Vietnam's prime minister has issued an urgent plea to the country's universities to raise standards to meet the demands of a modern economy.

In a speech to lecturers at the National University of Ho Chi Minh City last month, Phan Van Khai said that universities had to modernise curricula, improve teaching methods and invest in better technical facilities.

"Over the past few decades we have talked a lot about prioritising education but we have not actually achieved it," he said.

Mr Khai called on the ministry of education and training to improve teaching methods by granting scholarships for lecturers to retrain overseas.

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But Tran Chi Dao, outgoing rector of the National University, said under-investment was a problem. "Poor facilities and insufficient staff numbers make it difficult to provide a diverse range of courses and carry out research as dictated by government," he said.

The National University also appealed to the prime minister to grant funds of $33.7 million (?23.6 million) to stave off budget shortages.

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The university is Vietnam's largest, with 100,000 full-time and 150,000 part-time students.

The prime minister's speech was followed by calls from recruitment experts to address the mismatch in graduate supply and demand. There are too few qualified technical workers and too many students completing popular degrees in the natural and social sciences. Some 46,769 graduates remained unemployed last month - an increase of 56 per cent in five years.

In 1999, the World Bank agreed loans of $103.7 million to improve higher education in Vietnam, but these are contingent on the accurate completion of an "audit" of student numbers.

John Morgan, director of the centre for comparative education policy at Nottingham University, said: "Vietnam remains a country of unfulfilled potential. Attempts to liberalise the economy have had only limited impact on educational reform, which is essential for development to succeed."

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