Vietnam and other low-and-middle-income countries in East Asia need to make their higher education systems more responsive to labour market demands and the economy to climb up the income ladder, says a report released today by World Bank East Asia and Pacific Regional.

Students at FPT University are provided with laptops for study purposes.

Titled "Putting higher education to work: Skills and Research for Growth in East Asia", the report lists skills workers need to be employable and to support to increase employers productivity and competitiveness and how higher education can produce research that help apply, adapt and develop new technologies to drive growth.

World Bank lead economist and report lead author, Emmanuel di Gropello said that higher education institutions in the developing East Asia\'s economies had yet to fulfil potential.

The World Bank pointed out challenges to Vietnam\'s higher education system including low enrolment at less than 20 percent, insufficient soft skilled graduates as well as poor co-operation between universities and research institutions and firms.

Recent survey findings show that in Vietnam, only around 3 percent of firms co-operate with universities or research institutions. Around 20 percent of university lecturers with PhD degrees merely teach, doing no research due to work overload and limited time and resources.

Di Gropello recommended that the government set up and create favourable conditions that help universities and other institutions interact and jointly develop projects via a so-called "innovation fund".

Moreover, she added that Vietnam was following the right direction in improving the quality of education by giving universities autonomy to make critical decisions related to curricula, finances and staff.

Higher salary and employee benefits were also listed as ways to attract talent, helping improve education quality.

World Bank regional vice president James W. Adams said that with ageing populations, developing countries in the region faced the challenge of achieving growth led by gains in productivity.

"The significance of higher education will increase as the countries work to escape the middle income trap [ middle-income countries find themselves squeezed between low wage competitors in poor countries and cutting edge innovators in rich countries]," he said.

According to the World Bank, over the last two to three decades, higher education access in low-and-middle-income East Asian countries has expanded with enrolment rates of 10-50 percent, which were still lower than higher-income countries however.

In such countries, employers require employees to possess skills based on science, technology, engineering and math as well as problem-solving skills and creativity to serve higher productivity.

The big challenge remains in how to develop and deploy the right types of skills and research.

The report suggests three priorities that Governments, public policy makers can make to improve higher education including efficient financing, better management of public institutions and stewardship of the system.