Vietnam launches plan to modernize state and reach high income by 2045

The Vietnam Government has launched the most ambitious restructuring plan since DOI Moi reforms in 1986. The proposal, approved last weekend by the Communist Party Central Committee, provides for a reduction by half of the number of provinces, the elimination of public office and a profound revision of the country’s regulatory and administrative apparatus.

The declared goal is to turn Vietnam into a high -income nation by 2045 and ensure, as of 2025, economic growth rates over 10% per year.

The project was formalized by signing Resolution 60 by Secretary General to Lam, who took over the party’s leadership eight months after the death of Nguyen Phu Tong. The measure proposes to reduce the current provinces to 34 and eliminate the intermediate level of the districts, now considered inefficient and expensive.

From these changes, more than 60% of the provinces will have direct access to the sea, which, according to the government, will expand opportunities related to coastal tourism, seafood production and international trade.

In parallel to territorial reorganization, the plan includes the digitization of administrative processes and the simplification of procedures that today inhibit foreign investment. The expectation is to eliminate 30% of regulatory procedures by 2030, facilitating the activity of companies and investors.

“If we do not innovate, we will lose,” To Lam said in a speech transmitted to party paintings across the country. He argued that Vietnam needs to enjoy the current decade to make a new leap in the face of the “New World Order” expected for 2030.

The growth of the Vietnamese economy since the beginning of the socialist transition is cited by the authorities as the basis for the new round of reforms. In 2023, the country’s gross domestic product was 96 times larger than in 1986. Only between 2010 and 2024, GDP grew 3.3 times – a faster performance than other Southeast Asian countries, such as Philippines (2.2 times), Malaysia (1.7 time) and Thailand (1.6 time). According to projections from the International Monetary Fund, Vietnam is expected to exceed Thailand and Malaysia at economic volume by 2028.

The new plan also aims to make the public machine more efficient. Among the goals is the gradual reduction of up to 20% of the functionalism until the end of the decade, from the merger of organ and the revision of attributions between government spheres. Working for the Vietnamese state has been synonymous with stability for decades, even in the face of low wages.

“Those who do not consider themselves meeting the requirements should resign proactively and give way to more appropriate others. It is an act of bravery,” To Lam said in defending the renewal of public paintings.

Currently, official salaries range from 3 to 23 million DONG per month (equivalent to about $ 110 to US $ 890), lower than average market. The Ministry of Interior proposed a progressive equalization with the private sector, which, according to the proposal’s advocates, would also reduce incentives for corruption.

The government, however, recognizes that the scope of this measure will depend on tax results and the reorganization of Folha. It is expected that, with fewer positions, resources can be redirected for fairer and more productive remuneration.

Hanoi’s broad institutional reform also includes the revision of the economic regulation system, considered by foreign entrepreneurs and investors as excessively bureaucratic. A European executive reported, in a recent interview with the local press, that the documentation required to import a container with multiple goods forms a stack of more than one meter high.

The Government’s goal is to reduce this type of bottleneck, facilitate licensing and boost exports, which are responsible for a significant portion of national GDP.

The changes are expected to take effect from September, but still depend on legislative approval. The president of the National Assembly stated that parliamentarians may have to “work at night” to account for the reform agenda, which will be debated between May and June.

According to the government, the reduction in the number of provinces and the fusion of administrative structures are only the first step of a transition that can completely remodel the Vietnamese state by 2030.

Despite the risks inherent in the process, the Communist Party’s proposal has generated positive expectations between entrepreneurs and investors. By announcing the plan, to Lam stated that the country needs to act quickly and unity to maintain the dynamism of the economy.

“The rest of the world has advanced a lot from us. They are growing too fast,” said the leader. For Hanoi, the new phase of reforms is not just a response to the global conjuncture, but a strategic bet in the future.