Vietnam

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To Lam Advances Local Government Reform and Administrative Restructuring in Hanoi

July 4, 2025 | Governance & Law

General Secretary To Lam met with Hanoi constituents and ward officials to discuss upcoming local government restructuring and broader administrative reforms.

After the 9th session of the 15th National Assembly, To Lam convened meetings with voters from 11 Hanoi wards to focus on the ongoing two-level local government reform and administrative restructuring. He called for a streamlined Party organization system that clearly defines Party leadership, State management, and the people’s decision-making role. Acknowledging land scarcity in inner-city Hanoi, he outlined plans to convert surplus office space into schools, health stations, and community activity centers to better serve residents.

**Responding to concerns that ward officials will face excessive workloads under the new model, To Lam explained that staff calculations ensure reasonable deployment and praised the existing ward teams for their dynamism and professionalism.**
He said any mergers or structural changes must undergo thorough review and adjustment, and he criticized anxiety over these reforms as unreasonable. He reminded attendees that officials’ highest duty is to serve the people and assured them that the State will support early retirement arrangements to protect any staff who might incur losses due to reform.

**Looking ahead, To Lam set ambitious socio-economic targets for Vietnam: eight percent growth by 2025, sustained double-digit growth during 2026–2030, upper-middle-income status by 2030, and high-income status by 2045 with a per capita income above US$20,000.**
He tied these milestones to four strategic breakthroughs—digital transformation, international integration, legal innovation, and private sector development—and stressed the need for unity, a lean and committed leadership team, and rapid progress. He also emphasized that preparations for upcoming Party congresses and the 16th National Assembly elections will ensure leadership aligns with the people’s aspirations.

**To Lam reaffirmed the government’s commitment to raising living standards and ensuring that no citizen lacks housing or basic needs, setting a goal to eliminate temporary housing by August 31.**
He said spiritual and cultural well-being must advance alongside material progress and commended Hanoi’s work on urban challenges like traffic congestion, pollution, and public civility. He pointed to free tuition and school lunches for primary students as examples of humane city policies that support child development and ease parental burdens.

**Voters voiced strong support for the two-level local government reform as essential to improving public services, administrative efficiency, and the investment climate.**
They urged stronger oversight of the reorganization process, retention of capable and ethical officials, and continued attention to social welfare policies. They also raised concerns about implementing new laws, combating counterfeit goods, and addressing urban issues such as private sector development, renovation of aging apartment complexes, land-use planning, and stalled projects. To Lam thanked them for their candid feedback and instructed local authorities to address these proposals within their jurisdiction as they prepare to implement the new model on July 1, 2025, with a particular focus on personnel quality and avoiding localism or group interests.

**During his visit to the administrative service center of Dong Da ward, To Lam confirmed that the two-level government model is ready to operate smoothly and handle citizen procedures at the grassroots level, with any unresolved issues escalated promptly to higher city levels.**
He stressed that digital transformation and a shift from administrative routines to a service-oriented approach are critical for the success of the new governance system. Throughout his engagements, he reaffirmed that political and governance reforms must reduce costs, improve services to citizens and businesses, strengthen social welfare measures, enforce strict food safety standards, and promote sustainable urban development.

### IMPACT ANALYSIS
**From this Development, various impacts could cascade through the system, to a lesser or greater extent, depending on the severity and criticality of the shocks.**

