Private higher education has become an integral part of higher education systems worldwide, including in Vietnam. However, the details explaining the private higher education sector emergence in Vietnam has hardly been addressed in the current literature. Most scholars that have mentioned this emergence in passing believed that Vietnamese private universities emerged to cater to the rising higher education demand that was unmet by its public counterparts. However, interviews with senior policy-makers, founders of private universities, and archived documents contradict this explanation: private universities emerged when demand for higher education declined sharply in Vietnam. Instead, our data point out that private higher education was part of the state-led political and economic reform. In general, we find that while the state set some uncompromised boundaries, it left ample space for private actors to take initiatives -- although a deeper analysis reveals that the state itself did not have a consensus view on where the censored line ends and where the free zone starts. Throughout this article, we argue that the notions of (public) demand vs. the state's plan for higher education should be contextualized with sufficient care in the context of a planned economy like Vietnam's.