Vietnam has been one of the fastest growing economies in Southeast Asia in recent years. Since the “Đổi Mới” policy of 1986, the country has undergone sustained economic reforms that have transformed it from a low-income country to a dynamic middle-income economy. In this context, the Vietnamese government’s current goal is to continue this development and reforms and transform Vietnam into a high-income country by 2045. One of the main tools to achieve this goal is to strengthen the relationship between domestic and foreign firms and attract long-term investment to the country.
The Vietnamese government is aware of the importance of long-term foreign investment for the country’s development and is making administrative changes in government management by carrying out a number of institutional reforms to attract this investment to the country and to achieve the 2045 goals.
This article discusses the recent restructuring of units under ministries and ministerial-level agencies in Vietnam, including the streamlining of institutional layers within ministerial structures, and analyzes the impact of the reforms on the business environment and their importance for foreign investors.
Vietnam’s Most Ambitious Reform Agenda Since Đổi mới
Vietnam is undertaking its most comprehensive state restructuring since the Đổi mới reforms of the late 1980s. Anchored in Resolution 18-NQ/TW of 2017, the country’s leadership has articulated a long-term vision for a “streamlined, efficient, and modern” political and administrative system. The 2024–2025 restructuring phase marks a decisive acceleration of this agenda, with far-reaching implications for governance, public administration, and economic competitiveness.
Resolution 18-NQ/TW and the 2030 Vision
Adopted by the Communist Party of Vietnam in 2017, Resolution 18-NQ/TW set out to innovate and streamline the organizational structure of the political system. The objective was clear: reduce bureaucratic bloat, eliminate institutional overlaps, and enhance effectiveness across state agencies.
Crucially, the Resolution established a 2030 deadline for comprehensive reorganization of the political system. By then, Vietnam aims to have a leaner public sector with clearer mandates, fewer personnel, and significantly reduced intermediate layers and redundant focal points. The current restructuring phase represents a major step toward realizing that vision.
International organizations such as the World Bank and the OECD have stressed the need for institutional reforms in Vietnam. The OECD’s Vietnam Economic Survey 2025 links institutional development to strengthening governance, citing it as a prerequisite for competitiveness and foreign investment.
Structural Inefficiencies in the Pre-Reform System
Vietnam’s old government apparatus faced persistent institutional challenges. Its bulky, multi-layered structure led to overlapping mandates, fragmented policy domains, slow approval processes, and accountability gaps. A bloated civil service and excessive decentralization further compounded inefficiencies.
Multiple ministries and agencies often shared similar or unclear responsibilities, resulting in turf conflicts and blurred lines of authority. International assessments and domestic surveys consistently highlighted how these issues translated into administrative burdens for businesses and citizens alike, undermining economic dynamism and public trust.
Administrative Barriers and Investor Concerns
Studies of Vietnam’s business environment including competitiveness rankings and investor perception surveys have repeatedly pointed to overlapping procedures, red tape, and delays as key constraints on growth.
Such administrative hurdles are, in practice, a major obstacle for foreign investors in Vietnam. A 2023 survey by the Japan External Trade Organization (JETRO) found that Japanese companies consider licensing procedures to be a significant risk and even believe that they can lead to business losses in sectors such as e-commerce.
The 2024–2025 Restructuring: From Policy to Implementation
A notable development in 2026 is that the restructuring is no longer limited to internal administrative changes but is being translated into binding implementation tasks for ministries. Under the Government’s latest action program, ministries are required to review and reassign overlapping licensing powers and eliminate duplicated approval steps across sectors such as industry, trade, and digital services.
In practice, this directly targets the type of bottlenecks reported by foreign investors, particularly in sectors where multiple authorities previously exercised parallel or unclear competence.
Similar concerns have been raised by foreign business associations. In March 2024, foreign-invested enterprises at the Vietnam Business Forum reported lengthy licensing procedures at the Ministry of Industry and Trade (Vietnam), while the European Chamber of Commerce in Vietnam highlighted regulatory uncertainty affecting European businesses.