Domain	Causal Chain	Possible Outcome
Governance & Law	(Two-level local government model rollout ↑ → Sub-national fiscal autonomy ratio ↑ → Government-effectiveness score ↑ → Public-trust index in national institutions ↑)	Enhanced local autonomy and effectiveness boost public trust in national institutions, consolidating legitimacy for further reforms.
Governance & Law	(Two-level local government model rollout ↑ → E-procurement penetration rate ↑ → Regulatory-quality score ↑ → Ease-of-doing-business percentile ↑)	Increased e-procurement adoption improves regulatory quality and ease of doing business, lowering barriers for investment.
Infrastructure & Urbanization	(Brownfield asset-recycling programme scale ↑ → Land-value-capture revenue ↑ → Public-investment execution ratio ↑ → Infrastructure-quality index ↑)	Higher land-value-capture revenues fund more efficient public investments, improving infrastructure quality citywide.
Infrastructure & Urbanization	(Conversion of surplus office space to public facilities ↑ → Public-space & community-centre spending ↑ → Cross-community event attendance rate ↑ → Social-trust composite swing ↑)	Repurposed office spaces increase community-centre use and event attendance, strengthening social trust.
Infrastructure & Urbanization	(Elimination of temporary housing ↑ → Affordable-housing finance ecosystem strength ↑ → Homeownership affordability index ↑ → Household formation rate ↑)	Eliminating temporary housing spurs affordable-housing finance, improving affordability and boosting household formation.
Environment	(Conversion of surplus office space to public facilities ↑ → Urban-sprawl & zoning regulation flexibility ↑ → Urban green-space per capita delta ↑ → Urban heat-island intensity ↓)	Repurposing office space and relaxing zoning rules increase urban green space per capita, reducing heat-island intensity.
Households	(Affordable-housing finance ecosystem strength ↑ → Housing cost-to-income burden ↓ → Household consumption growth contribution to GDP ↑)	Stronger housing finance reduces cost burdens, increasing household consumption’s contribution to GDP.
Macroeconomics & Growth	(Ambitious high-growth targets ↑ → Capital-formation rate ↑ → Potential GDP growth revision ↑ → Real GDP growth ↑)	High growth targets drive capital formation, revise up potential GDP, and support stronger real GDP growth.
Competitiveness	(Ambitious high-growth targets ↑ → Smart-city data-platform integration score ↑ → Digital-technology adoption rate ↑ → Total-factor-productivity level vs frontier ↑)	Ambitious targets boost smart-city integration and digital adoption, lifting total-factor productivity closer to the frontier.
Technology & Innovation	(Digital transformation mandate ↑ → R&D tax-incentive generosity score ↑ → Public–private joint-research project count ↑ → AI adoption GDP uplift ↑)	Digital mandates and generous R&D incentives spur joint research, accelerating AI adoption and uplifting GDP.

### BOTTOM LINE

- The adoption of a streamlined two-level local government structure could devolve greater budget authority to wards and districts, raising fiscal autonomy ratios and strengthening administrative responsiveness and credibility of state institutions.

- Centralizing procurement through unified digital platforms may accelerate e-procurement uptake, enhance regulatory transparency, and improve Vietnam’s ease-of-doing-business ranking, thereby boosting domestic and foreign investment.

- Repurposing surplus office buildings into schools, clinics, and community centers is likely to mobilize land-value-capture funding for public works, expedite infrastructure upgrades, and improve quality-of-life metrics in dense urban neighborhoods.

- Converting underutilized real estate assets into green and communal spaces may increase per-capita urban parkland, mitigate heat-island effects, and foster stronger social cohesion through shared civic activities and cross-community events.

- A directive to eliminate all temporary housing by late August could trigger a rapid expansion of affordable-housing finance schemes, lower cost-to-income ratios for renters, and enable a wave of new homeowners, supporting a sustained rise in household consumption.

- The government’s high-growth trajectory targets may catalyze accelerated capital formation, justify upward revisions in potential GDP forecasts, and sustain real GDP growth toward the 8 percent and double-digit ambitions through 2030.

- Emphasizing digital transformation as a cornerstone of legal and administrative reform may lead to more generous R&D incentives, deepen public–private research collaborations, and spur AI and advanced-tech adoption across sectors, driving productivity gains.

- Strengthening social-welfare commitments—such as free tuition, school lunches, and the eradication of precarious dwellings—could alleviate household burdens, enhance social equity, and bolster public support ahead of upcoming Party congresses and national elections.

- Heightened citizen engagement driven by improved local services and community-centered facilities may amplify trust in national institutions, reduce parochialism, and reinforce legitimacy for further governance reforms.

- The accelerated reform timeline presents the risk of administrative overload and staff turnover; planned early-retirement support, targeted personnel reviews, and training initiatives aim to preserve workforce quality and maintain morale.

- Urban-planning reforms that relax zoning restrictions in favor of brownfield redevelopment may curb outward sprawl, optimize land use, and conserve green fields, but will require vigilant oversight to balance growth with environmental and sustainability standards.

