Vietnam’s National Assembly Approves Government Reshuffle, Expands Leadership Structure

Key Events

• Vietnam Plans to Streamline Governance While Increasing Number of Deputy Prime Ministers to Seven
• Public Scramble for License Renewals in Vietnam Ahead of Administrative Shift
• Analysts Warn of Debt Trap as Vietnam Expands Railway Network
• China Protests Vietnam’s Construction in Disputed Spratly Islands
• Proposed Tariffs Threaten Jobs at U.S. Manufacturing Firms in Vietnam

Vietnam Increases Number of Deputy Prime Ministers to Seven Amid Government Restructuring

Vietnam’s National Assembly concluded its ninth extraordinary session on Feb. 19, approving significant changes to the government structure, including the appointment of two new deputy prime ministers, bringing the total to seven.

The appointments of Mai Van Chin and Nguyen Chi Dung, proposed by Prime Minister Pham Minh Chinh, come as Vietnam restructures its governance system. On Feb. 18, the National Assembly passed a resolution reducing the number of government departments from 19 to 14 while maintaining 11 ministries and creating six new ones.

The revised government structure will consist of 25 members, including the prime minister, seven deputy prime ministers, and 20 ministers, governors, and other key officials. The newly established ministries are the Ministry of Ethnic Affairs and Religion, the Ministry of Banking and State Finance, and the Ministry of Agriculture and Environment.

The restructuring aligns with the Communist Party’s long-term plan to streamline administrative functions. According to a conclusion issued by the party’s Central Executive Committee on Feb. 14, discussions are underway to eliminate district-level governance and merge certain provincial units. These proposals are expected to be presented to the Politburo in the third quarter of 2025.

In addition to government reorganization, the National Assembly approved the investment policy for the Lao Cai - Hanoi - Hai Phong railway project. The railway, set to be completed by 2030, has an estimated cost of 203.2 trillion dong ($8 billion), funded through a combination of state budget allocations and loans from Chinese partners.

While these changes aim to enhance efficiency, concerns persist over potential financial risks and political centralization. Analysts warn that Vietnam must ensure transparency in project management to avoid corruption and debt dependency, especially regarding large-scale infrastructure projects financed by foreign loans.

The restructuring and expansion of government leadership reflect Vietnam’s balancing act between administrative efficiency and political consolidation as the country navigates economic and governance challenges.

Vietnamese Citizens Rush to Renew Driver’s Licenses Amid Administrative Transition

In recent days, long lines have formed at driver’s license issuance and exchange of the Dept of Transport’s centers across Vietnam as citizens rush to complete procedures before the system transitions to new management. According to Luat Khoa Magazine, reception points in many provinces and cities have become overwhelmed, while online services are also facing technical difficulties.

The surge in demand follows a government proposal to transfer the responsibility for issuing and renewing driver’s licenses from the Ministry of Transport (MOT) to the Ministry of Public Security (MPS) as part of a broader administrative restructuring. This change is included in a draft decree submitted by the MOT on Feb. 13, outlining the merger of ministries and the revision of their functions.

The transition aligns with the Road Traffic Safety Law and Decree 151/2024/ND-CP, which were issued in late 2024 and which are set to take effect on Jan. 1, 2025. However, uncertainty over how the handover will affect licensing procedures has led to a rush, with even individuals holding licenses valid for up to two more years seeking renewal.

On Feb. 17, despite cold and rainy weather, long queues were seen at the Hanoi Dept of Transport’s licensing centers. Similar congestion was reported in Ho Chi Minh City on February 18, with local media highlighting overloaded reception points. Many citizens attempting to use online services, such as the National Public Service Portal and the VNeID electronic identification app, also encountered system failures, preventing them from completing their applications.

In response to public concerns, a representative from the Dept of Transport reassured citizens on Feb. 18 that licensing procedures will continue smoothly regardless of which agency oversees them. Authorities urged people not to rush unnecessarily to apply for their license renewals and advised only those with soon-to-expire licenses to proceed with renewals.

Despite these reassurances, the pressure on licensing offices has not fully eased. As of Feb. 19, the Dept of Transport in multiple provinces confirmed that they would continue processing license applications through the current system while awaiting further government directives.

With the transition still in progress, officials will need to address logistical challenges to ensure a smooth handover and prevent further disruptions for motorists.

Vietnam’s Railway Expansion Raises Debt Concerns, Analysts Warn

Vietnam’s ambitious push to modernize its railway system could lead to financial mismanagement and growing debt, analysts have warned, according to VOA News.

The Vietnamese government has been ramping up plans to upgrade its aging rail infrastructure, particularly the long-planned North-South high-speed railway. Officials argue that the project will boost economic growth and improve regional connectivity. However, experts fear that heavy reliance on foreign loans—especially from China and Japan—could put Vietnam at risk of falling into a debt trap.

