Administrative restructuring

Vietnam’s economy is doing well, and the outlook for the foreseeable future also looks good. For example, for this year 2025 the Vietnamese Government is aiming for a gross domestic product (GDP) growth of > 8%. And for the years to follow, it is even looking at a double digit growth rate. In order to achieve such impressive targets, the Government is taking various actions. Among these actions is administrative restructuring, with the aim of creating a lighter and more efficient Government. One that can support the economic development of the nation. In this news article, we are having a look at some of the reform measures that are being taken. We will also see how these measures may impact Vietnam’s investment climate.

Restructuring at the higher levels

One important measure is the restructuring of several Vietnamese ministries, and some key Government agencies. Vietnam used to have 22 ministries and 8 Government agencies (e.g. State Bank of Vietnam, Government Office, and Vietnam Television). When the restructuring is complete, there will be 14 ministeries and 3 ministerial level agencies. For example, there will be a Ministry of Agriculture and Environment by merging the Ministry of Agriculture and Rural Development with the Ministry of Natural Resources and Environment. And the Ministry of Science and Technology is going to merge with the Ministry of Information and Communications.

Apart from ministerial restructuring, there are also talks about merging certain provinces with each other. The goal here is similar: streamlining governance, reducing costs, and improving efficiency. Vietnamnet recently reported that National Assembly deputies have voiced support for merging small provinces with low populations. They further suggested that reducing Vietnam’s 63 provinces to around 40 may be a practical step. However, they also emphasized that the reform must go beyond a simple administrative map adjustment. Instead, it should lead to real structural efficiency. For example, Hanoi previously merged with Ha Tay Province and parts of Vinh Phuc and Hoa Binh. And more such mergers may follow in the future.

Restructuring at the lower levels

In a recent Government meeting, Vietnamese Prime Minister Pham Minh Chinh mentioned that it is necessary to focus on completing the project of arranging administrative units. The main goal here is to simplify and optimize the administrative machinery of the Government. For example, by reducing the number of administrative levels, eliminating redundant units, and ensuring that Government agencies operate more efficiently. Eliminating the district level-, and expanding the provincial level jurisdictions is one measure that may help in this regard.

Prime Minister Pham Minh Chinh also made it clear that the arrangement of provincial-level administrative units needs to follow certain key numbers and criteria. For example: surface area, population, economy, culture and the ability to complement and support each other. The goals is to improve decision-making, increase responsiveness, and cut down on unnecessary bureaucracy. The new structure will hopefully improve coordination across various Government levels, resulting in a more agile and cohesive system. By streamlining Government operations, Vietnam hopes to reduce administrative costs and improve service delivery to its citizens.

Administrative restructuring and the economy

Administrative restructuring may have an impact, positive or negative, on Vietnam’s economy. Ms. Pham Thu Hang, who is a spokesperson for the Ministry of Foreign Affairs, recently elaborated on this. She mentioned that Vietnam is already working on policies of streamlining the State apparatus towards efficiency and effectiveness since 2017. She also said that there is an implementation plan, with an appropriate roadmap and criteria. According to her, the administrative restructuring will not have a (negative) effect on the investment and business environment in Vietnam.

Perhaps even to the contrary. Because at the same time as the restructuring process, Vietnam continues to focus on simplifying investment processes and procedures. In order to create favorable conditions for foreign enterprises wishing to do business in Vietnam. One of the goals here is to make Vietnam’s regulatory framework stronger and less burdensome for companies. The outcome will hopefully facilitate smoother and faster interactions between businesses and Government agencies. Which may in turn result in more foreign direct investment (FDI). Because investors typically seek environments where business regulations are straightforward and predictable.

For businesses already active in Vietnam, the restructuring project may have both direct and indirect impacts. On the direct side, the reduction in red tape and simplification of the approval processes will likely make it easier for them to start and run their activities in Vietnam. On the indirect side, as the Government focuses on creating larger administrative units, there is an opportunity for improved infrastructure and regional development. This could enhance logistics, transportation, and communication networks, all of which are critical for businesses operating in diverse regions of the country.

Vision for the future

The Government’s vision extends beyond the immediate effects of the administrative restructuring. In the long run, the streamlined administrative system is expected to create a more efficient public sector. One that can better support economic growth, innovation, and development. By focusing on efficiency and effectiveness, the Vietnamese government aims to build an administrative framework that aligns better with the demands of a modern, globalized economy. Of course there is also a link to be made with digital Government, and the so – called “smart era“. For example, Vietnamese Prime Minister Pham Minh Chinh recently mentioned that digital transformation must be closely linked to restructuring the administrative apparatus. In this regard, it is noteworthy that Vietnam recently moved up 15 places to rank 71st among 193 countries in the 2024 edition of the United Nations (UN) E-Government Survey.

Conclusion

The ongoing restructuring of Vietnam’s administrative system is a significant undertaking. One that aims to prepare the country for a future which needs a dynamic, flexible and responsive Government system. Vietnam is trying to achieve this by restructuring the administrative system both at the higher, and at the lower levels. It is also trying to simplify investment procedures, and moving in the direction of e – Government. One obvious group of beneficiaries are Vietnam’s citizens. At the same time, the Vietnamese Government also tries to create a friendly environment for businesses. Indeed, the measures taken may well have the effect of boosting Vietnam’s attractiveness as an investment destination. Which would in its turn support economic growth and development for Vietnam in the years to come.

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