- With the two-level government model scheduled for mid-2025, local authorities will need to rapidly adopt service-oriented mindsets and digital workflows to ensure seamless citizen procedures and to escalate unresolved cases effectively.

Vietnam Launches Major Personal Income Tax Reform Initiative

July 4, 2025 | Governance & Law

Vietnam’s Ministry of Finance has launched a comprehensive overhaul of its personal income tax and deduction framework.

**On July 2, the Ministry of Finance announced plans to propose a comprehensive amendment to the Personal Income Tax Law for submission to the National Assembly’s October 2025 session.**
The existing law, in effect since 2008, contains provisions—such as family deduction levels and a progressive tax rate schedule—that no longer reflect current economic conditions. The Ministry is working with multiple agencies and local governments to keep the draft on schedule.

**The amendment will address six key areas.**
First, it will revise how the government calculates taxable income and applies tax exemptions to support high-tech workforce development and green growth initiatives. Second, it will recalibrate family deduction levels to match changes in living standards and macroeconomic trends, and introduce special deductions for education and healthcare expenses. Third, it will simplify the current seven-bracket progressive tax schedule for wages and salaries by reducing the number of brackets, widening income ranges, and smoothing rate jumps when annual incomes are aggregated. This change will streamline tax filing and payment procedures and align them with international practices.

**Fourth, the amendment will review thresholds for the taxable turnover of individual business households, giving the government authority to adjust these thresholds periodically without the constraints of existing legal stipulations.**
Fifth, it will refine calculation methods for various income types. Sixth, it will update tax-exempt income items to reflect recent Party and State policies, particularly those promoting high-tech and green sectors. The Ministry plans a public consultation once it finalizes the proposal.

**Personal income tax constitutes the third-largest revenue source in Vietnam’s tax system after value-added tax and corporate income tax.**
In 2024, personal income tax revenue reached an estimated 189 trillion VND, a year-on-year increase of 20 percent, and accounted for more than 9.3 percent of total state budget revenue, up from 5.3 percent in 2011. Deputy Director Truong Ba Tuan of the Department of Tax Policy Management and Supervision of Fees and Charges confirmed that the draft law aims for inclusion in the 2025 legislative program.

Monitored Intelligence for Vietnam - July 4, 2025

News
Media
101

Government
Releases
20

City/State
Releases
2

Embassy
Releases
3

Foreign
Service
Advisories
0

Academic/
Think
Tank
4

Podcasts
0

Videos
0

Social
Media
0

Business
Releases
8

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Mưa lớn ở miền Bắc giảm dần, nhiều tỉnh sắp đón nắng nóng

Heavy rain in the North gradually decreases, many provinces soon to welcome hot weather

Dantri | Local Language | News | July 4, 2025 | Extreme Weather Events

Heavy rain in the Northern region of Vietnam is gradually decreasing as of July 3rd, with scattered showers and thunderstorms expected from the night of July 4th to 6th. Some areas will still experience locally heavy rain during this period. From July 8th to 9th, the Northern region is forecasted to have sunny days with some places experiencing hot weather.

The area from Thanh Hoa to Hue will have scattered showers and thunderstorms with locally heavy rain from July 4th to 6th, mainly in the late afternoon and evening. From July 7th to 12th, this region will see sunny days with some hot weather as well.

Sea areas including the Gulf of Tonkin, North East Sea, Central and South East Sea, and coastal zones from Quang Tri to Ca Mau will experience scattered showers and thunderstorms on July 3rd. The meteorological agency warns of potential tornadoes, strong winds at level 6-7, and sea waves over 2 meters high during thunderstorms. Southwest winds at level 5 to 7 and rough seas with waves 15-25 meters high are expected from Lam Dong to Ca Mau, posing risks to boats operating in these waters.

Heavy rain has caused significant flooding on some streets and roads in Hanoi. The daily weather forecast for various regions across Vietnam indicates mostly cloudy conditions with scattered showers, thunderstorms, and locally heavy rain. Tornadoes, lightning, hail, and strong gusts of wind are likely to accompany thunderstorms in many areas. Temperatures range from lows in the low 20s Celsius to highs exceeding 33 degrees Celsius in some places, with thunderstorms expected particularly during afternoon and evening hours.

