One Country, Fewer Provinces: Việt Nam’s Parliament Approves Major Merger
Key Events
- Việt Nam’s National Assembly Approves Historic Resolution on Provincial and Municipal Mergers
- Việt Nam Abolishes Lump-Sum Tax Scheme, Small Businesses Struggle with New E-Invoicing Rule
- Phúc Sơn Trial Reignites Debate Over Political Purges and Graft in Vietnam
- Investment Vetting in Spotlight as Mekolor Proposes Mega Rail Project
Việt Nam Cuts Provinces, Shifts Power in Historic Redrawing
On June 12, the National Assembly officially passed a resolution to reorganize the provincial-level administrative units with an overwhelming approval rate of 99.1% among deputies.
This resolution takes effect immediately.
According to the resolution, Việt Nam will now have a total of 34 provincial-level administrative units, consisting of 28 provinces and 6 centrally-run cities.
Of the current 63 provinces and cities, only 11 will remain unchanged. These include: Cao Bằng, Lạng Sơn, Điện Biên, Lai Châu, Quảng Ninh, Thanh Hóa, Nghệ An, Hà Tĩnh, and the cities of Hà Nội and Huế. The remaining 52 provinces and cities will be merged to form 19 new provinces and 4 new cities.
The resolution also specifies that the new local governments in the reorganized provinces and cities will officially begin operating on July 1. Until then, the existing local governments will continue their duties.
Deputy Prime Minister Nguyễn Hòa Bình stated that on June 30, all affected localities are expected to simultaneously announce their new administrative boundaries along with the new leadership structures of both the Communist Party and local government.
Earlier, on the morning of June 11, Minister of Home Affairs Phạm Thị Thanh Trà presented the reorganization plan and personnel arrangements to the National Assembly. According to Minister Trà, the total number of staff — including officials, civil servants, and public employees — assigned to the 52 provinces and cities involved in the merger amounts to 447,657 people, comprising 2,321 officials, 79,118 civil servants, and 366,218 public employees.
The Ministry of Home Affairs also proposed that 33,956 out of 38,182 provincial-level public offices be retained for continued use after the reorganization, with 4,226 buildings deemed surplus.
Tax Tech Trouble: Small Merchants Struggle with Việt Nam’s New E-Invoice System
As of June 1, individual and household businesses in Việt Nam that previously paid lump-sum taxes and generated annual revenues of 1 billion đồng ($40,000) or more are now required to issue e-invoices generated from cash registers connected to the tax authorities.
This new regulation is part of Decree 70, issued by the government on March 20.
Three Tax Methods Replaced
Previously, under Circular 40/2021, small businesses and individual traders had three options for tax payment:
- Declaration Method – requiring accounting books and invoices;
- Per-Incidence Payment – for irregular or location-less traders;
- Lump-Sum Method – where the tax authority estimated and fixed a monthly or quarterly tax amount based on revenue and industry.
The lump-sum method offered simplicity, especially for micro businesses, as it removed the need for monthly revenue declarations. However, it often resulted in unfairness and tax evasion—larger businesses paid the same as small ones, while some smaller ones were overtaxed due to inaccurate estimations.
Business Closures and Resistance
Since the implementation of the new policy, numerous small business owners have temporarily closed operations. At Bình Tây Market in Ho Chi Minh City’s District 6, 474 out of 2,358 stalls—more than 20%—suspended business. Many restaurants across the city have stopped accepting bank transfers, insisting on cash-only payments.
Vendors cite multiple pressures: competition from e-commerce, tightened inspections on product origin, and now the mandatory use of e-invoices from cash registers.
On May 4, the Politburo issued Resolution 68 on private sector development, urging a more equitable tax framework across all economic actors, expanding the tax base, and mandating e-invoices as part of the national tax reform.
Implementation Woes
While the new system aims to boost transparency and curb tax loss, its launch has been rocky. In Ho Chi Minh City, some vendors have openly refused to accept bank transfers, saying they are too small-scale or citing privacy concerns about tax tracking.
Others accept transfers but ask customers to label them as “gifts” or “donations” to avoid detection. Even larger restaurants report difficulties generating invoices during peak hours or when customizing orders.
Technical glitches are another concern: some invoicing software has proven unstable, with weak connections to the General Department of Taxation, duplicate invoice generation, and missing features such as status filtering.
