As Vietnam intensifies institutional reforms and restructures its government apparatus to pursue a more efficient socio-economic development model, the consolidation of provincial-level administrative units has emerged as a notable highlight of 2025. More than a mere administrative move, this initiative presents a major opportunity to reshape the industrial real estate market – making it larger in scale, more professional, and increasingly attractive to international investors.
From Administrative Reform to New Planning Opportunities
Vietnam is aiming to build a leaner and more effective government structure while promoting balanced development across regions. The merger of provincial-level units is being implemented to reduce fragmentation in planning, optimize administrative efficiency, and enhance inter-provincial competitiveness in attracting investment.
According to Mr. Thomas Rooney – Senior Director of Industrial Services at Savills Hanoi – if carried out systematically and with a long-term vision, the process could lay the groundwork for the development of integrated industrial-urban zones, catering to the increasingly selective demands of foreign investors.(1)
Expanding administrative boundaries allows for the planning of larger-scale industrial parks, thereby addressing the rising demand for industrial land, a resource currently scarce in many developed areas.
Advancing Specialized Industrial Parks
Post-merger, larger provinces will be better positioned to reorganize industrial development zones and establish specialized industrial clusters, such as those for supporting industries, auto parts, or high-tech manufacturing.
These clusters will not only help localities stay ahead of the global production shift but also enhance their positions within the global value chain.
A compelling example is the merger of Hai Phong and Hai Duong, which took effect on July 1, 2025. The newly combined urban area now spans 3,195 square kilometers with a population of over 4.6 million and an economy valued at nearly VND 658 trillion, making it the third-largest industrial-logistics hub in Vietnam. (2)
This merger enables better integration of Hai Phong’s seaport and logistics infrastructure with Hai Duong’s land resources and labor force. Authorities now plan to develop 46 industrial zones covering around 12,000 hectares by 2030, focusing on specialized sectors like electronics, automotive components, and high-value manufacturing.(3)
Transitional Challenges and the Need for Flexible Adaptation (1)
Naturally, any reform of this magnitude comes with short-term challenges. Changes to administrative boundaries may impact licensing procedures, environmental and construction regulations, and other bureaucratic processes.
Some businesses may experience early-stage confusion due to new points of contact and inconsistencies in policies across recently merged areas. Yet this also represents a golden opportunity to rebuild a more streamlined and transparent administrative system – one that investors consistently value.
In the industrial real estate sector – where clarity and stability in zoning and planning are crucial – unified policies and procedures will help reduce compliance costs, save time, and build long-term investor confidence.
The Role of Infrastructure, Labor, and Governance (1)
In addition to planning and policy, labor availability and transportation connectivity remain critical. Changes to administrative boundaries may affect where workers live, how they commute, and how personal documentation is processed. If not managed well, these factors could hinder progress. But with effective coordination, they offer a chance to restructure the labor network and improve inter-regional infrastructure – both essential for the sustainable development of future industrial zones.
The transitional period is expected to last 2–3 years. Businesses should proactively stay informed, engage with new authorities, and adjust their development strategies accordingly. Meanwhile, the government must ensure transparency and offer support mechanisms – especially for small and medium-sized enterprises – to ensure a smooth transition.
The 2025 provincial-level administrative mergers in Vietnam represent more than bureaucratic restructuring – they mark a strategic move to power industrial real estate growth. If executed in a well-planned and synchronized manner, this process could expand the scale, improve the quality of development plans, and enhance Vietnam’s competitiveness in the global value chain – particularly as manufacturing shifts continue across Asia.
Source:
(1). Savills
(2). Vn Economy
(3). Dai Doan Ket Newspaper