When General Secretary To Lam and Prime Minister Pham Minh Chinh first described institutional reform as “the bottleneck of all bottlenecks” at the end of last year, it was a stunning moment. No Vietnamese leader had ever been so frank, precise, or direct about the country’s most entrenched challenge.

So when the two leaders later affirmed that “a breakthrough in institutions is the breakthrough of all breakthroughs,” the business community and the public alike felt a surge of hope  -  a belief that Vietnam might finally realize its long-promised vision of a world-class business and living environment.

That optimism resonated across media, policy discussions, and especially at last week’s National Conference, where the General Secretary reaffirmed four newly adopted Party resolutions as “the four pillars” to help Vietnam take flight.

What is 'institutional bottleneck'?

It refers to Vietnam’s dense, convoluted legal framework  -  increasingly difficult to follow and costly to comply with  -  for both citizens and businesses.

From “strategic breakthrough” to “breakthrough of breakthroughs”

Since the 11th Party Congress in 2011, institutional weakness has been recognized as one of Vietnam’s three strategic bottlenecks, alongside infrastructure and human resources. Institutional reform has since been repeatedly listed among the nation's top strategic priorities.

The 13th Party Congress emphasized institutional reform again as a “strategic breakthrough”: building a comprehensive legal system for a socialist-oriented market economy, modernizing national governance, streamlining laws and regulations, improving the business environment, encouraging innovation, and strengthening decentralization alongside effective supervision.

Yet as General Secretary To Lam candidly acknowledged, “These progressive policies have not been institutionalized in a timely or comprehensive way.”

Instead, Vietnam has been patching its institutional gaps with short-term fixes: special resolutions, omnibus laws, simplified legislative processes, and annual business environment reform policies. Many laws have been revised multiple times  -  without resolving the core issues.

To bypass legal roadblocks, the National Assembly has granted “special mechanisms” to 10 localities: Hanoi, Hai Phong, Thanh Hoa, Nghe An, Hue, Da Nang, Khanh Hoa, Buon Ma Thuot, Ho Chi Minh City, and Can Tho.

At a May 2022 National Assembly session, Prime Minister Pham Minh Chinh remarked, “If all 10 provinces are asking for special mechanisms, can we still call them ‘special’?”

Most of these special requests revolve around the same issues: land clearance autonomy, land and forest management, industrial zone licensing, and requests for central budget support.

“If every province is asking for the same things,” he continued, “perhaps it’s time to expand decentralization, allowing the central government to lead strategically while localities act more proactively.”

Vietnam’s legal system, which should be uniformly applied nationwide, has instead become fragmented. In effect, it has morphed into a straitjacket constraining development  -  to the point where 10 provinces needed exceptions just to function. Six more merged provinces are now awaiting similar arrangements.

Yet there has never been a national review answering a critical question: Have these “special mechanism” provinces actually achieved breakthroughs  -  in infrastructure, investment, or sustainable growth?

“The bottleneck of all bottlenecks” in many sectors

This institutional deadlock begins with the legislative process itself, which remains heavily centralized within ministries. Even when laws are opened for public comment, responses from civil society are minimal  -  often out of apathy or futility.

Take the investment sector. In December 2024, four major laws were revised: the Law on Public Investment, Law on Investment, Law on Bidding, and the Law on Public-Private Partnerships (PPP). Lawmakers said these would create a major “breakthrough” in improving Vietnam’s business climate.

Yet only five months later, three of those four laws (excluding the Enterprise Law) are already back on the table for amendment. The Bidding Law is also being revised again.

Yes, the “fix what’s broken” approach has its merits. But this patchwork approach reflects an unwillingness to fundamentally abandon the mindset of “if it can’t be controlled, ban it”  -  a mindset the Party’s Resolution 68 explicitly urged the country to leave behind.

Worse still, frequent amendments across sectors are doing little to improve state management or regulatory effectiveness. Instead, they often add to the procedural burden on citizens and businesses.

At the recent National Conference, National Assembly Chairman Tran Thanh Man cited Ministry of Justice data: 32% of all legal documents issued in the past five years had to be amended within just two years of coming into force.

Overlapping, contradictory, and vague regulations remain unresolved  -  and continue to hinder implementation nationwide.

Why is the law so entangled that 2,200 projects worth nearly 6 million billion VND (approx. $235 billion) and more than 300,000 hectares of land are stalled?

It’s telling that long-standing bureaucratic bottlenecks  -  like visa policies and vehicle inspections  -  were only removed after senior officials were prosecuted for corruption or abuse of power.

Meanwhile, the “ask-give” model of administrative procedure still permeates almost every sector.

A new vision

Nearly 15 years after the 11th Party Congress, institutional reform still lags  -  and is increasingly seen as the greatest obstacle to national development.

Globally, the world is undergoing deep transformations in geopolitics, economics, and technology.

Faced with these global and domestic realities, the need for comprehensive reform is no longer an option. As General Secretary To Lam said, “It is a mandate for the nation’s future.”

“We need a comprehensive, profound, and synchronized reform effort  -  one that delivers new breakthroughs in institutions, economic structure, growth models, and governance.”

“Only with determined, sustained, and effective reform can Vietnam overcome challenges, seize opportunities, and realize its aspiration for fast and sustainable development.”

Tu Giang & Lan Anh