In a significant shift for Vietnam’s administrative landscape, the adoption of a two-tier local government model—comprising provincial and commune levels—is reshaping the business environment. Experts and industry leaders report that this streamlining of bureaucratic structures is reducing operational costs and time, fostering a climate ripe for bolder investments and expansion. As Vietnam continues its push for administrative reform, businesses in sectors ranging from tourism to manufacturing are experiencing tangible benefits, signaling a new era of efficiency and opportunity.
A Streamlined Path for Business Operations
The reorganization of provincial units under the two-tier system is yielding measurable improvements in Vietnam’s investment and business climate. By simplifying administrative layers, the model eliminates redundant intermediary levels, enabling faster decision-making and clearer procedures. This restructuring is not just about cutting red tape; it is opening new avenues for companies to tap into markets, optimize operations, and pursue growth with greater confidence.
In the tourism sector, the impact is particularly pronounced. Bùi Thanh Tú, Marketing Director of BestPrice Travel, highlighted the positive changes in a statement to local media. He noted that the coordination of tours, events, and tourism promotion is now more effective and adheres to schedules more reliably—a critical factor in an industry marked by intense competition. Tú emphasized that the reform is also building confidence among businesses to invest in regions previously hindered by fragmented development strategies. For instance, the merger of areas like Hà Nam and Nam Định with Ninh Bình has created linked tourism clusters, such as the route from Tam Chúc to Bái Đính, or the Catholic pilgrimage path from Nam Định to Phát Diệm, offering new opportunities for growth. 
Manufacturing and retail businesses are also reaping the rewards. Mai Đỗ Thùy Dung, CEO of AKA Furniture, which operates well-known brands like Nha Xinh and BoConcept, pointed out that local departments have become more proactive and flexible in guiding procedures. Speaking to a Vietnamese online publication, she described how the simplification of the administrative apparatus has reduced overlap between district-level agencies and various departments. A recent example involved her firm’s showroom design adjustment documents, where feedback from relevant agencies was handled more swiftly than in the past. Dung noted that these improvements save time and costs while creating favorable conditions for internal restructuring, supply chain optimization, and enhanced customer experiences—key elements for success in the competitive furniture retail market.
Driving Investment with Administrative Efficiency
Beyond operational benefits, the two-tier government model is transforming how local authorities support business initiatives, particularly in project investment. Industry leaders report that the time required for administrative procedures has been significantly shortened, with some processes now accessible online or manageable at the commune level when authorized. This shift is fostering a more responsive environment for investors looking to capitalize on Vietnam’s growing economy.
Lữ Nguyễn Xuân Vũ, General Director of Xuân Nguyễn Group JSC, shared insights into how these changes are facilitating major projects. His company is currently developing the ASEAN+ Cultural Village project in Vĩnh Long, a region formerly part of Bến Tre Province before a recent administrative merger. With an initial infrastructure investment of approximately VNĐ100 billion (~US$4.1 million), the project aims to establish a cultural and resort complex focused on community-based tourism. Vũ acknowledged the strong support from authorities at all levels but expressed hope for continued collaboration to ensure swift and smooth implementation. He also advocated for greater decentralization at the commune level, suggesting that bold, flexible, and well-trained officials could drive a breakthrough in Vietnam’s ongoing administrative reforms.
Dung of AKA Furniture echoed this sentiment, calling for a business-friendly local government that ensures consistent policy implementation and leverages technology in administrative processes. She proposed a single point of contact for each type of procedure and more structured dialogue channels between authorities and businesses. Such measures, she argued, would further enhance the ease of doing business in Vietnam, encouraging firms to pursue ambitious expansion plans.
Building a Foundation for Sustainable Growth
Feedback from a range of enterprises underscores the broader implications of the two-tier system. When operated with flexibility, this model not only streamlines administrative functions but also fosters transparency and responsiveness, creating an environment conducive to business growth. Experts suggest that these reforms lay a solid foundation for attracting domestic investment, improving competitiveness, and enabling companies to adopt sustainable growth strategies with confidence.
The tourism industry, for instance, stands to benefit from a more cohesive approach to regional development. Localities that previously struggled to exploit their full potential are now better positioned to collaborate and market their unique attractions as part of larger, interconnected clusters. This is expected to draw both domestic and international visitors, boosting revenue for travel businesses and supporting local economies.
Similarly, in manufacturing and retail, the reduction of bureaucratic hurdles allows firms to allocate resources more effectively, whether by streamlining supply chains or enhancing customer-facing operations. The ripple effects of these changes are felt across various sectors, as businesses find themselves better equipped to navigate Vietnam’s competitive landscape.
Challenges and Expectations for the Future
Despite the optimism surrounding the two-tier model, challenges remain. Some industry leaders, like Vũ, believe that commune-level authorities need greater decision-making power to handle significant projects independently. Without substantive decentralization, there is a risk that bottlenecks could persist at higher administrative levels, slowing down critical investment initiatives.
Moreover, the success of these reforms hinges on consistent policy implementation and the integration of technology into governance. Businesses are eager for digital solutions that simplify processes further, such as online portals for document submission and tracking. Regular dialogue between local authorities and the private sector is also seen as essential to addressing emerging challenges and ensuring that reforms remain aligned with business needs.
Experts caution that while the initial results are promising, the long-term impact of the two-tier system will depend on sustained commitment from all levels of government. Training programs for commune-level officials, investment in digital infrastructure, and mechanisms for accountability will be crucial to maintaining momentum. Without these, there is a danger that the benefits of reform could be undermined by inconsistencies or resistance to change.
A Model for Regional Reform?
Vietnam’s experiment with a two-tier government model offers valuable lessons for other countries in the region grappling with bureaucratic inefficiencies. By prioritizing simplicity and responsiveness, the country is positioning itself as an attractive destination for investment at a time when global businesses are seeking stable and supportive environments. The reforms also align with broader regional trends toward decentralization, as governments across Southeast Asia look to empower local authorities and stimulate economic growth.
Comparisons can be drawn with neighboring nations like Thailand and Indonesia, where administrative reforms have similarly aimed to reduce complexity and enhance local governance. However, Vietnam’s approach is distinct in its focus on merging provincial units to create cohesive economic zones, a strategy that could inspire similar initiatives elsewhere. As the ASEAN+ Cultural Village project and other ventures take shape, they may serve as test cases for the scalability of this model, both within Vietnam and beyond its borders.
Ultimately, the two-tier system represents a bold step forward for Vietnam’s administrative framework. It reflects a recognition that economic progress is inextricably linked to governance efficiency—a principle that resonates in a region increasingly defined by rapid development and global integration. For now, businesses are capitalizing on the newfound clarity and speed of administrative processes, but the true test will be whether these reforms can deliver lasting change.
As Vietnam presses ahead with its restructuring, the question remains: can this momentum translate into a broader transformation of the country’s economic landscape? The early signs are encouraging, but the journey is far from over.