Based on internal surveys, the 2023 PCI report also pointed to similar difficulties. The report found that more than 10,000 companies had governance problems and that there was a gap between provincial leadership and local implementation.
The 2024–2025 restructuring aims to untangle these institutional knots by consolidating agencies with similar functions and sharpening hierarchical accountability.
Legal Framework and Institutional Consolidation
Under National Assembly Resolutions 176/2025/QH15 (on government structure) and 177/2025/QH15 (on the number of government members), Vietnam has moved from a fragmented 18-plus ministry structure to a more consolidated model comprising.
Before the current reform, the functions, duties and organizational structures of ministries and ministerial-level agencies in Vietnam were defined by Decree No. 178/2007/ND-CP dated December 3, 2007. Article 15 of the Decree specified the structure of ministries, one of the main components of which was the “general departments”. Article 20 of the same Decree also specified the status and powers of the general departments. In practice, this administrative unit operated semi-autonomously and constituted an important intermediate layer in the system.
Abolition of the General Department Level
The elimination of the entire General Department level, a cumbersome intermediate layer in the administrative system, is considered the biggest highlight in this reform.
The abolition of the General Department level is not a change of form, but a change of structure and administrative management thinking. Therefore, the policy of eliminating the General Department level has many simultaneous goals. First, to shorten the organizational system, leaving only two main administrative levels: the Ministry and the Department/Division. Second, to redistribute functions among units, avoiding duplication of tasks or leaving gaps in responsibilities. Third, to strengthen the political and administrative responsibility of the head of the Ministry, when there is no longer an intermediate level to “share the burden” in the decision-making process.
An important but less visible consequence of abolishing the General Department level is the concentration of decision-making authority at the ministerial and departmental levels. This reduces the scope for informal internal consultations that previously delayed approvals, but at the same time increases the individual responsibility of decision-makers.
What This Means for Businesses
For businesses, this shift may result in more decisive outcomes, but also in stricter file scrutiny, as fewer administrative layers remain to absorb procedural or legal risks.
Implementation Challenges
However, the abolition of the General Department level is not without certain challenges. On the one hand, when the functions and workload of the General Department are transferred to the Department or Division level, these units must be significantly restructured to ensure reception capacity. On the other hand, when eliminating the intermediate level, the requirement is to have a flexible coordination mechanism and a concise, transparent decision-making process, avoiding congestion or overlap due to the lack of clear authority between the successor units. In addition, the current General Department leadership team also needs to be reasonably rearranged to ensure effective management while avoiding wasting the quality of senior staff.
However, for the reform to be truly effective, it needs to be accompanied by a legal system, instructions on reorganizing tasks and powers, and especially the process of transferring cadres and civil servants after the merger to be carried out transparently, humanely and in accordance with actual capacity.
Human Resource Reform: Moving Beyond “Jobs for Life”
Institutional restructuring is being accompanied by a significant shift in public-sector human resource management. Vietnam is actively dismantling the long-standing “job-for-life” mentality within its civil service. Merit-based recruitment and performance evaluation are being emphasized, with new pathways opening for experienced professionals from outside government to enter senior positions.
This transition is intended to address under-performance and inject fresh expertise into the public sector, aligning personnel reform with broader institutional modernization.
A Broader Global Context
On a global scale, international reports increasingly position Vietnam’s 2024–2025 reforms as part of a broader push toward institutional modernization. By closing gaps with OECD-style governance standards and improving administrative efficiency, Vietnam aims to enhance state capacity while sustaining economic growth and investor confidence.
Conclusion
Vietnam’s ongoing state restructuring is not merely a bureaucratic reshuffle. It represents a strategic recalibration of governance one that seeks to resolve long-standing institutional inefficiencies, modernize public administration, and align the state apparatus with the demands of a rapidly evolving economy. As the reforms unfold toward 2030, their success will play a pivotal role in shaping Vietnam’s next phase of development.
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