(Bloomberg) — As Elon Musk and Argentina’s Javier Milei champion ambitious plans to dramatically slash the size of government, a similar effort is getting underway across the globe from political leaders with a completely different ideology: Vietnam’s Communist Party.
Most Read from Bloomberg
In what amounts to the biggest overhaul of the state since adopting pro-market reforms in the 1980s, Vietnamese officials are targeting a roughly 20% reduction in the size of ministries, government agencies, and civil service workforce. It’s being pitched as essential medicine to remedy a bloated bureaucracy, reduce red-tape and cut unnecessary costs from local governments on up.
The plans would see five ministries abolished and the merger of ministries such as finance and planning and investment. Four government agencies, including the State Capital Management Committee, will be eliminated. Five state television channels, 10 newspapers and 19 magazines will be scrapped.
The Southeast Asian country’s attack on bureaucracy follows similar plans in Argentina and the US. Argentina’s President Javier Milei moved to shrink spending immediately upon taking office, cutting government ministries in a bid to eliminate deficits. President-elect Donald Trump is promising dramatic cuts under the newly-created Department of Government Efficiency co-headed by Elon Musk.
“There is a surprising convergence there — both the Vietnamese government and Musk want control — that’s the common denominator that they both understand and can negotiate on,” said Huong Le Thu, deputy director of the Asia Program at the Crisis Group.
Musk’s efforts, though, are expected to face fierce political backlash. Vietnam’s one-party government has a much freer hand to execute policies unpopular with some segments of society.
“This is Vietnam’s most ambitious administrative overhaul since Doi Moi,” Nguyen Khac Giang, a visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute, said. “Hanoi is trying to streamline a bureaucracy that’s increasingly seen as an impediment to growth.”
‘Urgent’ Cuts
Communist Party chief To Lam’s push to overhaul the government comes ahead of next year’s leadership reshuffle at the twice-in-a-decade National Party Congress. Lam, who took over the nation’s top political position in August following the death of long-time leader Nguyen Phu Trong, is putting his stamp on the system amid jockeying to win a full term as party general secretary. While details of the reorganization could still change, Lam is determined to reshape the government before the 14th Congress in early 2026.
Story continues
“This is a very urgent issue which must be done,” Lam said in a speech posted on the Communist Party’s website in December. “Sometimes we have to take bitter medicine, endure pain and cut out tumors in order to have a healthy and strong body,” he said.
The first details of Vietnam’s reorganization plan began to trickle out in November, with a formal blueprint unveiled early in December, giving bureaucrats only until the end of the month to submit restructuring reports. They will be put forward for approval at extraordinary meetings of the Central Committee and the National Assembly in February.
It’s not yet clear how many jobs will go, but civil servants are clearly stressed — one deputy prime minister said 100,000 jobs would be affected, another former parliament official said hundreds of thousands of party members and public employees will be worried.
Businesses cautiously welcome what many see as long overdue and necessary reforms but fret policy decisions could be put on hold, leading to months-long logjams.
“The restructuring process may cause things to slow or get delayed for some months,” said Le Dang Doanh, an economist and former government adviser in Hanoi. “However it will ease the cost burden for the state budget and hopefully will boost the efficiency of the state apparatus,” Doanh added.
Lam said in October that roughly 70% of the state budget is spent on employee salaries and regular state expenses, which doesn’t leave enough to spend on investment projects. “If we just use the money to feed each other, there is no money left to develop” critical infrastructure, Lam added.
Vietnam faces a widening budget deficit after tax reductions and exemptions took a significant chunk out of state revenue. The government has set a budget deficit target of 3.8% of GDP for 2025, and has pledged to prioritize spending on big-ticket transport networks. In November, it approved a $67 billion North-South high-speed railway and is pushing to speed up the development of three cross-border railway lines linking Vietnam and China.
Possible Overload
The ministries that look set to stay include: defense, public security, justice, foreign affairs and industry and trade. The Government Office, Government Inspectorate and State Bank of Vietnam will also remain intact, albeit all will be subject to internal streamlining.
The Ministry of Home Affairs said about 130 trillion dong ($5.1 billion) would be needed for redundancy payments to help ease the impact of job losses, Tuoi Tre reported.
“This is not an easy or quick thing to do and it is likely that many state officials will have to take on multiple tasks which require some expertise they may not have,” said Nguyen Tri Hieu, a Hanoi-based economist. “The streamlining could cause overload at first.”
The belt-tightening comes alongside a worsening global backdrop as Trump threatens to roil international trade with widespread tariffs. Vietnam, which relies heavily on foreign investment to fuel export-driven growth, was a major beneficiary from the US-China trade war in Trump’s first term — although officials in Hanoi are bracing for possible disruption this time around.
The government overhaul could also have implications for Vietnam’s ambitious goals of boosting growth to at least 8% this year. Public infrastructure investment, critical to support rapid growth, has been slow, with state spending for projects in 2024 just 77.5% of what had been planned.
The bureaucratic shakeup follows the Party’s years-long corruption crackdown that’s led to high-profile political resignations, a death sentence for one of the country’s richest women, and the arrest and detention of hundreds of party officials and business leaders.
“With the anti-corruption campaign having weakened provincial power bases and cleared out resistant officials, the leadership now has both the political capital and urgency to push through reforms they believe are necessary to achieve their goal of high-income status by 2045,” ISEAS-Yusof Ishak Institute’s Giang said.
–With assistance from Nguyen Kieu Giang and Linh Vu Nguyen.
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.