HANOI (Reuters) - About a year ago, 2,000 of the best and brightest from five of Vietnam's top universities were invited to take a lengthy multiple-choice exam for a shot at a job at Intel Corp..
The giant computer chip maker had broken ground on its biggest factory ever in Vietnam's commercial hub, Ho Chi Minh City, and the $1 billion assembly and test facility, expected to start operations this year, needed good engineers.
It was more than just another big project. The Intel investment would put Vietnam on the global tech map and help a rising star in the manufacturing world move closer to its dream of advancing up the value chain.
But the results from Intel's test cast a spotlight on one of Vietnam's biggest barriers to achieving that dream: its inadequate and inflexible higher education system.
A fraction of the students passed the written exam, covering physics, electrical engineering, maths and other topics. They were given an English test and just 40 made the final cut.
Than Trong Phuc, Intel's country manager for Vietnam, said he was not surprised by the results.
"Is Vietnam a literate society with good people with fundamental skills? Yes," he said. "But do these people already have knowledge about chip-making in place? No. So we have to start from the ground."
Company spokesman Nick Jacobs said the test was not designed for hiring but rather to "evaluate the competencies" of students and to be a starting point for dialogue with the authorities.
Vietnamese newspapers and websites reported on the result, though, and word quickly spread.
The Intel tale soon became a go-to anecdote in the foreign business community to highlight the education system's failings and one of the big problems when investing in the Southeast Asian country, a lack of skilled professionals.
Among Vietnamese, public debate has blossomed about what many are calling an education crisis, especially at a time when some argue education reform should be a top priority as the government tries to right an economy buffeted by the global recession.
The higher education system remains a throwback to Vietnam's pre-reform days when the economy was small and centralised, ill equipped for the country's new realities.
"The demand for education at the post-secondary level is enormous. Demand way outstrips supply," said Jeffrey Waite, who follows education in Vietnam for the World Bank.
"The system is under enormous pressure to respond by expanding access, and there's always the risk of expanding access at the cost of quality ... Quality is of real concern."
One huge problem is staff. Political credentials remain at least as important in the selection of professors as educational bona fides, despite a clear need for better qualified teachers.
Less than 15 percent of teaching staff at higher education institutes have a doctorate, and that percentage has not changed in the past 10 years, Waite said.
Schools have little autonomy to tailor curricula and students are rewarded for memorisation skills, not critical thinking.
"I bet very few graduates could give a correct answer if they were asked 'what is a market economy?'," said one recent graduate who declined to be identified. "But you know what? They made us memorise the Investment Law which took effect in 1987."
The school system, like other facets of life in Vietnam, is also plagued with corruption. Plagiarism is reportedly rife.
Not surprisingly, the products of such a system are weak.
Only 30 percent of university and college graduates met requirements for their jobs, state-run VietnamNet quoted the Ministry of Education and Training as saying.
Between now and 2015, the two biggest cities, Hanoi and Ho Chi Minh City, will need some 4 million "high-quality" workers in fields such as information technology, tourism, shipbuilding and finance. Based on the current level and quality of training, at best 40-60 percent of demand could be met, it said.
In IT, Vietnam's universities and junior colleges mint 110,000 new engineers a year but only 10 percent become "effective employees", it reported.
The talent drought is not limited to the tech sector.
"Whenever I talk to any company here, whether it's American or not, they say that finding good people is one of the major issues that they face," said U.S. Ambassador Michael Michalak, who has made education a top priority.
The Vietnamese government recognizes the need for change. The question is whether or not it will come fast enough.
"The major challenge in this phase of development for Vietnam is really human resources," said Ton Nu Thi Ninh, a former Vietnamese ambassador to Brussels who is now working to set up a private university in the south, called Tri Viet University.
"You can have all the influx of investment and capital you want, but if you don't have the right human resources, in time you won't make it."
Companies, meanwhile, are forced to be creative in finding ways to fill their human resource pipelines.
Some foreign firms have partnered with Vietnamese universities. Many have their own training programs. FPT Corp, one of Vietnam's top technology companies, even set up its own university in 2006.
Intel flew its 40 successful graduates to Malaysia for further training, and later this year will send 28 students to Portland State University in the United States on two-year, all-expenses-paid scholarships worth $2.24 million.
"They come back and the condition is they work for Intel for three years, which is not a long time," Phuc said.
The company has also donated PCs to Vietnam, trained teachers and offered $500 scholarships to 55 students domestically.
The government has been drafting and re-drafting an education strategy to take it through to 2020, but it has faced criticism.
One former senior education official was quoted as calling a late draft "unbelievably romantic". The start year keeps getting pushed back and it is unclear when the plan will be implemented.
The Ministry of Education and Training did not respond to requests for an interview with Reuters.
One critically needed change, some say, is the role of the central government, which must shift to one of broad oversight rather than micromanaging matters such as tenure appointments.
"It's like they want to have their cake and eat it. They know what they want. They want to have one or two of their universities to be top ranked in the world. But they don't want to give away what they have," the World Bank's Waite said.
Additional reporting by Pham Hong Hanh; Editing by Alan Raybould and Megan Goldin