Adjusting provincial and municipal administrative boundaries is important and a factor of transformation in Viet Nam's industrial real estate market. If implemented efficiently, this restructuring could catalyse the development of large-scale industrial-urban zones, attracting more international investors. 

Lean management and development expansion 

The merger of administrative units does not merely adjust boundaries but also carries the goal of streamlining the management apparatus, reducing fragmentation in planning, and enhancing competitiveness among localities. 

According to Thomas Rooney, Associate Director, Industrial Services, Savills Ha Noi, if carried out systematically, this process will help initiate the development of integrated urban-industrial ecosystems to attract more international investors, that are becoming more selective with investment destinations.  

The expansion of administrative boundaries will enable provinces to plan more large-scale industrial zones, offering more business options. With the increase in available land, domestic and international enterprises will have greater access to suitable sites for establishing factories, thereby mitigating industrial land shortages in high-demand localities.

After the mergers, the larger provinces will have the foundation to delineate zones more clearly, thereby facilitating the development of specialised industrial parks or clusters, such as supporting industrial parks or specific-sector parks that supply components and parts for major manufacturing sectors or specific industries such as automative or semiconductors.  

Rooney notes, “Provinces like Bac Ninh and Hung Yen, which have already been standout destinations for investment, will benefit from mergers and planning coordination by complementing each other in infrastructure, workforce, and development strategy. With a larger scale, these provinces can achieve higher standards in infrastructure and management, strengthening their position in the global value chain.” 

Short-term challenges, long-term benefits 

Adjusting administrative boundaries will inevitably impact various aspects, from land use planning and investment licensing to legalities surrounding the environment and construction. According to the expert, short-term business discomfort may arise due to changing the point of contact and misalignment in the merged localities. However, this presents a major opportunity to rebuild a more transparent and efficient regulatory framework in the long run.  

Better coordination and unified procedures within the new administrative zones will help save time, reduce compliance costs, and improve investor confidence.  

Key impacted areas

One key impacted area is the workforce, a foundational layer of industrial real estate’s competitiveness. Changes in administrative boundaries can affect workers’ housing plans, administrative registration, and transportation connections. These changes could become a barrier if not correctly executed, simultaneously presenting an opportunity to rebuild the labour supply network on a regional and interprovincial scale. 

The development of inter-regional infrastructure also drives the shift away from traditional industrial markets, where supply is limited and investment costs are rising. Emerging localities with abundant, affordable land and improved infrastructure will be able to become new industrial hubs.  

This critical transition period is expected to last two to three years. The Savills associate director believes businesses need to proactively stay informed, establish relationships with the new local authorities, and remain flexible with their land use plans. .

On the government side

On the government side, the top priority is transparent communication. Proactively engaging in dialogue with businesses and providing support mechanisms, especially for small and medium-sized enterprises, which will help minimise major disruptions and maintain investment momentum.  

Administrative restructuring should not become a barrier but rather a transformative springboard toward a more consistent, fair, and efficient investment environment.  

The provincial merger proposal is a pivotal administrative reform that will directly impact Viet Nam’s development landscape. If carried out with a long-term vision and coordinated determination, it can become a new catalyst, enabling Viet Nam’s industrial real estate sector to break through and strengthen its position in the global value chain.