Administrative reform is never merely a technical exercise. The bureaucratic structure of a state constitutes its institutional load-bearing system, shaping how authority is exercised, resources are allocated and public value is delivered. Altering this structure is akin to removing the central columns of a skyscraper: while the promise is a leaner and more open design, the remaining foundations must instantaneously absorb immense pressure to prevent institutional failure.
Vietnam took precisely this risk in 2025. Effective from 1 July 2025, the country abolished nearly 700 district-level administrative units, consolidated its local government from a three-tier (province–district–commune) into a two-tier (province–commune) model, and reduced the number of provinces from 63 to 34. The commune tier was restructured from 10,035 to 3,321 units and the commune emerged as the new frontline executive authority. In a single stroke, Vietnam dismantled a governance architecture that had endured for decades, and set itself on one of the most ambitious administrative experiments in modern Southeast Asian history.
A Legacy System Past Its Limit
For decades, Vietnam’s administrative state operated according to a Soviet-inspired model of centralised, hierarchical management.While this structure provided stability during periods of rapid transformation, over time it became a growing constraint on development. The state apparatus itself came to be identified as the “bottleneck of all bottlenecks” – a system so layered and redundant that administrative costs accounted for an estimated 70% of annual state expenditure, the apparatus maintained approximately four million public sector employees, and the density of public workers — 43 per 1,000 residents — far exceeded regional peers such as Singapore or India.
Commune- and ward-level authorities routinely required approval from higher levels for even routine administrative actions, reinforcing the entrenched “ask-give” mechanism. Decision-making became dependent on discretionary clearance rather than rules-based authority, incentivising delay, risk aversion and rent-seeking. Securing a construction permit in some localities required up to 30 to 40 stamps from different departments, a procedural ordeal that typically spanned two to three years. Such complex and cumbersome administrative procedures created ample opportunities for the commercialisation of state power and persistent red tape.
The Transition to a Two-Tier Local Government System
The transition was executed through an unusually rapid and disciplined legislative process. Following the Politburo’s directive in February 2025 and formal Party approval in April, the National Assembly endorsed the reform on 5 May 2025 with 94.56% of votes in favour. A constitutional amendment removed the mandatory requirement for district-level administration, and the revised Law on the Organisation of Local Government (Law No. 72) took effect on 1 July 2025, just months after the political mandate was issued. The institutional logic was explicit: move from vague legal language to strict delineation of responsibilities, eliminating functional overlaps and jurisdictional ambiguity at every tier.
The reform also redefined roles fundamentally. Provinces, elevated from administrators to strategic architects, absorbed over 100 tasks, including issuing investment and enterprise registration certificates. Communes, elevated from passive “extended arms” to proactive “service centres,” inherited nearly 600 additional tasks (approximately 86% of former district functions): issuing construction permits, land use right certificates, and managing civil registration, among others. Public Administrative Centres were also established across communes, serving as a “one-stop” portal for state services and providing citizens and enterprises with direct, localised access to governance. By utilising integrated digital portals, these centres reduce procedural friction – helping to transform the administrative culture from one of passive management to “constructive, service-orientated governance.”
The Leaner Government vs. Heavier Burden
The implementation of the two-tier local government system has produced a complex landscape of results. At the commune level, officials inherited responsibilities far faster than skills, staffing and systems could be developed. Nearly 4,000 civil servants were redeployed from provincial and former district levels to reinforce communes, while intensive upskilling programmes — covering legal proficiency, digital processing and data governance — were rolled out nationwide.Still, reports from provinces like Tay Ninh revealed frontline staff working extreme hours, including weekends, just to manage the surge in dossiers.
A harder challenge has been what might be called the risk-aversion paradox. A flatter hierarchy eliminates the grey zones for corruption, but it also removes the cover of collective responsibility. With a high-intensity anti-corruption environment, reduced promotion pathways and new accountability demands, many local officials have become reluctant to exercise their expanded authority. Fearful of career-ending mistakes, some fall into administrative paralysis — waiting for written directives rather than acting on delegated powers.For businesses, the reform has reduced bureaucratic friction and opened new pathways for investment, particularly through the consolidation of provinces into larger economic hubs. But enterprises have also had to navigate significant short-term disruptions: updating tax codes, business licences, and land-use certificates to reflect new administrative boundaries, and adapting to new contact points and jurisdictional responsibilities.
For citizens, the transition has been disorienting as much as it has been convenient. Overnight, familiar administrative boundaries dissolved — the ward or commune office they had always dealt with no longer existed, replaced by a larger, newly merged unit sometimes located further away. People found themselves navigating unfamiliar contact points, unclear jurisdictions and staff who were themselves still learning which authority they now hold. In rural and mountainous areas, where internet access is unreliable and digital literacy limited, citizens are unable to perform end-to-end online procedures from home, forcing them to visit commune-level “one-stop shops” in person. This lack of digital readiness has led to the reliance of “document brokers” — intermediaries who exploit those unable to navigate the system — directly challenging the reform’s aspiration of transparent, people-centred governance.
An Unresolved Challenge
Prime Minister Phạm Minh Chính has acknowledged that early implementation has delivered “positive progress” while exposing a central dilemma: the architecture of reform is largely complete, but the operational capacity required to fulfill its promise remains fragile. Vietnam’s experiment offers a rare real-time insight into the challenges of modern state-building. A leaner government is not automatically a better one. Whether the two-tier model delivers sustained improvements in governance will depend not only on legal redesign but on whether digital transformation can genuinely substitute for organisational depth; and whether institutional reform can rebuild, rather than erode, the trust of the officials and citizens it relies on most.