Key Events
- Bumpy Start for Việt Nam’s New Governance Model Amid Tech Failures and Staff Discontent
- Unprecedented Trade Pact: Việt Nam Grants U.S. Full Market Access in Tariff Agreement
- Workers Push for 9.2% Minimum Wage Hike Amid Việt Nam’s High-Income Ambitions
- Việt Nam Pumps in Cash to Stabilize Currency as Pressure Mounts
New Governance Model Hits Snags on Launch Day Across Việt Nam
On July 1, hailed by state media as a “festival for the nation,” Việt Nam officially launched its overhauled two-tier local government model across 34 newly reorganized provinces and cities. Dozens of new laws and decrees also came into effect. However, the rollout was marred by technical disruptions, logistical confusion, and growing public discontent.
According to Lao Động newspaper, just a day before the launch, the government’s national digital ID platform, VNeID, experienced heavy disruptions. As many citizens rushed to check their updated place-of-origin information following administrative mergers, the system crashed under the surge in demand.
Users on the social media forum Voz reported incorrect hometown details when accessing their personal data on July 1, highlighting deeper concerns about data integrity. In Hai Duong, Hải Phòng newspaper reported on July 2 that online public service platforms remained riddled with issues—from unstable connections to a lack of system integration—making it difficult for users to log in or complete transactions.
Efforts to shuttle civil servants to new provincial centers also ran into trouble. In Quảng Trị, a government train intended to transport officials to Đồng Hới was canceled. In Hà Nội, newly reassigned officials heading to Minh Châu Island had to trek across rivers and mountains to make it to their first day of work. Meanwhile, in Hồ Chí Minh City, buses scheduled to ferry staff from former provinces like Bình Dương and Bà Rịa–Vũng Tàu reportedly ran empty.
The human resources strain appears to be deepening. A survey by the Hồ Chí Minh City Institute for Development Studies (HIDS) of over 56,500 people found that 54% of officials, 43% of civil servants, and 34% of public employees would consider quitting if given better job options. Over half of respondents expected workloads to surge by 50% following the restructuring. Many cited staffing shortages, overwhelming duties, tight deadlines, excessive meetings, and irrelevant extracurricular campaigns as reasons for burnout.
Adding to the wave of disruption, nearly 600 labor contract-based union officials were laid off nationwide starting July 1 as part of the bureaucratic streamlining.
While the new administrative structure marks a significant shift in Việt Nam’s governance system, its bumpy rollout raises urgent questions about the government’s preparedness—and the toll on both public workers and services.
U.S. and Việt Nam Reach Landmark Tariff Deal, Granting U.S. Full Market Access
On the evening of July 2 (Việt Nam time), former U.S. President Donald Trump announced on Truth Social that the United States had reached a breakthrough tariff agreement with Việt Nam—one week ahead of schedule.
Under the new deal, Vietnamese goods exported directly to the U.S. will be subject to a 20% tariff, while goods transshipped from third countries will face a 40% tariff. In return, U.S. products entering Việt Nam will enjoy zero import tax. “This is truly unprecedented in the relationship between our two nations,” Trump declared. “The U.S. now has full access to the Vietnamese market.”
According to Politico, additional tariff agreements between the two countries are expected in the near future.
As of 2:30 p.m. on July 3, Vietnamese state media had yet to provide detailed coverage of the development. Some outlets mentioned it briefly in broader economic updates but omitted specifics—particularly the exact tax rates and implications.
The agreement follows months of mounting trade tensions. On February 4, the U.S. government announced a steep 46% tariff on Vietnamese goods, citing an ongoing trade imbalance. In 2024 alone, the U.S. trade deficit with Việt Nam peaked at a record $123.4 billion. The Trump administration accused Việt Nam of serving as a “backdoor” for Chinese exports—relabeling Chinese goods as “Made in Vietnam” to circumvent existing U.S. tariffs.