According to VOA News, the Vietnamese government is seeking around $58 billion in investment to fund its railway projects. While some funding may come from domestic sources, foreign loans remain crucial to financing the modernization plan. This raises concerns about Vietnam's ability to manage the debt effectively and ensure transparency in project execution.

China’s Belt and Road Initiative (BRI) has already left several countries struggling with unsustainable debt, and analysts fear that Vietnam could face similar risks. If Vietnam turns to Chinese funding, it may encounter challenges similar to those of Laos, which has become heavily reliant on China to sustain its high-speed rail system.

At the same time, Vietnam is also considering Japanese investment, which may come with stricter financial conditions but which could provide better governance safeguards. Some analysts believe Japan’s involvement would help Vietnam avoid excessive debt risks while ensuring high-quality infrastructure development.

Corruption and inefficient project management remain additional concerns. Vietnam’s history of infrastructure delays and cost overruns raises doubts about whether the railway expansion can be implemented effectively without financial waste or mismanagement.

Despite the risks, the government remains committed to modernizing its railway system as part of its long-term development strategy. Officials argue that a modern rail network will ease traffic congestion, lower transportation costs, and strengthen Vietnam’s position in global supply chains.

With major decisions ahead, Vietnam faces a delicate balancing act—securing much-needed investment while ensuring sustainable financial management and avoiding the pitfalls of excessive debt.

Vietnam’s Spratly Island Developments Spark Rare Chinese Protest

Radio Free Asia (RFA) reports that China has issued a rare public protest against Vietnam's recent construction activities in the disputed Spratly Islands, accusing Hanoi of building on "illegally occupied" reefs and islands. The Chinese government asserts that Vietnam's actions violate China's sovereignty and international law, urging an immediate cessation of these developments. 

The Spratly Islands, located in the South China Sea, are subject to overlapping territorial claims by China, Vietnam, the Philippines, Malaysia, Brunei, and Taiwan. The area is strategically significant due to its rich fishing grounds and potential underwater oil and gas reserves.

Vietnam has not officially responded to China's recent protest. Historically, Hanoi has maintained that its activities in the Spratly archipelago are lawful and conducted within areas under its sovereignty.

This protest from Beijing comes amid heightened tensions in the South China Sea, where China has been expanding its military presence and constructing artificial islands. These actions have drawn criticism from neighboring countries and the international community, who view them as attempts to assert control over the contested waters.

The situation underscores the ongoing complexities and sensitivities surrounding territorial disputes in the South China Sea, with multiple nations vying for control over the region's resources and strategic waterways.

Vietnam-Based U.S. Manufacturers Foresee Layoffs if Tariffs Imposed

From Reuters, there is a recent survey by the American Chamber of Commerce  in Vietnam reveals that most U.S. manufacturers operating in the country anticipate workforce reductions if the Trump administration enforces proposed tariffs.

Conducted from Feb. 4 to 11, the survey gathered responses from over 100 AmCham Vietnam members, including major corporations such as Intel and Nike. The findings indicate that nearly two-thirds of manufacturing firms foresee potential layoffs, while less than half of all businesses share this concern. 

Vietnam has become a significant hub for foreign investment, particularly in manufacturing, following the imposition of U.S. tariffs on China in 2018. The country now hosts substantial operations for numerous U.S. multinationals. 

However, the prospect of new tariffs has altered the previously optimistic outlook. According to the survey, 81% of respondents expressed concerns that such tariffs could disrupt supply chains, and 41% are considering diversifying away from the U.S. market. 

Analysts suggest that Vietnam's significant trade surplus with the U.S. may make it a target for new duties, potentially affecting exports such as semiconductors. The situation underscores the interconnectedness of global supply chains and the potential widespread impact of trade policy shifts. 

Hanoi Releases Map Defining Maritime Claims in Gulf Shared with China

Vietnam's foreign ministry has released a map delineating its baseline claims in the Gulf of Tonkin, a region where it shares a maritime boundary with China. This move aims to bolster Vietnam's sovereignty and jurisdiction in the area, as reported by Reuters.

Baselines are critical in establishing the extent of a nation's territorial waters and exclusive economic zones. In the context of the South China Sea, such demarcations are particularly sensitive due to overlapping claims from multiple countries, including China and Vietnam.

The newly published map features a line marked by 14 coordinate points, stretching from Quang Ninh Province to Quang Tri Province along Vietnam's coast. According to the foreign ministry statement, this baseline provides a legal foundation for Vietnam to assert and enforce its sovereign rights, facilitate economic development, manage marine resources, and promote international cooperation.

