Local population and business declined after Vietnam’s provincial merger in 2025.
By May Chan
Civil servant Tuyen Hung had built a stable life in Vinh Phuc, a province 63 km away from Hanoi in northern Vietnam. She is now being deployed to a new city which is 40 km away from her home, as the central government is redrawing the national map by merging provinces.
Tuyen has lived in Vinh Phuc with her husband and two children for years. Her husband was a teacher while the children all went to nearby schools.
“I never expected to start all over again in a new city. Now, my husband needs a new job while the children have to switch schools,” the mother says.
In June 2025, Vietnam launched a historic administrative reform that reduced its 63 provinces to 34. The move aims to cut government positions from 420,000 to 290,000 to fight corruption among local authorities. The new measure is expected to save VND 190,500 billion (US $7.3 billion) for the national economy, according to the Vietnamese government.
Following the reform, the former Vinh Phuc province was merged into the new Phu Tho province. The administrative capital has now shifted from Vinh Yen, a city located in the heart of Vinh Phuc, to a citywhich is 40km away —Viet Tri. More than 2,200 civil servants and their families are being relocated to the new capital, including Tuyen’s family.
When Tuyen returns home to collect her belongings, she finds the town has changed. “The main streets, where many shops and markets are located, used to be jammed with commuters and shoppers every day. Now they are almost empty,” the 39-year-old woman says.
Tuyen points out that many residents are thinking about their future, especially the young who are looking for entertainment and job opportunities.
“A smaller population means a decline in business, such as restaurants or entertainment. Public resources for education, social service and facilities might be cut down,” she says.
“Even the weekly musical show in our city square, which had been going on for six years, was cancelled. Young people don’t want to stay in a declining town,” Tuyen adds.
According to government statistics, with a population of 1,221,803, Vinh Phuc’s net migration rate fell to -1.7 per cent in 2024.
As people move away, local businesses are feeling the pain.
Nguyen Ha Anh, who has run a barber shop in Vinh Yen for 12 years, says her profits have dropped by 50% since the merger began in June 2025.
Her shop is situated near several government offices, and about 70% of her clients are public servants. Regular customers visited her shop every one or two weeks and they knew each other quite well. Some even used to visit daily for a hair wash.
“But around August 2025, they started dropping by to say goodbye. It is sad to see them go, and I also feel worried about how to run my business in the future,” the shop owner says.
To cut costs, Nguyen had to let go of her only assistant.
“Other shops also have suffered losses. I’m lucky that my shop has a convenient location. The situation is even worse for those in quieter areas,” she says.
Nguyen observes throughout Vinh Phuc, “For Rent” signs have become a common sight.
In a less populated neighbourhood, grocery store owner Jane* closed her two-decade-old business four months after the merger was announced.
“After the reform was rolled out, many have left my neighbourhood. By October 2025, I only had five to 10 customers a day,” Jane recalls.
Now she is looking for a new job. “My brother in Viet Tri can secure me a job there, but I’m not ready to leave. I was born here,” she says.
“Finding a job in Vinh Phuc will be hard, though, with businesses closing and little demand for workers of my age,” the 43-year-old woman adds.
Nguyen*, a Vietnamese political journalist, says turning the area into an industrial development might be the long-term solution to revive the affected community.
She notes that major investors such as Honda, Toyota, and Piaggio are already operating here, with more than 480 foreign-invested projects.
The new Phu Tho leaders aim to leverage this, Nguyen observes. In June 2025, they proposed a development plan positioning the former Vinh Phuc region as an industrial hub. This strategy is expected to attract more industrial investors to the area, with China’s Songshan Lake Group already proposing a VND 62 trillion (US $2.4 billion) high-tech industrial park.
“If more industrial sites are developed, they will provide jobs to retain local residents and may even attract newcomers seeking opportunity,” Nguyen says.
Professor Song Ruifeng of the General Education China Programme from The Chinese University of Hong Kong points out that the reform highlights the complex reality of a nation-scale policy.
“All such decisions are trade-offs. Vietnam’s actions must have been based on a sophisticated calculus, and there will certainly be benefits. The remaining issue is whether the losses of those affected will be sufficiently compensated,” Song says, adding that it is not only about financial compensation, but also about whether new opportunities will be available.
“Crises may be opportunities for innovation if they bring reflections and transformations. For the country, local communities should also be seen as a priority for real growth,” Song adds.
*Name changed at the request of interviewee
Edited by Jennifer Liu
Sub-edited by Christine Ge
