The Asian Development Bank has approved loans of US$190 million to establish a university of science and technology in Hanoi, according to its news release issued Tuesday.
The school which will support research, technical innovation and skills development in Vietnam will also receive aids of 100 million euros ($148) from the French government.
Meanwhile, Vietnam's government will provide $23 million, the bank said.
According to ADB, besides funding physical facilities to accommodate an initial 5,000 students, the project will develop modern governance and management systems and capacity-build senior staff.
It will also establish centers to promote high quality, relevant academic programs, research, and links to industry groups in the private sector.
These features will provide a model that can be applied at other local universities in the future, it said.
Vietnam has been one of Asia's fastest expanding economies over the past two decades with growth averaging over 7% between 1990 and 2010, according to the bank.
It is now a middle income country and is aiming to become a fully fledged industrialized nation by 2020, creating a surge in demand for skilled labor which the higher education system is struggling to meet, it said.