Many sellers, especially the elderly or tech-inexperienced, are struggling to adapt. Some have opted to quit or lease out their stalls. Overwhelmed call centers and insufficiently trained software support staff have only worsened the situation.
According to the Ministry of Finance’s General Statistics Office, in the first five months of 2025, over 111,600 businesses exited the market, while nearly 111,800 were newly established or resumed operations.
From Bidding Rigs to Bribes: Phúc Sơn Case Exposes Deep State Corruption
On June 24, the Hanoi People’s Court will open the first-instance trial of 41 defendants in a sweeping corruption case involving Phúc Sơn Group, formally known as Phúc Sơn Construction Group JSC. The case, dubbed the "Million-Dollar Finger" scandal, is among the most serious in Việt Nam’s recent anti-corruption campaign. Most defendants are state officials, with hundreds of billions of đồng in bribes and embezzled funds involved.
The central figure is Nguyễn Văn Hậu, also known as "Hậu Pháo," chairman of the Phúc Sơn Group. He faces charges of bribery, accounting fraud, and violations in bidding procedures. Among the co-defendants are five former provincial party secretaries and dozens of other senior officials from various ministries and local governments.
The case was officially initiated by the Ministry of Public Security on Feb. 26, 2024, following a referral from Khánh Hòa authorities in late 2023. It later expanded to include Vĩnh Phúc, Quảng Ngãi, and Phú Thọ, involving a total of 41 defendants, with 23 originally indicted and more added as the investigation progressed.
Investigators concluded that Hậu and his associates engaged in systematic bribery and rigged bidding, targeting major public projects. In Vĩnh Phúc, these included the Central Market, the Vĩnh Phúc College of Culture and Arts, the Red River dike project, and urban road construction in Vĩnh Tường. In Quảng Ngãi, Phúc Sơn was involved in major infrastructure projects like the southern Trà Khúc riverbank and National Highway 1 upgrades.
Phúc Sơn reportedly operated two sets of accounting books, concealed revenue, fabricated documents, and evaded taxes. The investigation estimated illegal gains of nearly 1,168 billion đồng.
Hoàng Thị Thúy Lan (former Vĩnh Phúc Party Secretary): received 25 billion đồng and $1 million;
Lê Duy Thành (former Vĩnh Phúc chairman): received 20 billion đồng and 1.3 million USD;
Nguyễn Văn Khước (former Vice Chairman): received 3 billion đồng and $20,000;
Several former Quảng Ngãi officials, including Đặng Văn Minh, Cao Khoa, and Lê Viết Chữ, also accepted tens of billions of đồng and U.S. dollars.
Lan is seen as a key enabler, helping Phúc Sơn win numerous key tenders.
Coincidentally, Phúc Sơn’s questionable activities in Quảng Ngãi took place during the tenure of Võ Văn Thưởng as provincial Party Secretary (2011–2014). During this period, the group engaged in land grabs, construction deals, and PPP projects—many later deemed fraudulent or manipulated.
Speculation continues about the alleged ties between Hậu, Lan, and Thưởng, suggesting a network that facilitated project approvals and helped Phúc Sơn secure contracts.
These rumors have intensified since Thưởng resigned as resident, fueling ongoing debate over whether Việt Nam’s “furnace-blazing” (đốt lò) anti-graft campaign is a genuine clean-up or a political purge. Notably, a 60 billion đồng donation from Phúc Sơn to build a family temple in Thưởng’s hometown remains under public scrutiny.
Mekolor Joins Race to Build North–South Railway with Bold Investment Proposal
Vietnamese company Mekolor has submitted a proposal to become the primary investor in the ambitious North–South high-speed railway project, pledging to self-finance the venture with $100 billion (over 2.3 million billion đồng) in equity. This makes Mekolor the third domestic enterprise to show interest in the project, following similar proposals from VinSpeed and THACO.
According to its plan, Mekolor would partner with a U.S.-based firm, Great USA, to raise the $100 billion capital needed to develop the 1,541-km rail line. The company promises to complete the project within five years, operate it for 49 years using a 95% Vietnamese workforce, and offer free tickets to the public for the first six months after completion.
However, the bold proposal has triggered widespread skepticism and debate across Vietnamese media and the public. Many have questioned the company’s financial capability, as Mekolor reportedly has only four employees and a registered capital of just 1 billion VND (approximately $40,000 USD).
