Did you hear the three bells ringing from all temples and churches, praying for Vietnam’s peace and prosperity as the country implements significant administrative and geographical mergers starting from July 1, 2025? This merger is part of a broader national reform that reduced Vietnam’s 63 provinces and cities to just 34, aiming to streamline governance and boost national development.
While this change may seem insignificant to many provinces, for Ho Chi Minh City, it cannot be underestimated. The merger of Ho Chi Minh City, Binh Duong, and Vung Tau into a single administrative unit marks the dawn of a new era for Vietnam. This strategic consolidation is not just a change in governance; it is a transformative shift and a bold vision that promises to reshape the economic, social, and cultural landscape of the entire country and the region.
Ho Chi Minh City: Now a Multi-Centered Megacity
Following the merger, Ho Chi Minh City has a total population exceeding 14 million (about 1.5 times its pre-merger size) and a total area of over 6,772 square kilometers (more than 3 times its pre-merger size). This significant increase in size makes it the most populous locality in Vietnam and positions Ho Chi Minh City as a multi-centered megacity, comparable to some of the world’s largest urban centers.
A Unified Economic Powerhouse
Starting from July 1, 2025, Ho Chi Minh City will have much more: an international financial center, an iconic international airport, industrial zones, deep-sea ports, oil and gas facilities, and the vast South Sea (part of the Pacific Ocean). Starting from July 1, 2025, almost 4 million people from Binh Duong and Vung Tau will proudly call Ho Chi Minh City home, and all businesses in these regions will have Ho Chi Minh City on their address.
This merger brings together the strengths of three distinct regions, each with its unique advantages. The original Ho Chi Minh City core, the bustling economic heart of Vietnam, is renowned for its vibrant business environment, international connectivity, and cultural crossroads. Binh Duong, with its robust industrial base, has been a designated hub for manufacturing and technology investments. Vung Tau, a coastal gem, offers unparalleled opportunities in energy (oil & gas), tourism, and maritime industries. Together, these regions form a unified economic powerhouse that is much greater than the sum of its parts.
The merger is set to create a stronger economic region by leveraging the combined resources and strategic advantages of Ho Chi Minh City, Binh Duong, and Vung Tau. This unified economic hub will provide a larger geographical area, attract more investments, and drive economic growth and job creation.
One of the most anticipated benefits of the merger is the enhancement of infrastructure and logistics activities. Given a larger geographical area, the city is also expected to have better coordination in the development of satellite towns and modern metropolitan areas. The integration of roadways, airways, waterways, and seaports will create a seamless transportation network, facilitating smoother logistics and reducing costs. This infrastructural upgrade is a game-changer, making the city more attractive to investors and enhancing efficiency for its businesses.
With this merger, the government aims to consolidate administrative functions and streamline public services, reducing bureaucratic hurdles and making it easier for businesses and citizens. For businesses, simplified regulations and procedures will facilitate smoother operations and expansion efforts. For example, a company that used to have a headquarters in Ho Chi Minh City and a branch in Vung Tau due to regulation’s requirement can now likely consolidate operations. Enterprises now have more room to build their headquarters and branches, not being confined in just a few districts of the original Ho Chi Minh City core areas.
Simplified administrative and land procedures will make it easier to harmonize regulations across the three areas, reducing the complexity of compliance and fostering a more predictable business environment. This will be particularly beneficial for small and medium-sized enterprises (SMEs), which often face challenges navigating regulatory frameworks. The unified administrative framework will foster a more business-friendly environment, encouraging both local and foreign investments.
Remaining Challenges
Despite the promising benefits, the merger also presents several challenges. Integrating the administrative systems of three cities, each with its own history, culture, and way of doing business, can be complex and time-consuming. Ensuring that all systems are compatible and function seamlessly together requires significant effort. Integrating diverse communities with different cultural and social backgrounds can be challenging.
There will be a temporary infrastructure overload. The sudden increase in population and economic activity could strain existing infrastructure, such as roads, transport, and public facilities. There is also a risk that certain areas may develop faster than others, leading to economic disparities. Attracting and distributing investments evenly across the new administrative unit will require careful planning and coordination.
Last but not least, ensuring that the rapid development of the merged region is sustainable and does not harm the environment will be a significant challenge. Effective management of natural resources, such as water and land, will be crucial to support the fast-growing population and economic activities.
Vietnam’s aggressive growth and development for the next 20 years
Given the speedy reform and short-term challenges, Vietnamese people are known for their ability to adapt quickly to new environments and make the best out of what is given. The merger of Ho Chi Minh City, Binh Duong, and Vung Tau is one of the most significant changes for Vietnam’s economic growth in recent times. By creating a unified economic powerhouse, enhancing infrastructure, and streamlining public services, this strategic consolidation is set to be a highly competitive economic and international urban hub that will drive Vietnam’s aggressive growth and development for the next 20 years. For businesses, the merger offers new opportunities for investment, expansion, and consolidation, and according to Prime Minister Phạm Minh Chính, this is only the beginning. Businesses, if they haven’t done so already, need to incorporate these changes and opportunities into their strategies now.
Authors
This article is written by Binh Le, and has been peer-reviewed (the “authors”). It is part of our Views and Analysis series, where colleagues from various disciplines, functions, and levels share their expertise, studies, observations, analysis, and views relevant to our work and clients.
Sources
The information, data and figures are from the Socialist Republic of Vietnam Government News and the author’s analysis.
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