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Snapshot on​ Vietnam's administrative reform 2025​
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  • July 28, 2025

Background

  • Since 2008, Vietnam has maintained a system of 63 small provinces, each operating on a 3-tier system: province/centrally governed cities, districts and communes​.
  • In April 2025, Resolution No. 60-NQ/TW and Decision No. 759/QĐ-TTg were signed, approving the plan to reduce the number of provinces to 34 and restructure the local government into a two-tier model, officially implemented on 1 July 2025.
  1. Provincial merging: 11 provincial-level units are retained while the remaining 52 are merged into 23, reducing to 34 provinces and cities
  2. Restructuring of local governments: district levels are removed, local and provincial governments now operate on a 2-tier system 

Rationale for the reform​

With multiple smaller administrative units, distribution of resources is challenging, which hinders the ability to support new development strategies that would require regional collaboration​.

Vietnam’s 63 provinces and multiple layers of local governance bodies, disproportionate to its land area and population, result in redundant functions, overlapping responsibilities, and increasing administrative expenses (accounting 70% of the state budget)​.

The reform is expected to go along with the digital transformation in the public sector, reducing the needs for multiple layers of administration​.

Benefits and challenges

Benefits of the administrative reform​

  • In the past, administrative processes were complicated and unclear, e.g. unclear role and responsibilities for different administrative units, and documents needed clearance from multiple layers, hence long wait / processing times​.
  • Following the reform, the government also issued Decree 118/2025/ND-CP, enforcing a ‘one-stop-shop’ public administrative centers.
  • Citizens now can go to new centralised centers for administrative processes, and the latter will coordinate with relevant authorities, eliminating the burden of visiting different administrative units for citizens​.
  • In addition, with fewer provinces and communes, regional planning and coordination across the country is expected to be smoother and less fragmented​.
  • As Vietnam has set a national plan for digital transformation, the reform will help expand this initiative​.
  • Local public administrative centers are integrated with the National Public Service Portal, i.e. more administrative matters will be processed online​.
  • This will likely result in higher technology adoption in local governments, as well as for citizens.
  • With the removal of a layer of governance (district), communal levels are now given more autonomy and power.
  • In the new system, instead of the rigid overreliance on district units, communes are empowered - they can proactively implement initiatives suitable to local conditions without depending on the district and provincial level, thereby accelerating the progress of socio-economic development programs​.

Challenges of the administrative reform​

  • With larger areas provinces, accessibility and governance, especially in remote areas, can be a challenge, forcing some officials and residents to travel further for some administrative tasks, disrupting routines and economic activities​.
  • In addition, the larger size also means that there could be challenges in reaching and providing public services to dispersed populations in rural areas, especially when the infrastructure of the area is underdeveloped​.
  • Post-merging, digital infrastructure has to be synchronised across provinces and communes. However, this poses difficulties because historically, digital transformation has varied significantly across regions, reflecting differences in IT infrastructure needs, investment budgets, and technology adoption​.
  • For instance, urban areas have progressed in digital services, while less developed provinces still face unstable internet and outdated telecom infra. To smoothly roll out the reform, improvement and uniformisation of digital infrastructure is among of the main areas of focus.
  • The reform, particularly removal of district levels, requires transparent workforce reduction.​
  • Overstaffed local governments may face unemployment and career shifts, increasing social tensions without adequate support​.
  • Administrative restructuring requires efficient role allocation to prevent service disruptions, emphasising effective human resource management during the transition​.

Download the report Snapshot on​ Vietnam's administrative reform 2025​

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Nguyen Luong Hien

Partner, Deals/Strategy, PwC Vietnam

Tel: +84 28 3823 0796

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Keith Mark Doten

Director, Deals/Strategy, PwC Vietnam

Tel: +84 28 3823 0796

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