Vietnam Embarks on Major Administrative Overhaul: The Vietnamese Parliament has approved a sweeping set of reforms aimed at streamlining the country’s bureaucracy, reducing red tape and boosting economic growth.
The Vietnamese Parliament has given its approval to a sweeping set of reforms aimed at streamlining the country’s bureaucracy. The changes, which include reducing the number of ministries from 18 to 14 and cutting around 100,000 public sector jobs over the next five years, are designed to reduce red tape and boost economic growth.
What Changes Are Taking Place?
As part of the restructure, state-owned media organizations, the civil service, the police, and the military will face cuts. The ministries of transport, planning and investment, communications, and labor have been scrapped. ‘The planning and investment ministry will be merged with the finance ministry, while the transport ministry and construction ministry will be combined.’ The natural resources and environment ministry and agriculture ministry will also be merged.
The Need for Reform
Analysts note that Vietnam’s institutional framework is seen as a ‘bottleneck’ hindering further economic development. Despite adopting free-market principles 40 years ago, the country remains a lower-middle-income nation. ‘The reforms aim to modernize Vietnam’s state apparatus, tackle persistent inefficiencies, and streamline its bloated bureaucracy.’
Vietnam's economy has experienced rapid growth over the past few decades, with an average annual GDP growth rate of 6.5% from 2000 to 2020.
The country's economic reforms, known as 'Doi Moi' , introduced in 1986, have led to increased foreign investment and trade.
Vietnam has become a major manufacturing hub for international companies, particularly in the textile and electronics industries.
According to the 'World Bank' , Vietnam's GDP per capita has risen from $334 in 2000 to over $2,500 in 2020.
Economic Challenges
Vietnam faces uncertainty about its trade relationship with its largest market, the United States. With Donald Trump set to take office, there are concerns that the country may face blanket tariffs of 10%-20% on all imports. The reforms come amid concerns in Hanoi about the pace of economic change.
Consolidating Power
The reforms also have a political dimension. To Lam, Vietnam’s most powerful politician, has been consolidating power since ascending to the party’s top office. His leadership will be up for confirmation at the Communist Party’s 2026 congress. While most analysts expect him to secure another term as general secretary, there are murmurs of discontent within the party.
A Legacy in the Making
If executed well, these reforms could establish To Lam and Prime Minister Pham Minh Chinh’s legacy as action-oriented reformists. The primary goals of the reforms are to modernize Vietnam’s state apparatus, tackle persistent inefficiencies, and streamline its bloated bureaucracy.
