Intergovernmental Profile: Vietnam

Vietnam is a unitary country with four governance levels: central, provincial, district, and commune, of which the latter three are considered ‘local’ administration levels. The 2013 Constitution and the 2020 Law on the Organization of Local Government provide the overarching framework for central-local relations. At present, Vietnam’s local governance institutions consist of People’s Councils (legislative organs), People’s Committees (executive organs) and line ministries, departments, or units, which are established in 63 provincial-level, 705 district-level, and 10,599 commune-level administrations.

Vietnam’s local governance institutions at provincial, district, and commune level should be considered hybrid local governance institutions with varying degrees of autonomy, decision-making power, and functional responsibilities. Local governance institutions in Vietnam operate within a centrally-controlled system that relies on the principle of ‘democratic concentration’. Power is shared in a top-down manner with local governance institutions that are also granted a degree of administrative and fiscal autonomy, providing local governance institutions–particularly at the provincial level–with a degree of de facto decision-making power over how resources are allocated locally. Despite having some autonomy to manage their own affairs, significant restrictions are imposed by higher-level governments that constrain their de facto authority. Most significantly, a considerable degree of authority vested in the People’s Committees (and especially the President of the People’s Committee), whose membership is determined by the Party. In contrast, although they approve the local budget, the elected People’s Councils lack significant authoritative decision-making power. Despite a relatively high degree of fiscal and administrative autonomy, under Vietnam’s approach to ‘dual subordination’, all local spending plans must ultimately be approved by higher-level governments and are significantly influenced by the Party apparatus and central line ministries.

The State Budget Law outlines central and local spending functions respectively, but the two lists are almost identical. In practice, service delivery functions within each sector are assigned to different subnational levels in correspondence with the subsidiarity principle. The governance level with de facto responsibility for delivering any given public service is determined on a case-by-case basis depending on the special character of individual jurisdictions. As a result, there is a degree of heterogeneity in terms of which governance level delivers different public services. Even so, Vietnam’s nested budgeting system gives local governments significant delegated responsibilities for allocating resources and making service delivery decisions. In general, subnational entities are usually responsible for providing infrastructure and a variety of social services. Subnational spending represented more than 60% of total consolidated expenditure and over 50% of total public investment in 2020, with roughly half of total education and health spending taking place at the subnational level.