Large-scale territorial reorganization is not judged by its legal intent, but by its transitional execution. In Vietnam’s case, the merger of provinces and centrally run cities represents one of the most complex administrative transitions since the post–Đổi Mới decentralization period. The challenge lies not in approving the new territorial map, but in making the new system function without disrupting governance, economic activity, or social stability.
Vietnamese authorities have repeatedly emphasized principles such as continuity, non-disruption, and stability during restructuring. However, international and domestic experience alike shows that transition periods particularly in the first two to three years are when governance risks peak. This chapter examines the transition mechanisms currently embedded in Vietnam’s reform approach and identifies the principal governance risks that could undermine reform outcomes if left unaddressed.
Structural Shift: Transition to a Two-Tier Administrative Model
From 1 July 2025, Vietnam switched to a two-tier administration model (province–commune/ward), from a three-tier administration model (province-district-commune/ward). The elimination of the operational role of district-level governments is part of broader efforts to streamline the political system’s apparatus. Combined with the provincial and city mergers, this represents a radical transformation of public administration, making the transition significantly more challenging.
As Vietnam embarks on a monumental shift with a two-tier local government model across 34 provinces and cities, Party General Secretary To Lam stated that the restructuring is vital for the nation’s development amidst globalization, digital transformation, and the Fourth Industrial Revolution. This transition offers a precious chance to renew leadership thinking, modernize state management, and leverage science and technology to enhance governance quality and public service effectiveness.
Legal Continuity and Transitional Stability
The designation of 1 July 2025 as the official operating date for the new provincial system is a critical stabilizing device. It provides:
- A clear legal cut-off between old and new administrative regimes,
- A synchronized transition across ministries, provinces, and local authorities,
- A predictable timeline for enterprises and citizens.
Importantly, existing administrative decisions, permits, land-use rights, and contracts remain legally valid after the merger. This continuity principle is essential to prevent legal uncertainty and protect vested rights.
In fact, if utilised properly, the transition window can be turned into an opportunity in the long-term. If executed well, the reform can:
- Reduce fragmentation in planning;
- Improve infrastructure efficiency;
- Support higher-quality, regionally integrated growth.
However, success depends on:
- Transparent and timely completion of unified master plans;
- Clear transitional guidance for investors and local authorities;
- Institutional capacity at provincial level to manage increased complexity.
Administrative Consolidation: Scope and Complexity
Provincial mergers necessitate the transfer and consolidation of:
- Administrative authority;
- Personnel;
- Budgets;
- Physical assets;
- Records and data systems.
In theory, this process is administrative and technical. In practice, it is highly political and organizational. Inconsistencies in record-keeping, differences in digital maturity, and variations in administrative culture between former provinces can slow consolidation and increase the risk of errors.
Continuity of Public Services and Governance Functions
A central political commitment of the reform is that the merger process must not interrupt:
- Public administrative services;
- Business licensing and approvals;
- Social services such as education, healthcare, and social protection.
However, the removal or functional reduction of district-level administration places new demands on provinces and communes. If responsibilities are reassigned without adequate capacity and resources, service quality may temporarily decline especially in remote or rural areas.
The success of this transition depends heavily on clear interim guidance and strong central oversight, particularly in high-risk domains such as land administration, taxation, construction permits, and public procurement.
Key Governance Risks During Transition
During the transition, governance risks may emerge. One of the most immediate risks during transition is ambiguity over administrative authority. When functions are transferred or merged, there is often uncertainty over which department is responsible, which level has decision-making power, which procedures apply and more.
This ambiguity can lead to administrative paralysis, as officials delay decisions to avoid errors or accountability risks. For enterprises and investors, this manifests as longer approval times, inconsistent guidance, and increased transaction costs.
Risk Aversion and the “Fear of Responsibility”
There is also a risk of risk aversion by public sector officials and the “fear of responsibility”. Vietnam’s ongoing anti-corruption campaign has significantly reshaped bureaucratic behavior. While it has strengthened discipline and accountability, it has also contributed to a phenomenon widely referred to as the “fear of responsibility.” During a merger transition, this risk is amplified. Officials may avoid signing decisions during periods of institutional uncertainty, delay approvals pending higher-level clarification, or adopt overly conservative interpretations of regulations.
If not counterbalanced by clear procedural guidance and protection for lawful decision-making, this risk aversion can undermine the efficiency gains the reform seeks to achieve.
Loss of Institutional Memory and Local Knowledge
With staff migration or transfer, another dire risk is the loss of institutional memory and local knowledge. Mergers disrupt informal knowledge networks that underpin effective administration, particularly in areas such as:
- Land-use history;
- Local planning contexts; and
- Dispute resolution.
When departments are consolidated and staff reassigned, this institutional memory may be diluted or lost. The risk is especially acute in land and construction management, where historical context often matters as much as formal documentation.
Uneven Administrative Capacity Across Regions
Another prevalent risk is the uneven capacity across newly merged territories. Not all former provinces enter the merger on equal footing. Differences in fiscal capacity, human resources, digital systems and leadership quality can result in uneven governance outcomes within a single merged province. If left unaddressed, this can create new internal disparities and weaken public trust in the reform.
Risk Mitigation and Institutional Safeguards
In order to manage these transition risks, institutional safeguards and risk mitigation mechanisms need to be enforced.
Strong central oversight is essential during transition. Clear, standardized guidance on authority assignment, procedural continuity and transitional workflows can significantly reduce uncertainty and risk aversion.
Digital public services and unified administrative codes are among the most effective safeguards against transition chaos. They can function as stabilizing tools by enabling these functions:
- Electronic processing;
- Transparent tracking of applications; and
- Consistent data across jurisdictions
Digital systems reduce discretion, enhance predictability, and protect both officials and service users.
Human Resource Management and Capacity Building is an important way to mitigate risks. By solidifying the workforce, external frictions from transition can be cushioned. Targeted capacity-building programs are critical to ensure key staff are retained, skills are aligned with new responsibilities and leadership teams are capable of managing larger, more complex organizations. Merger periods should be treated as opportunities for professionalization, not merely downsizing.
Communication and stakeholder engagement is key to making the transition smoother for all the stakeholders. Transparent communication with citizens, enterprises and investors helps manage expectations and reduce misinformation. Clear messaging about what changes and what does not can prevent confusion and stabilize public confidence.
For enterprise or potential investors, these transition risks translate into longer timelines for approvals, greater need for regulatory monitoring, higher value placed on government relations and compliance planning.
However, enterprises that understand and anticipate transition dynamics can:
- Adjust project sequencing;
- Mitigate compliance risks; and
- Position themselves advantageously for post-transition stability.
Conclusion
The transition phase of Vietnam’s provincial and city mergers is the decisive test of the reform. While the legal framework and strategic intent are clear and ambitious, governance risks during 2025–2027 are real and consequential.
If transition management is effective supported by clear guidance, digital systems, and capable leadership the reform can deliver lasting gains in efficiency, planning coherence, and governance quality. If not, short-term disruptions may erode confidence and blunt the reform’s long-term benefits.
The ultimate success of Vietnam’s territorial reorganization will therefore depend less on the number of provinces merged, and more on how well the state manages change, protects continuity, and sustains trust during this critical transition period.
Read more: Harmonising Provinces After Merger Through Infrastructure Planning and Regional Integration
