Vietnam’s decision to abolish the district-level government and move to a two-tier local government system cannot be properly understood without a rigorous diagnosis of the structural pathologies embedded in the former three-tier system (province–district–commune).
For many years, policy debates focused on procedural inefficiencies slow approvals, excessive paperwork, and administrative burden. However, the reform initiated from 2023 onward reflects a deeper conclusion reached by the Party, the National Assembly, and the Government: that these inefficiencies were not incidental, but structural, rooted in the way authority, responsibility, and accountability were distributed across three local levels.
This chapter analyzes four interlocking structural problems that made the three-tier system increasingly unsustainable in the context of Vietnam’s current development stage:
- Administrative fragmentation
- Duplication of authority
- Systemic decision-making delays
- Chronic accountability gaps
These problems were repeatedly identified in Party resolutions, Government reports, and implementation reviews of administrative reform programs, and ultimately provided the policy justification for eliminating the district tier altogether.
Administrative Fragmentation as a Structural Feature
Districts as Semi-Autonomous Silos
Under the former system, district-level governments occupied an ambiguous institutional position. Legally subordinate to provinces, they nonetheless exercised substantial discretion in:
- interpreting provincial directives,
- sequencing implementation,
- prioritizing administrative workloads.
In practice, districts often functioned as semi-autonomous administrative silos, particularly in large provinces and urbanized regions. Provincial policies whether related to land use, public investment, or sectoral planning were filtered through district-level administrative logic before reaching communes.
This filtering effect produced horizontal fragmentation (between districts within the same province) and vertical fragmentation (between province and commune). As a result, the same policy could be implemented differently across districts, undermining uniformity and predictability.
Impact on Strategic Planning and Coordination
Fragmentation was especially problematic for cross-district infrastructure projects, urban expansion, industrial zone development and environmental and water management.
District boundaries became de facto barriers to integrated planning. Projects that required coordination across districts faced prolonged negotiations, inconsistent interpretations, and competing local priorities.
As Vietnam’s economy became more interconnected and spatially complex, this fragmentation increasingly conflicted with national objectives for regional development and territorial integration.
Duplication of Authority and Functional Overlap
Overlapping Mandates Across Three Levels
One of the most persistent weaknesses of the three-tier system was the duplication of authority across provinces, districts, and communes.
In many policy domains most notably land administration, construction licensing, environmental management, inspection and supervision, social services responsibilities were shared but not clearly delineated. Provinces issued overarching policies, districts exercised approval or verification powers, and communes handled frontline implementation. This overlap created a governance environment in which no single level held full responsibility.
Transaction Costs and Administrative Burden
For citizens and organizations, duplication translated into multiple submissions of similar documents, repeated verification of the same information, uncertainty over which authority was competent.
From a system perspective, duplication increased administrative costs, internal coordination burdens and opportunities for procedural delay.
Government reform reviews repeatedly concluded that reducing procedural steps without removing overlapping authority would not yield sustainable improvements hence the need for structural change.
Pre-Reform Administrative Burdens on Investors
The administrative reform also has important implications for the investment environment in Vietnam. Surveys among enterprises showed that administrative procedures are still complicated and time-consuming. In fact, according to the APCI report of 2022, a survey was conducted among 3,092 enterprises and the results of the survey showed that 4.7% of enterprises paid informal costs for investment procedures. The report also shows that in the land group, each enterprise had to spend an average of 32.2 hours and 3.8 million VND (160 USD) for administrative procedures. These also prove that the procedural burden within the pre-reform administrative system continues.
Meanwhile, legal expert Hồng from the Legal Department of VCCI noted that for a typical land use, an investor still has to complete at least 15 different procedures during the preparation stage. VCCI research shows that frequent changes in laws also create difficulties for investors. A project can be subject to 12 laws and 20 decrees (or ordinances) in addition to local regulations. Hồng also adds that administrative requirements take 18-24 months to complete, with an average of 2-3 years, if the process goes smoothly. The 2023 PCI report found that 73% of businesses either postponed or canceled their business plans due to procedural difficulties.
Decision-Making Delays and the “Layering Effect”
Sequential Approvals as a Structural Bottleneck
The three-tier system institutionalized a layered approval process. Even routine administrative actions often required:
- commune-level submission,
- district-level review,
- provincial-level endorsement or confirmation.
This sequencing produced predictable delays, particularly in areas requiring inter-departmental coordination.
Districts, positioned between implementation and approval, frequently became bottlenecks, either due to capacity constraints or cautious administrative behavior.
Risk Aversion and Procedural Conservatism
As accountability pressures increased especially in sensitive areas such as land, construction, and public investment district officials often adopted conservative approaches:
- escalating decisions upward,
- requesting additional documentation,
- delaying approvals to avoid personal risk.
These behaviors were not individual failings but rational responses to a system in which authority and responsibility were fragmented.
The cumulative effect was a structural slowdown in administrative responsiveness, incompatible with Vietnam’s development and governance objectives.
Accountability Gaps and Responsibility Diffusion
“Shared Responsibility” as No Responsibility
A critical flaw of the three-tier system was the diffusion of accountability. When outcomes were unsatisfactory delayed projects, inconsistent enforcement, or service failures it was often unclear which level was responsible.
District governments could claim adherence to provincial guidance; provinces could attribute failures to district execution; communes could cite lack of authority or resources.
This vertical diffusion of responsibility weakened incentives for decisive action and performance improvement.
Impact on Administrative Culture
Over time, accountability gaps contributed to:
- procedural formalism,
- risk avoidance,
- compliance-oriented rather than outcome-oriented governance.
Reform evaluations by central authorities increasingly emphasized that clarifying accountability was as important as streamlining procedures.
Mismatch Between Governance Structure and Development Stage
Legacy Structure in a Modern Governance Environment
The three-tier system was designed for a governance environment characterized by limited mobility, sectoral planning and analog administration.
By contrast, contemporary Vietnam requires:
- rapid policy coordination;
- digital service delivery;
- integrated spatial planning; and
- data-driven governance.
The district level, originally intended as a control and transmission layer, became increasingly misaligned with these needs.
Urbanization and Regional Integration Pressures
Rapid urbanization and the emergence of metropolitan regions further exposed the inadequacy of district-based governance. Urban systems do not conform neatly to district boundaries, and governance structures based on such boundaries struggled to manage urban complexity.
Policy Conclusion: Why Elimination, Not Adjustment
Policy reviews conducted during the implementation of administrative reform programs consistently reached a decisive conclusion: incremental adjustment of the three-tier system was insufficient.
Measures such as simplifying procedures, reducing staffing and issuing guidance, while necessary, could not resolve the structural contradictions inherent in the system.
The elimination of the district level thus represents a structural solution aimed at:
- removing a redundant layer;
- clarifying authority;
- shortening accountability chains;
and aligning governance architecture with Vietnam’s development trajectory.
Conclusion
The former three-tier local government system in Vietnam was undermined by structural fragmentation, duplicated authority, systemic delays, and diluted accountability. These weaknesses were not temporary or procedural, but embedded in the architecture of governance itself.
The move to a two-tier system responds directly to these structural problems. By removing the district level, the reform seeks to create a governance framework that is more coherent, more accountable, more responsive and better suited to a digitally enabled, regionally integrated economy.
Understanding these structural deficiencies is essential to evaluating both the logic and the risks of Vietnam’s two-tier local government reform, which subsequent chapters will analyze in detail.
Read more: Monitoring and Evaluation Framework for Assessing the Effectiveness of Provincial and City Mergers