In response, Vietnamese General Secretary Tô Lâm held a direct phone call with Trump, asking the U.S. to postpone the punitive tariffs. During the call, Lâm reportedly pledged to reduce Việt Nam’s tariffs on American imports to zero and offered assurances that Việt Nam would take steps toward being officially recognized by the U.S. as a market economy, according to CNN.
The two sides agreed to a 90-day negotiation window from April 7 to July 7. This week’s announcement signals that the talks have concluded ahead of schedule, though many details of implementation remain unclear.
Observers note the lack of transparency in the Vietnamese government’s response and the potential economic impact of the 20–40% tariffs on exports—a critical component of Việt Nam’s trade-driven economy. While the U.S. gains greater access to Việt Nam’s consumer market, Vietnamese exporters may face steep new challenges under the deal’s terms.
Push for Higher Pay: Vietnamese Workers Want More, Employers Resist
On June 26, the National Wage Council held its first session to begin discussions on setting Việt Nam’s regional minimum wage for 2026. The session highlighted a stark divide between labor and employer representatives over how much wages should rise.
Worker representatives proposed a maximum increase of 9.2%, while employer groups suggested a much smaller adjustment—just 3%–5%. According to Nhạc Phan Linh, deputy director of the Institute for Strategic Research under the Vietnam General Confederation of Labour (VGCL), the labor side also submitted a second proposal to raise wages by 8.3%, aiming to ensure that workers can meet basic living standards.
Linh emphasized that any wage adjustment should take effect from Jan. 1, 2026, rather than the traditional July timeline, arguing that low-income workers cannot afford to wait another six months under increasing cost-of-living pressures.
The wage negotiations come as Việt Nam pursues a long-term goal of becoming a high-income nation by 2045. To achieve this, the country must raise its average annual income to around $15,000 per person. As of now, the average stands at just $4,700 per person—a figure that underscores the growing gap between aspiration and reality.
While government officials have promoted rapid economic growth and high-tech investment as pathways to this goal, labor advocates caution that real progress cannot happen without ensuring fair compensation for workers. The current debate over minimum wage reflects broader questions about equity, productivity, and Việt Nam’s development trajectory.
As negotiations continue, both sides will need to balance economic stability with social justice—especially as inflation, labor shortages, and public frustration weigh on the country’s post-pandemic recovery.
The State Bank of Viet Nam (SBV) has injected nearly 93 trillion đồng ($3.6 billion) into the banking system over the past week, marking a significant move to ease liquidity pressures amid growing concerns over the depreciation of the Vietnamese đồng.
On June 27 alone, the SBV injected over 40 trillion đồng via open market operations—its largest single-day liquidity boost in over a year. These transactions were conducted through repurchase agreements with credit institutions, signaling the central bank’s urgency in stabilizing short-term liquidity.
The intervention comes as the U.S. dollar surges globally, putting downward pressure on the Vietnamese currency. As of this week, the official ceiling exchange rate has reached 26,323 đồng/$1—marking a nearly 17% devaluation of the đồng since 2015.
In an attempt to balance the liquidity inflow, the SBV simultaneously reissued 22.5 trillion đồng worth of treasury bills, effectively withdrawing an equivalent amount of cash from the system. Still, the net injection remains significant, underscoring the central bank’s delicate balancing act between stimulating economic activity and containing inflation risks.
Domestic economists say the weakening đồng could make Vietnamese exports more competitive by lowering their dollar-denominated prices abroad. However, they also warn that the devaluation risks driving up domestic prices, squeezing household purchasing power, and pushing inflation higher.
As of the end of May, the SBV had injected over 1 quadrillion đồng ($40 billion) into the economy—a scale that has prompted renewed debate over the long-term stability of Viet Nam’s monetary policy.
With global markets volatile and domestic inflationary pressures building, the SBV faces mounting challenges in navigating its dual mandate: supporting growth while maintaining currency stability.
