How Vietnam’s ‘Streamlining Revolution’ May Lead to Uneven Success

Vietnam’s ambitious administrative overhaul has been hailed as a masterstroke in modernizing its governance structure. However, beneath the surface, concerns are rising that this “streamlining revolution” may lead to uneven success, leaving some areas lagging behind others.

The most significant change is the reduction of provinces and centrally governed cities from 63 to 34. While this might seem like a straightforward exercise in administrative efficiency, it has already raised questions about how effectively local institutions will be able to execute plans drawn up in Hanoi. The abolition of the district tier of government and consolidation of commune-level units have also led to worries that vital services may be compromised.

The reform’s focus on structure is just one aspect of a broader effort to build governance capacity. Vietnam’s development model relies heavily on four strategic shifts, each dependent on the success of the others: improving party leadership capacity, state operating quality, and unifying governance; shifting growth towards productivity and technology; and preventing crises through early detection and response.

However, these shifts rely on the development of local institutions capable of executing plans drawn up in Hanoi. With nearly 210,000 civil servants and public employees having taken early retirement or severance under the restructuring, concerns about staff shortages and resource mismatch are growing. The government’s own figures suggest that while it has reduced the size of the state bureaucracy, it may have inadvertently created a gap between what is demanded of local institutions and their actual capacity to deliver.

Vietnam is facing significant economic challenges, including a slowing economy due to declining foreign investment and exports. Its efforts to shift growth towards productivity and technology are laudable, but many small businesses still rely on informal networks and personal connections to get things done. This raises questions about the impact of these reforms on the country’s broader economic development trajectory.

Will the focus on streamlining and capacity-building lead to more efficient governance, or will it create a system where local institutions are forced to adapt to central directives without sufficient resources? The government needs to be careful not to create a situation where some areas thrive at the expense of others. Vietnam’s experience should serve as a warning: the pursuit of efficiency and modernization can have unintended consequences if not carefully managed.

As Vietnam navigates this delicate balancing act, it would do well to remember that building capacity is only half the battle – sustaining momentum over time will require a more nuanced understanding of what works and what doesn’t. Singapore’s development model has been touted as an inspiration by Vietnamese policymakers, but beneath its gleaming façade lies a rapidly aging population and rising inequality.

The test for Vietnam’s streamlining revolution is far from over. While the government has made significant strides in reducing the size of the state bureaucracy, it now faces the harder task of ensuring that its institutions are effective in delivering results on the ground. If it fails to address the unevenness of success, the consequences could be far-reaching and devastating.