What Vietnam’s Political Transformation Means for Business Leaders

Vietnamese Communist Party General Secretary Tô Lâm and his administration are leading a streamlining of government that will fundamentally change the country’s legislative processes, technology sectors, and investment climate in the years ahead. While these reforms aim to accelerate decision-making, they may also reduce transparency – requiring businesses to navigate a more centralised and unpredictable regulatory environment.

Now more than ever, the government is aligning its policies with its ambition to position Vietnam as a centre for advanced manufacturing – particularly in AI and semiconductors – while introducing new incentives to attract both domestic and foreign investment, and cultivating a skilled workforce to support high-tech advancements.

While these aspirations are not unique to Southeast Asian nations, such a radical change of policies signals a readiness for modernity that is at least notable for business leaders. For those prepared to act, this could represent a huge opportunity – while those caught on the back foot may find themselves facing significant challenges. One thing is certain: significant reforms will require a much sharper, more proactive approach to regulatory engagement in order to navigate Vietnam’s evolving policy landscape.

In this article, we break down the key developments for business leaders, highlighting the reforms underway and their implications for the private sector.

Government consolidations: who is in charge and how are decisions made

• The National Assembly (NA) has consolidated its committees, allowing for faster deliberation of key policies such as taxation, foreign investment, and digital economy regulations.
• The government has streamlined its ministries, reducing administrative layers by merging regulatory bodies. The Ministry of Finance has consolidated oversight functions to improve fiscal policy efficiency. While these changes are expected to accelerate tax reforms, they may also create inconsistencies in enforcement.
• The number of Deputy Prime Ministers (DPMs) has increased from 5 to 7, each overseeing key economic and policy areas. For instance, DPM Ho Duc Phoc is now directly responsible for corporate tax and banking reform, signalling an emphasis on financial sector stability.

Shaping business outcomes: decentralisation and local-level dynamics

• In a major change, the government plans to merge its 63 cities and provinces into 34, a huge restructuring that will shift jurisdictional boundaries and consolidate administrative functions. While this could streamline governance, businesses will need to reorient their relationships with newly formed or expanded local authorities.
• Anticipated changes in provincial leadership are poised to significantly impact investor relations and the consistency of decision-making across regions. Businesses should expect potential shifts in licensing practices, project approvals, and regulatory enforcement, requiring renewed engagement strategies at the local level.
• In tandem with administrative reforms, licensing powers are being increasingly transferred from the Prime Minister’s office to provincial department authorities. This decentralization could expedite processes for compliant investors but may also introduce variability across jurisdictions, making local-level government relations critical to project success.

Legislative reforms: accelerating decisions while limiting output

• Amendments to the Law on Promulgation of Legal Documents (LPLD) now allow laws to bypass prolonged public consultations, fast-tracking decisions on investment regulations and taxation, among other critical issues. The compressed review period limits stakeholder input, increasing risks for businesses needing regulatory predictability.
• Regulatory bodies such as the Ministry of Finance (MOF) now have greater authority in approving foreign investment projects without extensive NA scrutiny, which presents opportunities for faster approvals and greater policy flexibility.
• Businesses are advised to shift from reactive to proactive engagement, building direct relationships with policymakers to shape impactful regulations.

Centralising tech sector governance

• The new Central Steering Committee on Science, Technology, and Digital Transformation, chaired by To Lam himself, now directs national priorities. This move mirrors China’s centralised tech governance model, with a focus on AI, cybersecurity, and semiconductor self-sufficiency.
• The government’s embrace of high-tech industries is evident in its controlled approach to satellite internet, aerospace, and underground infrastructure, exemplified by a recent greenlight to the US Starlink’s satellite services under strict cybersecurity conditions. This signals a dual commitment to fostering innovation while maintaining regulatory oversight, requiring businesses in AI, telecom, and digital services to navigate heightened compliance and data security mandates.
• The Vietnam Semiconductor Strategy (2025-2030) aims to attract global chipmakers with tax breaks and special economic zones. New entrants must navigate national security reviews and strict local content requirements.

Attracting emerging industries: investments and incentives

• To achieve its 8-10% GDP growth target by 2025, Vietnam is placing science, technology, and digital transformation at the core of its economic strategy, driving investment in AI, semiconductors, and advanced manufacturing.
• Vietnam’s embrace of high-tech industries is evident in its new approach to satellite internet, aerospace, and underground infrastructure. Businesses seeking to enter these emerging sectors must prepare for heightened regulatory oversight and data security mandates, making expert guidance in government affairs essential.
• This strategic pivot suggests that policymakers will introduce new incentives to attract domestic and foreign investment. However, the success of these industries will depend on Vietnam’s ability to develop critical infrastructure, establish robust regulatory frameworks, and cultivate a skilled workforce to support high-tech advancements.

Navigating change: strategic engagement and monitoring

• Companies must monitor evolving regulatory policies and engage early with key stakeholders to mitigate policy risks. Recent Special Consumption Tax (SCT) Law revisions impact sectors from tobacco to alcohol and tech, underscoring the need for ongoing policy risk assessment.
• Businesses must align government relations strategies with Vietnam’s high-tech and economic modernisation priorities, ensuring proactive participation in policy discussions, regulatory shaping, and investment dialogues to secure long-term opportunities and maintain market competitiveness.
• Understanding Vietnam’s political leadership transition, evolving investment incentives, and shifting regulatory frameworks will be crucial for business resilience and sustainable growth, allowing companies to anticipate changes, mitigate risks, and optimise strategic positioning.

From observation to action

Vietnam is not just reforming – it’s recalibrating the rules of engagement for business. With accelerated decision-making, centralised governance, and an intensified focus on high-tech industries, the landscape presents both significant opportunity and heightened complexity. For business leaders, success will depend on early, informed, and strategic engagement with policymakers and agile responses to shifting regulations.

At Asia Group Advisors, an Access Partnership company, we help businesses navigate this evolving environments. Our expertise in stakeholder engagement, policy monitoring, and risk analysis enables clients to anticipate change and shape outcomes. From our office in Hanoi, we offer on-the-ground insights backed by a global network that brings an international perspective. To find out more about how we can help you achieve your goals, please contact Tra Dang at [email protected].