Quick Takes:
Phan Văn Bách Begins Hunger Strike to Protest Mistreatment in Prison
According to reports on Facebook, Phan Văn Bách—a Vietnamese prisoner of conscience—has launched a hunger strike at Prison No. 5 in Thanh Hóa Province to protest mistreatment by prison authorities. His family has raised concerns about his rapidly deteriorating health and the urgent need for medical intervention.
China Slams U.S.–Việt Nam Trade Deal, Threatens Countermeasures
The Hill reports that Beijing has criticized the newly announced U.S.–Việt Nam trade deal, calling it unfair and vowing to take “resolute countermeasures” if the agreement undermines China’s economic interests. The deal, unveiled by President Donald Trump, includes a 20% tariff on Vietnamese exports to the U.S. and a 40% tariff on goods routed through Việt Nam from third countries like China. China’s Ministry of Commerce said it firmly opposes any trade arrangement made at the expense of China and urged countries to uphold global trade rules and fairness.
Foreign Residents in Việt Nam Required to Obtain Level-2 Digital ID
From July 1 to August 19, Viet Nam’s Ministry of Public Security will issue level-2 digital identification accounts to foreign nationals residing in the country. As of now, police authorities have received 333 registration applications. This initiative is part of the government’s broader push to standardize digital identity and streamline administrative procedures.
Brother of Monk Thích Minh Tuệ Arrested for Land Misuse in Gia Lai
On July 2, police in Gia Lai Province arrested and indicted Lê Anh Tuấn, the former chairman and director of Ia Châm Coffee Co., and brother of monk Thích Minh Tuệ (a Vietnamese Buddhist monk renowned for his ascetic pilgrimages and meditative walking practices, which have attracted both widespread social media attention and occasional government scrutiny in the last year to date), for “abuse of power while performing official duties.” Authorities allege Tuấn illegally built over 99m² of structures on agricultural land and encroached on 427m² of state-managed land.
Death Penalty Sought for Two Former Police Officers in Drug Trafficking Case
On July 1, the Hà Nội People’s Court reopened the trial of 12 defendants in a major drug trafficking case. The Procuracy recommended the death penalty for former officers Nguyễn Văn Hưng and Hà Minh Đức – both previously stationed in Long Bien District. Hưng allegedly used a government vehicle with official plates to transport drugs, while Đức was accused of aiding and protecting the ringleader, known as “Hương Mẩu,” in trafficking 134.8 kg of narcotics.
Rapid Growth Fuels Smog in Hanoi, One of the World’s Most Polluted Cities
NBC News Asia/Spike Johnson/June 29
“In a live ranking Saturday by IQAir, a Swiss air monitoring company, Hanoi ranked 13th on a list of the most polluted major cities.
The fog hanging over Hanoi isn’t just pollution; it’s a byproduct of growth that has lifted Vietnam’s economy while fueling its environmental struggles.
Since 2018, Vietnam’s gross domestic product has grown an average of 5% to 7% per year, far more than larger economies such as the United States and China, due in part to its infrastructure boom. Lower labor costs and a skilled workforce have made the Southeast Asian nation an attractive alternative for companies shifting production from China such as Apple and Nike, turning it into a regional manufacturing hub.”
Vietnam Aches for Its M.I.A.’s. Will America Stop Funding Science to Identify Them?
The New York Times/Damien Cave/July 4
“The scientists were there to advance a recent breakthrough by putting it to use. A few months earlier, they and their partners — including the International Commission on Missing Persons, in The Hague — had figured out the chemistry and computing required to identify remains as badly degraded as those often found in Vietnam’s acidic, tropical soil. For the first time, tiny snips of DNA taken from bones up to 70 years old could be used to link the country’s fallen soldiers to distant relatives, unlocking lost truths and deeper healing.
Before the disruptions, the scientists doing exhumations said they had aimed to identify 1,000 Vietnamese M.I.A.’s by July 11, the 30th anniversary of normalized U.S.-Vietnam relations. That, they believed, would prove what former enemies could accomplish by pursuing closure through science. Now they are hoping for one.”