(2025-07-02) 自7月1日起越南正式淘汰磁条卡企业用户须进行生物识别认证

Starting July 1, 2025, Vietnam Officially Phases Out Magnetic Stripe Cards; Corporate Users Must Use Biometric Authentication

China Business Association Ho Chi Minh City Branch | Local Language | Business | July 4, 2025 | Privacy

Starting July 1, 2025, banks in Vietnam have officially ceased the use of magnetic stripe bank cards. Corporate users are now required to complete biometric authentication for their legal representatives to continue accessing electronic banking services, including transfers and withdrawals. This mandate is based on Notice No. 17/2024/TT-NHNN issued by the State Bank of Vietnam. Failure to complete biometric verification will result in suspension of electronic banking services for organizations and enterprises.

Biometric authentication can be performed either at bank counters or through banking applications for Vietnamese citizens. Required identification documents include chip-enabled ID cards or valid passports for foreigners. The State Bank explicitly warns that banks will not proactively send any links requesting login information, one-time passwords, or personal data to customers, urging vigilance against potential fraud.

As of May 2025, biometric authentication had been completed for over 130.5 million personal profiles and 71,130 organizational profiles. Despite having over 200 million bank accounts nationwide, only 113.5 million had completed biometric authentication, leaving many accounts dormant and vulnerable to fraud. The Director of the Payment Department, Pham Anh Tuan, also highlighted that biometric authentication, while enhancing security, is not foolproof as criminals may employ tactics such as "renting faces" to bypass controls.

All magnetic stripe card transactions have been completely halted as of July 1, 2025, including those made with domestic magnetic stripe cards and chip or contactless cards that have magnetic stripe features. This move addresses significant security risks associated with magnetic stripe cards, which are susceptible to data copying and counterfeiting. In contrast, chip cards with EMV technology utilize dynamic encryption by generating unique transaction codes, providing enhanced protection against data theft.

Concurrently on July 1, 2025, Decree No. 94/2025/ND-CP was enacted, introducing a regulatory sandbox mechanism in Vietnam’s banking sector. This platform allows for the controlled testing and operation of innovative financial technology solutions, marking the first official effort by the government to support fintech innovation within a regulatory framework.

Phó Thủ tướng Hồ Đức Phớc tiếp Bộ trưởng Kinh tế, Thương mại và Doanh nghiệp Tây Ban Nha

Deputy Prime Minister Hồ Đức Phớc receives Minister of Economy, Trade and Enterprise of Spain

Bao Dien Tu | Local Language | News | July 4, 2025 | UndeterminedPolitics and Elections

Deputy Prime Minister H_c Phc met with Carlos Cuerpo Caballero, Spain's Minister of Economy, Trade, and Enterprise, to discuss bilateral relations and cooperation. H_c Phc praised Spain's role globally and affirmed Vietnam's commitment to joint efforts in addressing global challenges and sustainable development. He highlighted the positive progress in Vietnam-Spain cooperation, especially following the Vietnam-Spain Business Forum attended by numerous enterprises and regional leaders, and requested enhanced collaboration in sectors where Spain has strengths, such as railways, high technology, and human resource training.

Minister Carlos Cuerpo Caballero valued the participation of the Vietnamese delegation at the conference and expressed gratitude for the warm reception during Spanish Prime Minister Pedro Sánchez’s recent visit to Vietnam in April 2025. He commended Vietnam's socio-economic achievements and emphasized Spain's intent to strengthen economic, trade, and investment ties, particularly in transportation and renewable energy sectors. Both leaders agreed to coordinate closely to organize the first session of the Joint Committee on Economy, Trade, and Investment, develop specific action plans for enterprise cooperation, and encourage EU ratification of the Vietnam-EU Investment Protection Agreement while urging the European Commission to lift the "IUU" yellow card on Vietnamese seafood.

During the Vietnam-Andalusia Region Business Forum, Deputy Prime Minister H_c Phc outlined Vietnam’s development goals, affirming a targeted 8% growth rate in 2025 and double-digit growth from 2026 to 2030. He stressed Vietnam’s commitment to strategic reforms in institutions, infrastructure, human resources, science and technology, innovation, digital transformation, and private sector development. Additionally, he highlighted ongoing administrative reforms to better serve citizens and businesses.

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