The ministry emphasized that this baseline determination aligns with the United Nations Convention on the Law of the Sea (UNCLOS) and adheres to the 2000 Agreement on the Delimitation of the Gulf of Tonkin between Vietnam and China.

In March of the previous year, China announced its own baseline claims in the Gulf of Tonkin. At that time, Vietnam responded by underscoring the importance of respecting international law and the legitimate rights and interests of all nations involved.

China's foreign ministry has not yet issued a public response to Vietnam's recent publication.

Enhanced Naval Ties: China Sends More Vessels to Cambodia's Ream Base

China has reportedly dispatched two additional warships to Cambodia's Ream Naval Base, suggesting an imminent transfer of these vessels to the Cambodian navy, according to Radio Free Asia (RFA).

Satellite imagery from Planet Labs, analyzed by RFA, reveals two new ships docked at the Chinese-developed pier, adjacent to the corvettes Aba and Tianmen, which have been present since the previous year. The newly arrived ships, approximately 90 meters in length, resemble China's Type 056 missile corvettes.

This development aligns with earlier reports indicating China's intention to hand over naval facilities, including a pier and two warships, to Cambodia. In exchange, analysts suggest that China may receive privileged access to the base. The Cambodian military has previously confirmed plans for China to transfer two ships and provide training for Cambodian crews.

The Ream Naval Base, located in southwest Cambodia, has undergone significant modernization funded by China since June 2021. This collaboration has raised concerns among the United States and neighboring countries about China's expanding military presence near the contested South China Sea. Despite these apprehensions, Cambodian officials assert that granting China exclusive military access would violate the nation's constitution. However, access to the base has been predominantly limited to Chinese vessels.

In early February, Chinese ambassador to Cambodia Wang Wenbin, along with Cambodian Defense Minister Tea Seiha, visited the Ream base to assess the progress of its modernization. This visit underscores the ongoing cooperation between the two nations in enhancing Cambodia's naval capabilities.

Quick Takes:

Vietnamese Attorney Appeals Conviction for “Abusing Democratic Freedoms”

Attorney Tran Dinh Trien has officially appealed the entire first-instance verdict against him, arguing that his actions do not constitute a crime, Tien Phong Newspaper reports.

On Feb. 15, Trien submitted his appeal, acknowledging that he had posted comments online regarding Vietnam’s court system and the leadership of the Supreme People’s Court. However, he maintained that his statements fell within the bounds of free expression and should not be criminalized.

Vietnam Lifts Disciplinary Measures for Party Members with Third Child

The Communist Party of Vietnam will no longer discipline its members for having a third child or more, following a decision by the Politburo to support the Ministry of Health's policy.

The move aims to address Vietnam’s declining birth rate, which dropped to 1.96 children per woman in 2023 and 1.91 in 2024. Authorities hope this policy will encourage higher birth rates and support the country’s demographic balance, including a potential rise in surrogate births.

Former Phu Quoc Police Chief Accused of VND66 Billion Fraud

The Kien Giang provincial police have proposed prosecuting Le Van Mot, former Phu Quoc police chief, and his accomplice Nguyen Thi Hang, for their involvement in a land fraud scheme.

Authorities allege that while serving as police chief, Mot knowingly misled victims by falsely promising land use certificates for plots that were ineligible, swindling over VND 66 billion. The case, classified as an “asset seizure scam,” was officially reported on Feb. 17 and awaits further legal proceedings.

Ho Chi Minh City Offers Up to 2.7 Billion Dong for Laid-Off Public Employees

Ho Chi Minh City has approved a Feb. 20 resolution to provide additional financial support to civil servants and workers affected by government downsizing.

Over 7,000 employees impacted by the administrative restructuring will receive part of a 17,000 billion dong support package. Eligible individuals can receive up to 2.7 billion dong in compensation, combining assistance from Government Decree 178 (2024) and the newly adopted city resolution.

The policy aims to ease the transition for workers affected by government streamlining efforts.

Vietnam Insight: Learn more about Vietnam

Does EU-Vietnam Free Trade Break Provisions on Human Rights?

DW/David Hutt/Feb. 20

“More cynical human rights campaigners argue that the EU is simply putting profits over values.

A Vietnamese activist, who requested anonymity, told DW that Brussels isn't incentivized to pick a fight with Hanoi because European companies profit from Vietnam's booming economy.

Since the EVFTA took effect in 2020, EU-Vietnam trade has grown from €35 billion to €52 billion (from $36.5 billion to $54.2 billion), according to the European Chamber of Commerce in Vietnam.

A European Commission spokesperson told DW that it is in the process of conducting its preliminary assessment of the complaint filed earlier this month.”