the AISVN board, has become the media face of all this and hasn’t projected confidence, stating that she doesn’t know how much money is owed to parents and teachers while claiming an investment fund will come to the rescue.
Yesterday afternoon, she was banned from exiting Vietnam and the school was barred from admitting new students.
Over 100 parents proposed that the school offer online classes since normal activities haven’t resumed, but it’s not clear who would teach these courses since AISVN is down to 70 teachers from 155.
Elsewhere in poor (at best) financial behavior in the education sector, on Monday, Nguyễn Ngọc Thủy - better known as ‘Shark’ Thủy thanks to his appearances on the TV show Shark Tank Vietnam - was detained on fraud charges.
This was a long time coming. ‘Shark’ Thủy is chairman of the education corporation Egroup, whose most well-known (and now infamous) company is Apax Leaders, a nationwide chain of ESL centers.
In 2019, Apax Leaders had 50 centers with 22,000 students, but the pandemic forced the closure of many centers. At the same time, parents continued paying tuition through 2020 and 2021, even though their children couldn’t attend classes.
Demands for refunds started coming in, and the company divided parents into two groups, with the majority of one group reportedly getting their money back last year.
The second group wasn’t so lucky. In late 2023, parents went to several centers in HCMC to ask for reimbursement directly. Apax had proposed paying them back in five installments starting in October, only to miss that deadline and suggest pushing the schedule back to 2025.
By the end of January, the HCMC People’s Committee had ordered the company to follow through on its promise, with Apax continuing to claim it had no money to do so.
The issue hadn’t been resolved by the time of Thủy’s arrest, and here comes the kicker for parents: Apax Leaders announced it would suspend tuition refunds.
All told, the company allegedly owes VND94 billion (US$3.8 million) in tuition refunds just in HCMC. Teachers and staff also haven’t been paid in months, and Facebook groups for teachers have featured angry posts about Apax for years.
The company now has just two operating centers.
The other gut punch for parents is that Thủy’s arrest isn’t even related to this saga: investors accused him of committing fraud through a share transfer within Egroup. (Apax Holdings, another subsidiary, was delisted from the Ho Chi Minh Stock Exchange last year for failing to submit financial reports.)
This is the latest in a long line of over-leveraged companies that expanded into subsidiary after subsidiary with no money to back them up (see also: FLC Group and NovaGroup). It won’t be the last.
The ultimate losers in these two stories are teachers, parents, and - saddest of all - students. One can only hope this forces a hard look at how for-profit schools and language centers operate. To that, the education ministry announced a review of all international schools yesterday, though this wouldn’t include language centers like Apax.
In the end, given the weak consumer protection laws here, it’s hard to imagine everyone getting their money back.
Could Putin Visit?
In a development that would bend Vietnam’s ‘bamboo diplomacy’ if it came to fruition, General Secretary Nguyễn Phú Trọng invited Russian President Vladimir Putin to Hanoi.
According to the Vietnam News Agency, “President Putin happily accepted the invitation and agreed for the two sides to arrange at a suitable time.”
There were rumors of a potential Putin visit late last year after then-President Võ Văn Thưởng invited the Russian leader while at the Belt and Road Forum in Beijing.
It’s worth noting that the International Criminal Court (ICC) issued an arrest warrant for Putin in March 2023 as he is “allegedly responsible for the war crime of unlawful deportation of population (children) and that of unlawful transfer of population (children) from occupied areas of Ukraine to the Russian Federation.”
This falls under the Rome Statute, which created the ICC in 2002 and covers genocide, crimes against humanity, war crimes, and the crime of aggression.
Currently, 124 countries are party to the statute - Vietnam is not one of them.
Given historic ties between Vietnam and Russia (and the Soviet Union before that), the former has refrained from commenting on the latter’s invasion of Ukraine, abstaining from UN votes critical of Putin’s conduct while calling for a cease-fire from both sides.
Dmitry Medvedev, a prominent Putin ally, visited Hanoi last May, and the chairman of the Russian State Duma followed in October.
Russia, as is frequently noted, has been Vietnam’s primary arms supplier for decades. In that context, this recent Reuters story on Vietnam’s falling weapons imports is intriguing: according to data from the Stockholm International Peace Research Institute, arms imports by volume in 2023 were the lowest since 2007 (not counting the pandemic year of 2020).
To quote the wire service: “Vietnam's talks with other possible suppliers, including India, the United States, South Korea, Japan and the Czech Republic have intensified but no major deals, except the Indian corvette, have been reported amid issues over costs and integration with the existing arsenal, much of which has origins in the Soviet Union, experts said.”
Meanwhile, China, Vietnam’s primary hypothetical opponent in a conflict, had a defense budget of US$224 billion last year, up 7.2% over 2022. This year’s budget will increase by the same amount.
Extra Links:
How EU deforestation laws are reordering the world of coffee (Associated Press)
As West draws closer to Vietnam, Hanoi gets more like Beijing (Nikkei Asia)
Home Office launches 'stop the boats' ad campaign in Vietnam (BBC)
Culture of harassment persists for women in Southeast Asia’s conservation space (Mongabay)
Vietnam’s Social Listening Programme: Big Brother Looming Over Ho Chi Minh City? (Fulcrum)
Have a great weekend!
The part about the AISVN story that I still don't understand is how those parents thought the school would ever be able to repay the loan. Even with interest in that 90-day period. If the school needed all that money to function, where/when did the parents think the profit was going to turn so dramatically? And why would a school let you study for free? If your loan is going to overhead, again, where is the profit?
What am I missing? Every time I read about it, my brain hurts.