Vietnam’s New Revolution: Will Provincial Mergers Bring Disruptions or Opportunities?

On 12 April 2025, the Central Committee of the Communist Party of Vietnam (CPV) marked a historic turning point in Vietnam’s administrative landscape by approving a sweeping plan to reduce the number of provinces and municipalities from 63 to 34 through mergers. The Committee also greenlit the abolition of the district government level to establish a two-tier local government system comprising provinces and communes. Communes, currently exceeding 10,000 in number, will be slashed by 60–70 per cent. This streamlining will extend to vertical systems across government agencies, including the military, public security forces, courts, procuracy, and mass organisations, with their district-level agencies to be removed.

The provincial mergers are part of a broader “streamlining revolution” under CPV General Secretary To Lam’s leadership. In February, the National Assembly passed a resolution to consolidate ministries, cutting ministry-level agencies from 22 to 17. Similar restructuring has been conducted internally within each ministry and its corresponding local departments.

These reforms signal Vietnam’s determination to overhaul its bureaucratic apparatus, setting the stage for a transformative era in governance and economic development. They form a cornerstone of General Secretary To Lam’s grand vision to modernise Vietnam’s sociopolitical and economic systems, with the goal of propelling the country towards high-income status by 2045. While the initiative primarily aims to enhance public governance rather than centralise power in To Lam’s hands, it creates conditions for him to cement his legacy and potentially extend his tenure.

Three primary reasons underpin this restructuring. First, streamlining the local bureaucracy reduces contact points, decision-making layers, and command lines, thereby cutting red tape and enhancing the entire bureaucracy’s efficiency.

Second, reorganising provincial development spaces fosters economic synergy and curbs localism. Post-merger, most new provinces will have sea access, enabling coastal trade and infrastructural development. The merger of Ho Chi Minh City with the provinces of Binh Duong and Ba Ria-Vung Tau, for example, is expected to elevate the city into a major economic hub of the Asia-Pacific, leveraging Ho Chi Minh City’s status as a national commercial and financial centre, with Binh Duong’s strong industrial base and Ba Ria-Vung Tau’s robust oil and gas, logistics, and maritime tourism infrastructure.

Third, the reforms aim to ease the state budget, which currently allocates up to 70 per cent for paying recurrent administrative costs. The Ministry of Home Affairs projects significant savings and plans to redirect funds to development projects and social welfare, including free public education and healthcare. Additionally, proposed public employment reforms made possible by these savings, such as aligning public sector salaries with those of the private sector, seek to reduce corruption and attract talent, further strengthening governance.

These reforms represent Vietnam’s most ambitious and consequential administrative overhaul since reunification in 1976…

However, the reforms face challenges. For example, heated debates have emerged online over post-merger provincial names and administrative capitals, likely leading to short-term internal dissent among a segment of the provincial population in locations that are about to lose their names. Decision-making and licensing disruptions are also possible as officials adapt to new structures, potentially delaying investments or public services in the interim.

Yet, To Lam’s consolidated authority has ensured near-unanimous adoption of the reforms, with minimal visible opposition. The restructuring, set to conclude by September 2025, allows adequate preparation for the 14th CPV National Congress in early 2026 and the subsequent National Assembly election. Given the clear timeline and centralised oversight, any disruption is expected to be temporary.

These reforms represent Vietnam’s most ambitious and consequential administrative overhaul since reunification in 1976, potentially reshaping its political and economic landscapes for decades. Anecdotal evidence from social media suggests that public support outweighs concerns. Economically, a leaner bureaucracy promises to reduce red tape and corruption, enhancing responsiveness and attracting foreign investment. In the long run, the streamlined system is expected to bolster Vietnam’s growth by fostering efficient policy execution and regional economic clusters.

Politically, the reforms will likely lead to a restructuring of the CPV’s upper echelons. The new CPV Central Committee and Politburo, to be elected at the Party’s 14th National Congress, will likely shrink due to the smaller number of members representing provinces, concentrating influence among To Lam and his allies. This power concentration, a by-product of the bureaucratic initiative rather than its primary goal, offers opportunities and risks. On the one hand, it ensures political stability to drive development and counter global uncertainties. On the other, it risks long-term destabilisation if future leaders lack To Lam’s capability and vision or if they exploit concentrated power for personal gain.

The reforms’ success hinges on execution and public trust. By prioritising efficiency, economic synergy, and fiscal responsibility, the reforms address long-standing bureaucratic bloat. Plans for free education and healthcare resonate well with citizens, while investors seem to shrug off concerns about potential administrative disruptions with registered foreign direct investment surging by 34.7 per cent in the first quarter of 2025. Yet the government must manage local identities sensitively and ensure disruptions do not erode confidence. To Lam’s strong and action-oriented leadership will lend momentum but sustaining it requires intra-party cohesion, transparent communication, and tangible outcomes.

All in all, Vietnam’s provincial merger, local government restructuring, and broader bureaucratic reforms mark a bold stride towards modernisation. They promise a leaner, more efficient state, poised to unlock economic potential and improve living standards. While challenges like local resistance and temporary disruptions may emerge, the reforms’ ambitious scope and public backing bode well. Politically, they may entrench To Lam’s influence, offering stability but requiring vigilance to avoid excessive centralisation of power. For now, the reforms inspire more hope than fear that they might better position Vietnam to accelerate its development to navigate an increasingly complex global landscape.

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