Vietnam’s Bold Administrative Reform: What It Means for Foreign Investors

Vietnam is undergoing one of the most ambitious administrative restructing in its modern history. In early 2025, the government announced a radical plan to streamline its administrative machinery, reduce inefficiencies, and enhance economic governance – all with an eye toward becoming a high-income country by 2045.

In this article, we look Vietnam’s administrative restructuring strategy. Additionally, we disscus how these developments bring both new opportunities and critical challenges to navigate for cross-border investors.

What’s changing in Vietnam’s restructure and why does it matter?

On April 12, 2025, the Party Central Committee issued Resolution No. 60-NQ/TW following the 11th Conference of the 13th Party Central Committee, marking a pivotal step in Vietnam’s long-term governance reform strategy.

What is Resolution No. 60-NQ/TW?

This resolution sets forth a comprehensive plan to restructure the country’s administrative system, driven by the need to improve governance efficiency, reduce bureaucratic redundancy, and better align the administrative apparatus with socio-economic development goals. The Party Central Committee has reached a strong consensus on the following transformative measures:

• Vietnam will shift to a two-tier local government system, consisting of:
  • Provincial level: including provinces and centrally governed cities;
  • Commune level: including communes, wards, and special zones under provinces or cities.

• After the merger, the total number of provincial-level administrative units will be reduced from 63 to 34 (comprising 28 provinces and 6 centrally governed cities). Each unit will retain specific names and designate political-administrative centers according to the principles set out in official proposals and plans.
• The district-level administrative units will be dissolved, following the adoption of constitutional and legal amendments by the National Assembly.
• Commune-level administrative units will be consolidated, aiming for a nationwide reduction of 60–70% in their current number to streamline governance and enhance effectiveness.

The plan doesn’t just change the map; it redefines Vietnam’s entire administrative model. By removing the district level and cutting commune units, it brings provincial governments closer to citizens while streamlining decision-making. The plan will eliminate around 100,000 public sector jobs, aiming for a leaner, more efficient state. Minister of Home Affairs Pham Thi Thanh Tra said that the restructuring of commune-level administrative units will be completed by June 30, 2025, and from July 1, 2025, these units will operate under the new structure. Additionally, efforts will focus on finalizing the merger of provincial-level administrative units before August 30, 2025, so that provincial units can begin operating under the new structure from September 1, 2025.

Vietnam’s restructuring: What it means for investors?

Vietnam’s sweeping administrative reforms are more than just political shifts – they have significant implications for investors, both local and international. 

Opportunities

• Administrative streamlining for businesses: The reduction in administrative layers simplifies regulatory processes, allowing businesses to quickly obtain permits, licenses, and approvals. With clearer lines of authority and fewer bureaucratic hurdles, investors can expect faster project rollouts, reduced operational friction and eliminated administrative overlaps. Previously, projects crossing two communes in different provinces required duplicate approvals.  With merged provinces, businesses will only need one approval process, saving time and costs. Investors will benefit from clearer lines of authority, making it easier to navigate local regulations and get projects off the ground more quickly.
• Emergence of new economic hubs: Merging provinces creates larger, more competitive economic zones with stronger investment appeal and development potential. Less-developed areas benefit from the infrastructure and capital of more advanced regions, while merged provinces with greater population and scale can evolve into new growth engines. A prime example is the planned consolidation of Ho Chi Minh City, Binh Duong, and Ba Ria-Vung Tau into a “super city” contributing over 24% of national GDP (~114,3 billion USD). With a combined economic scale, strong FDI inflows, and ongoing infrastructure development, this newly merged urban region is poised to become a prime location for large-scale urban expansion. With a combined economic scale, strong FDI inflows, growing infrastructure, and forthcoming revisions to zoning and master plans, this region is poised to become a prime destination for large-scale residential, industrial, and commercial investment, offering investors access to broader markets, diversified labor, and enhanced supply chains.

