Communist country stems brain drain as boomerang engineers fuel hope of new Silicon Valley
HO CHI MINH CITY — Tran Tuan Anh has joined the vanguard of entrepreneurs reshaping Vietnam’s image and role in the global economy today. But he still remembers how badly he once did years ago in an economics class for engineers after he left the communist country to study at Oxford.
Given an investment exercise, Tuan Anh selected gold — and ended up with the second-worst result in the class. It made him realize much of the world doesn’t think like Vietnam, where many parked their money in gold before the modern property and stock markets developed.
He has brought that expanded worldview back to his home country. A lot of technology talent is returning to Vietnam now, fueling not only an electronics supply chain to challenge China, but also a fast-growing digital economy. Many countries dream about developing their own Silicon Valleys. In Vietnam, talk of such an innovation hub often overlooks one of its competitive advantages: those who have studied abroad.
Vietnam has long sent far more students overseas than its neighbors. As with its postwar refugees, these globetrotters gain skills and networks that prove valuable upon return. Yet at the same time, their wanderlust also raises questions about the one-party system’s capacity to educate a generation of independent thinkers at home.
King’s College Cambridge. U.K. schools are among the top choices for Vietnamese students looking to study abroad. © AP
“British education … instilled in us a sense of purpose in work, more than just earning money,” said Tuan Anh, whose own purpose, as CEO of the startup Solano, is to spread the use of solar panels.
More than two decades of study-abroad programs is bearing fruit. Early cohorts have had time to graduate and go to work — often in foreign countries — and now bring that experience to bear in Vietnam at a mature point in their careers. In that time, the country has shed much of its baggage of war and central planning to become a more attractive destination. High-tech goods as a share of exports, for example, hit 42% in 2020, up from 13% in 2010.
But in several ways, performance has not kept up with potential.
Suppliers for Apple say they can’t find enough engineers. The country has yet to generate a startup that, like Indonesia’s Gojek or Singapore’s Shopee, truly can take its brand across borders. Vietnam also has a core contradiction. The authoritarian state demands unquestioning loyalty and controls the flow of information. How might such an environment produce a creative economy based on innovation?
The zest for foreign degrees also comes with a corollary: less confidence in domestic diplomas. They have become almost a requirement for top jobs, setting up a potential divide between the foreign-diploma haves and have-nots.
Vietnam’s academic journey has tracked its cross-border links more broadly. Students once flocked to states in the former Soviet bloc, but more recently have ventured to countries that are home to many refugees of the Vietnam War.
In the U.S., a former belligerent of the war, Vietnam has ranked in the top 10 sources of international students for more than a decade. In 2022, it hit its highest ranking ever, No. 5, and remains there, according to official U.S. data.
The Southeast Asian country’s own schools have a reputation for teaching ideology and memorization, and also have — according to the government inspectorate — a problem with some educators taking bribes for good grades or tutoring.
Foreign programs are so popular that colleges spanning Finland to South Korea count Vietnamese as the biggest share of international enrollees. In the U.S., Congress launched a scholarship, the Vietnam Education Foundation (VEF), in 2003 to bring in students using $5 million a year that Hanoi was paying in postwar debt to Washington.
Tu Ngo, an investor and VEF scholar, says the fund is a key example of investments now paying off as alumni have come of age and established themselves in Vietnam’s economy.
Her fellow scholars have gone on to found startups such as the machine-learning vendor Palexy and the tech unicorn VNG’s chat app, Zalo, which is more popular in Vietnam than Facebook. More generally, the likes of Harvard and Cambridge have educated Vietnamese who then came home to lead all manner of tech companies, including Tap Tap, a rewards platform, Uber Vietnam and the logistics startup Abivin.
“Remember, in 2000, U.S. universities had no idea the caliber of students from Vietnam,” former VEF Executive Director Sandy Dang told Nikkei Asia. Washington had just lifted a trade embargo six years earlier. The science and tech-focused VEF triggered a snowball effect of Vietnamese rushing to U.S. schools, Dang said. “This really helped kick-start a group of highly accomplished people.”
Students of Harvard’s John F. Kennedy School of Government celebrate graduation in May 2019. U.S. schools are popular destinations for Vietnamese students. © AP
More of those boomerang graduates are opting to settle down in Vietnam. As the economy notches world-topping growth rates, attracting companies like LG and Alibaba, brain-draining emigration has plunged. Though labor trafficking still exists, the country’s net migration outflow fell from 162,571 people in 2001 to 4,378 in 2011, World Bank data shows. The figure has been largely unchanged ever since, a far cry from the era of boat people rushing for new shores.
For all the economic prospects, Vietnam’s officials admit the education system is lagging. Most undergrads must take classes in theories like socialism regardless of their major, while businesses say many recruits arrive without a knack for problem-solving, critical analysis or other practical skills.
The gap between tech ambition and reality stretches from startups to factories. The workforce is gaining some technical know-how by churning out devices for Apple, Samsung, Bosch and Canon. But Vietnam adds a comparatively small 55% to a product’s value before it is exported, the lowest rate among eight Asian countries assessed by Harvard in 2020.
Solar company Solano CEO Tran Tuan Anh, left, said it is hard to question authority and hierarchy in Vietnam, a one-party state that censors criticism. (Photo by Lien Hoang)
Getting education and training overseas is invaluable, said Nguyen Duc Long, a representative of the state’s National Innovation Center.
“That’s very difficult to replicate” at home, he told Nikkei.
While he says domestic schools are catching up, constraints remain. From teachers to parents, figures of authority reinforce the idea that there is one correct answer and young people must respect hierarchy, not question it, Tuan Anh said.
“The culture in Vietnam does not leave much room for that,” he said in an interview at his office, where there is a communal area for members of other startups working late into the night.
Vietnam is forecast to see the region’s biggest increase both in the size of the internet economy by 2025 and in venture capital deals from 2025 to 2030, according to a study by Google, Temasek and Bain of the six big Southeast Asian countries.
Ngo, the investor, said returning entrepreneurs like Tuan Anh will be a bridge overcoming old constraints.
“Investors usually say Vietnam has a lot of potential, but the challenge lies in finding founders and partners they can trust and build businesses with high governance and integrity standards,” she told Nikkei. “It is this bridge generation that we believe can take things forward, helping shape the new perception of businesses in Vietnam.”