News outlet Vietnamnet questioned the source and feasibility of Mekolor's $100 billion commitment, while Dân Trí reported that the company’s headquarters is tucked deep inside a small alley in Cần Thơ.
Mekolor was founded in October 2016, with its primary business listed as "trade promotion and business matchmaking." Its partner, Great USA, is said to be based in Florida, specializing in cryptocurrency issuance and connecting capital from international investment funds.
The North–South high-speed railway project was approved by Việt Nam’s National Assembly in November 2024, with a total investment of $67.34 billion. The plan aims to link Hà Nội and Hồ Chí Minh City over a 1,541-kilometer route, with completion targeted for 2035.
The National Assembly is still deliberating the amended Railway Law, which is expected to outline clearer frameworks for Public–Private Partnership (PPP) investments, a model crucial for mobilizing private and foreign capital for this megaproject.
As of now, no final decision has been made regarding Mekolor’s proposal, but the case highlights the tensions between ambitious infrastructure goals and the need for credible, transparent investment vetting.
Quick Takes:
Việt Nam to Establish International Financial Centers in Hồ Chí Minh City and Đà Nẵng
On June 11, the Ministry of Finance submitted a draft resolution to the National Assembly proposing the creation of international financial centers in Hồ Chí Minh City and Đà Nẵng by 2025. The initiative aims to attract global capital, develop high-end financial services, and build a skilled financial workforce for Việt Nam’s future growth.
Two TikTokers Arrested in Hồ Chí Minh City for Posts About Former Police Chief
On June 11, Trần Như Phước and Ngô Sơn Hà were arrested by Hồ Chí Minh City police for allegedly “abusing democratic freedoms to infringe upon the lawful rights and interests of the State and individuals” under Article 331 of the Penal Code. Authorities accused the two men of using TikTok accounts “phước79” and “SơnHà2” to spread false information about Lt. Gen. Lê Hồng Nam, former director of the Hồ Chí Minh City Police.
Former Deputy Minister of Labor Indicted for Bribery
On June 11, the Ministry of Public Security’s anti-corruption unit (C03) indicted Nguyễn Bá Hoan, former deputy minister of Labor, Invalids, and Social Affairs, on charges of accepting bribes. Investigators allege that Hoan intentionally created bureaucratic hurdles by demanding unlawful licenses from businesses, pressuring them to pay bribes in exchange for approvals.
Three YouTubers Detained in Hồ Chí Minh City for Political Content
On June 4, Hồ Chí Minh City police arrested Lê Văn Cần, 59, Nguyễn Đức Minh, 24, and Nguyễn Hoàng Tân, 27—operators of the YouTube channel “Người Đưa Tin”—for alleged violations under Article 331 of the Penal Code. They are accused of abusing democratic freedoms to infringe upon the interests of the state and individuals. The channel frequently posted videos related to political content.
Maj. Gen. Mai Hoàng Appointed New Hồ Chí Minh City Police Chief
On June 5, Minister of Public Security Lương Tam Quang appointed Maj. Gen. Mai Hoàng (b. 1979) as the new director of the Hồ Chí Minh City Police Department. The appointment ceremony was held on June 8, though state media did not report on the event. Since Tô Lâm became general secretary of the Communist Party in July 2024, several police generals from his home province of Hưng Yên have seen rapid promotions. Currently, the top police posts in both Hà Nội and Hồ Chí Minh City are held by officials from Tô Lâm’s hometown.
Over 22,000 Young People Unemployed in Hồ Chí Minh City
According to data from Hồ Chí Minh City’s Department of Home Affairs, 22,400 people under the age of 35 were unemployed in the first five months of 2025, making up 49.06% of the city’s total unemployed workforce. Among them, 9,297 hold a bachelor’s degree or higher. The main reasons cited include workplace environment and job pressure, which have led many young workers to frequently change jobs. Despite being Việt Nam’s economic powerhouse, Hồ Chí Minh City is seeing rising job instability among its youth.
Việt Nam Insight: Learn more about Việt Nam
Vietnam Reshapes Country Amid Radical Government Cuts—What To Know
Newsweek/Micah McCartney/June 13
“Vietnam’s legislature approved a plan on Thursday to reshape the county’s administrative borders, merging dozens of provinces and cities in a move that is expected to cut nearly 80,000 jobs, officials say.
Not everyone is pleased with the plan. One provincial official told AFP he felt ‘shocked and sad’ about having to leave after three decades in the job.”