List of Vietnam’s top 10 localities with the largest economic scale before and after the merger:

Before mergers (billion VND)		Rank	After mergers (billion VND)
Size	Region		Region	Size
1.778.269	Ho Chi Minh City	#1	Ho Chi Minh City	2.707.805
1.426.000	Ha Noi	#2	Ha Noi	1.426.000
520.205	Binh Duong	#3	Hai Phong	658.381
497.715	Dong Nai	#4	Dong Nai	613.072
445.995	Hai Phong	#5	Bac Ninh	439.767
409.331	Ba Ria – Vung Tau	#6	Phu Tho	364.516
347.500	Quang Ninh	#7	Quang Ninh	347.500
318.903	Thanh Hoa	#8	Lam Dong	319.871
232.767	Bac Ninh	#9	Thanh Hoa	318.903
216.944	Nghe An	#10	Tay Ninh	312.466

• Optimised resource allocation and coordinated planning: Vietnam has long struggled with fragmented administrative units, resulting in dispersed resources and limited large-scale investment. Merging provinces allows for the combination of complementary strengths, such as land-rich but cash-poor provinces and vice versa, enhancing capital efficiency and resource utilisation. Restructuring enables unified, large-scale planning across transport, urban development, and industrial zones, reducing fragmentation and facilitating more efficient execution of inter-provincial infrastructure projects like roads, bridges, and waste treatment. Vietnam can better allocate resources and fund strategic initiatives, such as roads, bridges, and public utilities. For investors, this fosters more predictable, well-connected, and economically viable zones aligned with long-term national development goals.
• Accelerate infrastructure investment demand: The restructuring is expected to drive significant demand for upgraded transport, utilities, logistics, and digital infrastructure in newly merged areas. Investors stand to benefit from increased public spending, improved inter-provincial coordination, and expanded opportunities through public-private partnerships (PPPs), particularly in infrastructure-intensive sectors focused on modernising public services and enhancing regional connectivity.

Challenges

• Administrative and legal disruptions: Vietnam’s administrative restructuring – from the provincial to the commune level – can introduce significant short-term instability in both governance and regulatory processes. As local departments and bureaucratic structures are reorganised, overlaps in authority, unclear jurisdiction, and coordination gaps may emerge. For investors, this can result in delayed approvals, ambiguous points of contact, and slower decision-making on projects. Compounding this, businesses may be required to update key legal documents such as tax codes, business licenses, and land-use certificates to align with new administrative units. These legal adjustments carry added compliance costs, potential operational delays, and confusion, especially for investors with cross-regional operations.
• Logistics and infrastructure disruptions: Administrative restructuring may necessitate adjustments to core logistical elements such as vehicle registration numbers, freight permits, and transport documentation. If these updates are not implemented swiftly and uniformly, businesses could face disruptions in transportation and distribution. For investors, particularly those in logistics, supply chain, or manufacturing sectors, delays in freight movement, increased compliance burdens, and inconsistent infrastructure readiness across newly merged regions may pose operational challenges and increase costs.
• Policy harmonisation complexity: One of the major challenges post-merger is the need to harmonise local regulations, tax incentives, and investment policies across newly merged provinces. Previously, different provinces may have offered competing or preferential terms to attract investment. Following a merger, these policies must be unified, which could lead to the loss or adjustment of favorable terms. Investors may face a period of regulatory uncertainty and must be prepared for shifts in incentive structures or compliance obligations as local governments realign their legal frameworks.
• Contractual and land use uncertainty: With new administrative boundaries and changes in land planning, existing land-use rights, zoning permissions, and leasing agreements may come under review. Investors may find themselves needing to renegotiate contracts, especially if the merger alters jurisdiction or zoning regulations. There’s also an increased risk of legal disputes if contractual terms conflict with newly issued guidelines or land-use master plans. This uncertainty can impact long-term investment planning and delay project rollouts, particularly in real estate, infrastructure, and manufacturing sectors.

Interested in entering the Vietnam market?

Here at GLOBAL ANGLE, we conduct market research in Vietnam. Our local Vietnamese partner, team members, and local researchers are based in the country for on-the ground and comprehensive market research and business consulting services. We can conduct detailed research on Vietnam’s supply chain and distribution according to your business needs.

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