On April 12, 2025, General Secretary To Lam signed and issued Resolution No. 11 of the Central Executive Committee, which outlined a significant restructuring of local governance in Vietnam. The resolution details a plan to consolidate the number of provinces and cities from the current total to 34, comprising 28 provinces and 6 centrally-controlled cities. This move is part of a broader strategy aimed at streamlining administrative units and enhancing governance efficiency.
The Central Executive Committee has agreed to reduce the number of communes by approximately 60-70%, a significant cut that reflects an ongoing effort to simplify the structure of local government. This decision aligns with the recommendations made during the 11th Central Conference of the Party, which took place from April 10-12, 2025, and focused on critical reforms in the political system.
According to the resolution, the new administrative structure will consist of a two-level local government model, which includes provincial-level governance (provinces and centrally-controlled cities) and commune-level governance (communes, wards, and special zones directly under the provinces or cities). The operation of district-level administrative units will cease on July 1, 2025, following the implementation of amendments to the 2013 Constitution and the new 2025 Law on Organization of Local Government.
These changes are not merely logistical; they are intended to create a more efficient and responsive government that is closer to the people. The decision to maintain a total of 34 administrative units reflects careful consideration of various factors, including geographic, demographic, and economic conditions. For instance, provinces like Thanh Hoa and Nghe An will remain intact due to their significant internal development potential, as noted by Mr. Phan Trung Tuan, Director of the Department of Local Government. He emphasized that the criteria for consolidation go beyond mere population and area size, aiming instead to foster better growth opportunities.
At an online seminar held on April 10, 2025, titled "Arranging Provinces and Cities for a Hundred-Year Development Strategy," Tuan explained that the goal is to create a governance model that not only reduces bureaucracy but also enhances the capacity for regional development. He pointed out that the merger of administrative units should create more room for growth and better service delivery to citizens.
As localities prepare for these changes, the Ministry of Interior has set a deadline of May 1, 2025, for regions to submit their proposals for merging provinces and communes. The Ministry will then compile these proposals to present to the National Assembly and the Government for approval. This timeline is critical, as it allows for a structured transition to the new administrative framework.
However, the announcement has sparked concerns in the real estate market, with many experts warning investors to remain cautious amid rumors of a "virtual land fever" linked to the provincial mergers. A recent survey conducted by VTC News found that land prices in areas like Hanoi, Nam Dinh, and Hoa Binh have started to drop, with some brokers reporting decreases of 1 to 3 million VND per square meter compared to earlier this year.
Broker Nguyen Anh Duc mentioned a specific case in the Ba Buong area of Hoa Binh, where land lots are being sold at reduced prices as sellers attempt to liquidate assets before the anticipated mergers take effect. He noted that prices have dropped significantly, with some plots being offered at 6-7 million VND per square meter, down from previous rates.
Similarly, in Nam Dinh, broker Le Ngoc Anh reported a decline in land prices, with reductions of tens to hundreds of millions of VND per plot following social media speculation about the province merging with Ninh Binh. The urgency to sell has led to significant price cuts, prompting concerns about the sustainability of such reductions.
Experts, including TS Nguyen Minh Phong, have cautioned that the current fluctuations in land prices may be driven by speculative behavior rather than genuine market conditions. He highlighted the risks associated with investing based on rumors, stressing the importance of relying on verified information about regional developments and government plans.
In light of these developments, it is essential for stakeholders to navigate the evolving landscape with caution. The overarching goal of the administrative restructuring is to create a governance system that is more efficient, cost-effective, and better equipped to meet the needs of the population.
As Vietnam moves towards implementing these significant changes, the focus will be on ensuring that the new administrative framework not only improves governance but also fosters economic growth and social stability. The upcoming months will be crucial for local authorities as they finalize their plans and prepare for the transition to a more streamlined government structure.
