Brian Jeffrey
At the end of last year, General Secretary To Lam and Prime Minister Pham Minh Chinh boldly labeled institutional reform as “the greatest bottleneck of them all,” a moment that caught many off guard. This level of transparency and clarity regarding Vietnam’s long-standing issues was unprecedented among its leaders.
When these officials later remarked that “a breakthrough in institutions is the ultimate breakthrough,” it sparked renewed hope among the business sector and the general public—a belief that Vietnam could finally achieve its long-held dream of a top-tier business and living environment.
This positive sentiment reverberated through media outlets, policy debates, and particularly during the recent National Conference, where the General Secretary reiterated four newly adopted Party resolutions termed as “the four pillars” essential for Vietnam’s advancement.
What exactly constitutes the ‘institutional bottleneck’?
This term refers to Vietnam’s complex, intricate legal structure, which has become more challenging to navigate and expensive to adhere to for both citizens and businesses alike.
Since the 11th Party Congress in 2011, the vulnerability of institutional frameworks has been recognized as one of Vietnam’s three primary strategic obstacles, along with infrastructure and human capital. Since then, institutional reform has consistently ranked among the nation’s foremost strategic priorities.
The 13th Party Congress reinforced this stance by declaring institutional reform as a “strategic breakthrough,” focusing on establishing a comprehensive legal framework for a socialist-oriented market economy, modernizing governance, refining laws and regulations, enhancing the business landscape, fostering innovation, and promoting decentralization with effective oversight.
However, as General Secretary To Lam candidly pointed out, “These progressive measures have not been instituted comprehensively or in a timely manner.”
Instead, Vietnam has been attempting to fill its institutional voids with temporary solutions: specific resolutions, omnibus legislation, expedited legislative processes, and yearly reforms in the business environment. Many laws have needed frequent adjustments—yet core issues remain unresolved.
To circumvent legal hurdles, the National Assembly has provided “special mechanisms” to ten localities: Hanoi, Hai Phong, Thanh Hoa, Nghe An, Hue, Da Nang, Khanh Hoa, Buon Ma Thuot, Ho Chi Minh City, and Can Tho.
During a May 2022 session, Prime Minister Pham Minh Chinh asked, “If all ten provinces are seeking special mechanisms, can we truly call them ‘special’?”
The majority of these unique requests address similar challenges: autonomy in land clearance, management of land and forests, industrial zone licensing, and requests for central budget assistance.
“If each province is asking for the same things,” he continued, “it may be time to broaden decentralization, allowing the central government to lead strategically while local governments become more proactive.”
Vietnam’s legal framework, which ideally should be uniformly applied across the country, has instead become fragmented. This has essentially turned it into an obstacle impeding progress—resulting in ten provinces requiring exemptions just to operate. An additional six merged provinces are now looking for similar arrangements.
However, there has yet to be a national evaluation addressing a crucial question: Have these provinces utilizing “special mechanisms” actually achieved significant breakthroughs in infrastructure, investment, or sustainable development?
The institutional gridlock starts with the legislative process itself, which remains heavily centralized in ministries. Even when laws are opened for public commentary, responses from civil society are often minimal—either due to apathy or feelings of helplessness.
Take the investment sector as an example. In December 2024, revisions were made to four major laws: the Law on Public Investment, Law on Investment, Law on Bidding, and the Law on Public-Private Partnerships (PPP). Lawmakers claimed these changes would represent a significant “breakthrough” in improving Vietnam’s business environment.
Yet just five months later, three of those four laws (excluding the Enterprise Law) are again up for amendment, with the Bidding Law also under revision.
Indeed, a “fix what’s broken” approach has its benefits. However, this piecemeal strategy reflects a reluctance to fundamentally shift away from the mentality of “if it can’t be controlled, prohibit it”—a mindset that Party’s Resolution 68 explicitly urged the country to abandon.
Moreover, frequent amendments in various sectors do little to enhance governmental management or regulatory efficiency. On the contrary, they often increase the procedural load on citizens and businesses.
At the recent National Conference, National Assembly Chairman Tran Thanh Man referenced Ministry of Justice data: 32% of all legal documents issued within the last five years required amendments within just two years of implementation.
Overlapping, contradictory, and unclear regulations persist and continue to obstruct nationwide application.
Why is the legal landscape so convoluted that approximately 2,200 projects valued at nearly 6 million billion VND (about $235 billion) and over 300,000 hectares of land remain stalled?
It is notable that long-standing bureaucratic bottlenecks—such as visa regulations and vehicle inspections—were only resolved after senior officials faced prosecution for corruption or misuse of power.
Meanwhile, the “ask-give” model for administrative processes remains prevalent almost everywhere.
Nearly 15 years after the 11th Party Congress, institutional reform still lags behind—becoming recognized as the largest barrier to national development.
Globally, significant transformations are occurring in geopolitics, economics, and technology.
In view of these global and domestic dynamics, the push for extensive reform has transitioned from optional to imperative. As General Secretary To Lam stated, “It is essential for the future of the nation.”
“We require a comprehensive, deep, and synchronized reform initiative—one that leads to new breakthroughs in institutions, economic structures, growth models, and governance.”
“Only through persistent, effective reforms can Vietnam navigate challenges, capitalize on opportunities, and achieve its goals for rapid and sustainable development.”
