Detail of the Reform Social Impacts
1. A comprehensive restructuring of Vietnam's 1.The new model shifts local
administrative and political system, aimed at governance from a control-
improving governance efficiency and based system to a service-
responsiveness. oriented one.
2. It reduces provincial-level administrative units 2. Citizens are expected to
from 63 to 34 by the end of 2025, creating larger, receive faster, more efficient
more economically viable provinces. service at the local level.
Increased responsibilities given
to commune-level units;
designed to be closer to the
people.
3.Eliminates the district-level of government, Challenges
moving to a three-tier model: Central → 1. Job loss among redundant
Provincial/City → Commune/Ward. officials.
2.Public resistance to new
province/ward names and office
relocations.
3.Attachment to local identities
and potential friction over
personnel reassignments.
4.Introduces two-tier local government with more
autonomy at the commune level, including the
ability to issue localized legal documents.
5.Streamlines ministries: reducing ministries and
agencies from 22 to 17, and merging overlapping
responsibilities.
6.Modernizes Party and National Assembly
structures by merging internal commissions and
cutting duplicate functions.
7. Entire reform guided by Resolution No.60-NQ/TW
and Decision No. 759/QD-TTg, with full rollout
targeted by end of 2025, ahead of the 14th National
Party Congress.
Political Impacts Economic Impacts
1. Abolishes the old four-tier model .1. Merged provinces form
(central, provincial, district, larger economic hubs with
commune) from the socialist era. Now broader geographic and
aligns with the three-tier model used industrial diversity (mountains,
by ~80% of countries globally. plains, coasts).
2.Over 700 responsibilities 2.Increases Vietnam’s coastal
reallocated from dissolved districts to province share from 44% to
provinces and communes. 62%, boosting seaport and
logistics development.
3. Legal reforms included Examples:
constitutional amendments and
changes to laws on local governance. “Greater Ho Chi Minh City” now
includes Binh Duong and Ba
Reinforces the Party’s commitment to Ria–Vung Tau with 99 seaports,
a lean, service-based, and surpassing Haiphong.
decentralized government.
“Greater Can Tho” gains coastal
access, enhancing the Mekong
Delta economy.
Expected benefits:
1. Budget savings via reduced
public workforce.
2.Faster investment processing,
fewer bureaucratic layers.
3.Creation of mega-economic
zones that encourage industrial
clustering and modern
infrastructure investment.
How Businesses and the Public View the Refo
Benefits
Public optimism about better governance,
more localized service, and reduced bureaucracy.
Concerns:
Uncertainty over merged province identities, office
locations, and job roles.
Loss of local pride or favoritism in appointments.
Business leaders (e.g., Soc Trang Business
Association):
Support the reform’s vision, but stress the need for
merit-based systems and regional unity.
Warn against unhealthy competition between
newly merged areas.
Prime Minister Pham Minh Chinh emphasized that
governments must now actively serve, listen,
and resolve citizen needs.
Lessons Learned from Other Countries
The shift to a three-tier administrative model is aligned with
global best practices:
Used by ~80% of countries worldwide.
Draws inspiration from:
France and Japan for commune-level autonomy.
Singapore and South Korea for centralized strategic planning
with local implementation power.
Moves away from outdated Soviet-style governance (dual
subordination of ministries), which created overlap and
inefficiencies.
The reform reflects a strategic modernization modeled on the
experience of more efficient global systems.
Impact on Banking Industries All Sources Used
1. SOE Equitization in Banking
What happened: The government partially privatized some
state-owned commercial banks (SOCBs), such as
Vietcombank, BIDV, and VietinBank, by selling shares to https://auschamvn.org/advocacy-update
domestic and foreign investors while still keeping majority
control.
Impacts:
1. Improved efficiency: These banks adopted more
competitive and customer-focused practices.
2. New capital sources: IPOs raised funds for expansion
without relying on the state budget.
https://vietnamnet.vn/en/vietnam-begin
3. Governance upgrades: They implemented international
accounting and risk management standards (like Basel II).
Challenges: Progress is slow due to political caution. Some
reforms stalled, leaving governance gaps.
2. Liberalization and Foreign Ownership
What happened: As of 2024–2025, Vietnam is allowing
foreign investors to own up to 49% of certain commercial
banks (up from 30%).
Impacts:
1.Increased foreign capital and expertise entering the sector.
2. Technology transfer and better compliance with global https://www.vietnam-briefing.com/news
standards.
3. Still, state retains majority control in key banks, limiting
full privatization.
3.Digital Banking Reform
What happened: Under the National Digital Transformation
Program, banks are encouraged to digitize their services.
Impacts:
1.Mobile banking and e-wallets (like MoMo, ZaloPay) have
exploded in popularity.
2.Cashless economy: More citizens and SMEs now use digital https://state-owned-enterprises.worldba
payment platforms.
3.Banking automation: Core banking systems and customer
onboarding are now mostly digital.
4.Open Banking & Fintech integration: Encouraged through
sandbox regulations and API development.
https://www.reuters.com/business/finan
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