As the nation integrates into the world economy, some foreign words are entering the Vietnamese vernacular with unfortunate consequences. Professor Pham Phu spoke to Tien Phong (Vanguard) newspaper about the problem.

In the drive to become a market economy a number of foreign words seem to be causing some confusion. Could you give us some examples?

Many people wrongly interpret the word "non-profit" as meaning that apart from some profit that is used to ensure the legal interests of investors or to help the poor, the rest is mostly reinvested for growth.

As a result many people use the term when arguing for the equitisation of schools or hospitals.

In fact, a key feature of any non-profit organisation is that it does not have an investor nor does it engage in profit sharing. The organisation's assets do not belong to the state or to any individual. It is community owned.

It cannot therefore be linked to the capital market or the stock market, as some people have claimed.

Regrettably, some Vietnamese still stick to the notion that a business can only be publicly or privately owned.

There are no legal guidelines governing the concept of community ownership or for regulating the behaviour of private entities operating under the guise of being non-profit.

What do you think about the suggestion that equitisation could improve standards of education?

In order to answer that question we must first consider the following three principles.

Firstly, privatisation is a common trend in the world at present. However, privatisation of tertiary education is universally understood as meaning:

a) Further expansion of private universities, including non-profit ones.

b) Mobilisation of student contributions through tuition fees.

c) Public universities are allowed to set up businesses to provide public services to generate income.

d) Non-profit universities receive additional funding from companies to carry out research and development contracts ordered by the companies.

e) The interpretation of the word "corporatisation" of public universities has triggered heated discussion in the US, Japan, Malaysia and many other countries.

But in this context, public universities are operated as private universities, with a management board comprised mostly of members who are outside the university.

They have the ultimate ownership and the teachers are no longer civil servants. They have an accounting system just like a private company only there are no shares or ownership as such.

There has never been an instance of a state-owned university being equitised anywhere in the world - except in the case of some small Chinese state universities which are poorly managed and financed and are generally of a low standard.

Secondly, there is the issue of mobilising capital from different stakeholders.

Vietnam has set itself the goal of having about 40% of its students studying at private universities by 2010.

In my opinion, it is better for state universities to raise capital for expansion or to improve facilities by issuing bonds or by getting credit from banks. I don' think it is necessary to equitise.

In the US state of North Carolina - a state university was very successful in mobilising bill ion of dollar to expand and modernise by issuing bonds.

Thirdly and finally, I want to talk about low standards and inefficiency.

In my opinion, these are the consequence of having poor management. They are not a consequence of being state-owned.

In Malaysia when they talk about university corporatisation they are referring to management, not financial corporatisation.

The misuse of the term has led to talk about equitising public hospitals to mobilise capital, and to the belief that equitisation could somehow benefit the poor!

Source: Viet Nam News