Will Bold Governance Reforms Help Vietnam?

Vietnam is undertaking a sweeping administrative overhaul in an effort to streamline governance and address long-standing inefficiencies within its bureaucracy. Over the next five years, the government aims to cut one in five public sector jobs, a significant reduction affecting state-owned media, the civil service, the police, and the military.

As part of the restructuring, four ministries—transport, planning and investment, communications, and labor—have been dissolved. On Tuesday, the country’s parliament approved a plan to reduce the number of ministries from eighteen to fourteen. Government projections indicate that around 100,000 employees will either be laid off or offered early retirement.

The Communist Party, under the leadership of To Lam, has positioned these reforms as a crucial step in its fight against entrenched corruption. The emphasis, officials say, is on fiscal discipline and ministerial efficiency rather than expanding government employment.

What are the main changes?

Among the most significant changes, the Ministry of Planning and Investment, which oversees foreign investment approvals, will be merged with the Ministry of Finance—a move that signals an effort to curb corruption tied to foreign capital, particularly as Vietnam seeks greater investment from Europe. Similarly, the Ministry of Transport will be combined with the Ministry of Construction, while the Ministry of Natural Resources and Environment will be folded into the Ministry of Agriculture.

Why now?

Vietnam has experienced a surge in foreign investment in recent years, yet its rigid bureaucracy has failed to convert these inflows into concrete economic gains. Once regarded as an emerging economic powerhouse, the country has instead become a case study in bureaucratic gridlock, where excessive red tape and inefficiency have stifled growth. Now, in an effort to rein in an overstretched public sector—where government jobs are not just sources of employment but symbols of social standing—the government is pushing through a sweeping restructuring plan. The planned cuts are expected to ease financial pressure on the state while streamlining governance.

At the same time, Vietnam is navigating external pressures, particularly in its trade relationship with its largest market, the United States. As an export-driven economy, it faces uncertainty over Donald Trump’s potential return to the White House. Trump has repeatedly threatened broad tariffs of 10–20% on all imports and has singled out Vietnam as “the worst abuser” of U.S. trade, pointing to its rapidly growing trade surplus since 2019. In this context, cost-cutting measures have become even more critical.

What will be the result?

Vietnam’s administrative overhaul is being presented as a bold step toward modernizing its state apparatus and addressing long-standing inefficiencies that have hindered governance and economic growth. The consolidation of ministries and commissions is expected to reduce bureaucratic hurdles for investment, infrastructure, and real estate projects. The reforms also seek to eliminate institutional redundancies that often create contradictions within the government, where one authority mandates a particular course of action while another demands the opposite. By reducing a bloated bureaucracy, the restructuring aims to reshape the country’s administrative landscape, potentially solidifying the legacy of To Lam—widely regarded as Vietnam’s most powerful politician—and Prime Minister Pham Minh Chinh as pragmatic reformers.

Analysts highlight that the current restructuring is unprecedented in both scale and speed, with Communist Party General Secretary To Lam describing it as an institutional revolution. While the government frames these reforms as essential for efficiency and modernization, their ultimate impact depends on execution. Whether they will result in meaningful administrative improvements or merely serve to consolidate power within the bureaucracy remains uncertain.

What Are the Broader Implications?

The timing of these reforms carries significant political weight, coming just a year before the Communist Party’s 2026 congress, where To Lam’s leadership will be up for confirmation. While he is widely expected to secure another term as general secretary, there are murmurs of discontent within the party. His push to restructure the government aligns with his apparent strategy of placing trusted allies in key positions, reinforcing his grip on power.

The political dynamics surrounding this overhaul are impossible to ignore. To Lam ascended to the party’s top position in August following the death of his predecessor, Nguyen Phu Trong, the architect of Vietnam’s sweeping blazing furnace anti-corruption campaign. As a former minister of public security, he cemented his influence through high-profile graft investigations, and since 2021, the Ministry of Public Security, the military, and the police have increasingly dominated the Politburo, the party’s most powerful decision-making body. His rise has also been accompanied by growing accusations of authoritarianism. Earlier this year, he briefly held both the roles of party chief and state president—an almost unprecedented consolidation of power in Vietnam’s modern political history.