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February 7, 2025

Vietnam’s Government Restructuring: Key Changes and Implications for Businesses

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Vietnam’s political system is currently undergoing a significant reorganization to streamline government operations and improve efficiency. In this regard, Plan 141/KH-BCDTKNQ18, issued on December 6, 2024, provided guidelines on the restructuring of existing ministries, ministerial-level agencies, and government-affiliated agencies. Accordingly, the number of ministries is being reduced from 18 to 14 through mergers and consolidations and the establishment of a new Ministry of Ethnic and Religious Affairs. The number of ministerial-level agencies is being reduced to three, and government-affiliated agencies to five. Similar streamlining is happening at provincial levels.

The newly consolidated state agencies will assume all functions, rights, and responsibilities of the merged entities, and will continue handling all ongoing matters previously handled by the former agencies. Some examples of these changes include the following:

  • The Ministry of Science and Technology (MOST) will oversee telecommunications, IT applications, cybersecurity, e-transactions, and national digital transformation, which had previously been managed by the Ministry of Information and Communications (MIC). MOST will also be responsible for issuing licenses related to these areas, such as licenses for G1 online game services and telecommunication services. The Ministry of Culture, Sports, and Tourism will assume the responsibility of press management, previously under the MIC.
  • The Ministry of Finance will assume state management functions related to investment, previously handled by the Ministry of Planning and Investment. Provincial Departments of Finance will issue Investment Registration Certificates and Enterprise Registration Certificates, a responsibility previously held by the Departments of Planning and Investment.
  • The Ministry of Home Affairs will oversee labor and employment matters. Provincial Departments of Home Affairs will be authorized to issue work permits and will be the designated authorities for companies to register their internal labor regulations.

Advantages for Businesses

The restructuring aims to simplify regulations and expedite licensing processes. By reducing the number of agencies and streamlining their functions, businesses can expect to encounter fewer bureaucratic hurdles and experience faster processing times for permits, licenses, and approvals.

In addition, the government’s focus on attracting and retaining top talent through measures like increased salaries, allowances, and benefits (as outlined in Decree No. 179/2024/ND-CP) is expected to result in a more professional and efficient public sector. This, in turn, will lead to more informed and timely decision-making.

With a more streamlined government structure, businesses can potentially save time and resources by dealing with fewer government agencies. This can significantly reduce the administrative burden on businesses and free up resources for core activities such as product development, service innovation, and customer acquisition.

Potential Challenges

The government restructuring, while aiming for long-term benefits, may present some temporary challenges for businesses, including:

  • Disruptions during reorganization: As the newly formed agencies undergo internal restructuring, they may experience delays in resuming their normal operations. This can lead to temporary slowdowns in processing applications, issuing licenses, and handling other business-related interactions.
  • Uncertainty due to regulatory changes: The restructuring will likely involve changes in regulations and procedures governing various industries. This transitional period may create uncertainty for businesses as they navigate the evolving regulatory landscape. New state agencies might face delays in fully taking on their duties, which could lead to hesitancy in issuing licenses or making important decisions while they get used to their new roles. Additionally, changes in regulatory procedures might happen before the laws are updated, creating gaps in the legal framework and potentially slowing down decision-making by authorities.
  • Potential need for new licenses and permits: While existing licenses or permits issued under the former agency structure may remain valid until their expiry dates or until specific regulatory changes are implemented, the restructuring is expected to introduce new licensing requirements and permit application processes. The newly restructured agencies may eventually mandate the use of new license or permit forms, or require businesses to obtain entirely new licenses or permits based on revised regulations. This can lead to additional administrative burdens and delays for businesses.

Recommendations for Businesses

As Vietnam’s political system undergoes this significant transformation, businesses should take the following steps to effectively navigate this period:

  • Understand the roles and responsibilities of new state agencies to navigate the changing regulatory landscape effectively.
  • Regularly review and stay informed about new regulations to ensure compliance and avoid potential penalties.
  • Establish clear and prompt communication with relevant government agencies when carrying out regulatory procedures to avoid unnecessary delays and costs.
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