Vietnam to Cut Provinces in Half as Part of Sweeping Cost-Cutting Reforms

Vietnam is set to halve the number of its provinces and reduce commune-level administrative units by up to 70% in an ambitious effort to streamline governance and cut billions of dollars in state spending.

The reform drive has already led to the consolidation of government ministries and agencies from 30 to 22, with further plans to eliminate 20% of public sector jobs over the next five years.

Major Administrative Overhaul by August 2025

According to a government statement on Tuesday (March 18), Interior Minister Pham Thi Thanh Tra confirmed that the restructuring, including provincial mergers and downsizing of local administrations, is set to be completed before August 2025.

Key changes under the plan include:

• Reducing provincial-level units by 50%.
• Cutting grassroots-level administrative units by 60-70%.
• Eliminating district-level governments altogether.

Vietnam currently has 63 provinces and major cities, overseeing about 700 district-level units and more than 10,000 commune-level units. However, the government has yet to specify which provinces will be merged.

Public Sector Downsizing Gains Momentum

With nearly two million public sector employees as of 2022, Vietnam is accelerating workforce reductions as part of its bureaucratic overhaul. Earlier this year, the government announced plans to cut 100,000 jobs through redundancies or early retirement.

So far, over 22,000 positions have been eliminated, according to VNExpress, a state-run news outlet. Minister Tra described the restructuring as a “real revolution in the entire political system.”

It remains uncertain whether further job cuts will accompany the upcoming provincial mergers.

Party Leadership Pushes for Reform

Vietnam’s Communist Party General Secretary, To Lam, has strongly endorsed the cost-cutting initiative, emphasizing the need to eliminate inefficiencies in state agencies.

“If we want a healthy body, sometimes we must take bitter medicine and endure pain to remove tumors,” Lam said in December 2024. He also warned that government offices should not serve as safe havens for underperforming officials.

Concerns Over Administrative Disruptions

While the restructuring is intended to improve efficiency, concerns are growing over potential short-term bureaucratic slowdowns. Reports have surfaced about delays in provincial offices, as officials struggle to manage workloads amid ongoing changes.

However, Vietnam’s Ministry of Foreign Affairs has dismissed fears that the reforms are negatively affecting the investment and business climate.

As Vietnam embarks on its largest administrative overhaul in decades, the success of these reforms will depend on effective implementation, maintaining service efficiency, and managing the transition without significant disruptions to governance and public services.

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Source: Vietnam Insider