Urbanization in Vietnam

Vietnam’s economic transformation over the last three decades has been a remarkable success story. The country has gone from one of the poorest in the world to a thriving lower middle-income economy, thanks to comprehensive economic reforms and rapid structural transformation from an agriculture-based economy to industrialization.¹ Urbanization has played a vital role in Vietnam’s success, with the share of the population living in towns and cities increasing from less than 20% in 1990 to more than 37.55% in 2022² The country has promoted prosperity through denser labor markets and agglomeration economies by concentrating people, skills, and economic activity in urban areas, thereby over half of the national GDP is contributed by urban areas.³

Definition

The definition of ‘urban’ varies globally and there is no universal definition of what ‘urban’ means. United Nations’ reports and data related to urbanization is based on each nation’s definition: either using minimum population thresholds, population density, infrastructure development, or employment type, etc. The European Commission applied its definition⁴ of settlements across all countries for urban center, urban cluster and rural (Urban center: must have a minimum of 50,000 inhabitants plus a population density of at least 1500 people per square kilometre (km2) or density of build-up area greater than 50%. Urban cluster: must have a minimum of 5,000 inhabitants plus a population density of at least 300 people per square kilometre (km2). Rural: fewer than 5,000 inhabitants.)

Vietnam adopts its criteria for urban areas as outlined in Decree 42/2009/NĐ-CP.⁵Urban areas, according to this decree, must possess urban functions,⁶ accommodate a minimum of 4,000 inhabitants, have non-agricultural labor comprising at least 65% of the workforce, and meet specified infrastructure standards. 

Vietnam classifies its urban areas into six types by the scale and level of development according to the administrative system, including: special type, type I, type II, type III, type IV and type V the urban classification is recognized by competent state agencies.

• Special urban areas are centrally run cities with inner-city districts, suburban districts and affiliated urban areas.
• Type I and type II urban areas are centrally run cities with inner city districts, suburban districts and may have affiliated urban areas; type I and type II urban areas are provincial cities with inner wards and suburban communes.
• Type III urban areas are cities or provincial towns with inner city wards, inner cities and suburban and suburban communes.
• Type IV urban areas are provincial towns with inner wards and suburban communes.
• Type IV urban areas and type V urban areas are towns in districts with concentrated built-up neighborhoods and possibly rural residential areas.

As of 2021, there are 868 urban areas, including 2 special type urban areas, 22 type I urban areas, 33 type II urban areas, 47 type III urban areas, 90 type IV urban areas and 674 class V urban areas.⁷

Urbanization Features

Urbanization involves the migration of workers and their families from rural to urban areas, as well as the transition of individuals from the agricultural sector to the industrial and service sectors within urban centers. Additionally, natural population growth contributes to the demographic changes observed in urban areas.⁸

Vietnam’s urban landscape is characterized by the presence of two urban poles, one in the North and the other in the South of the country. The Northern urban pole encompasses Hanoi and its surrounding provinces, extending its influence over the Northern Mountain, Red River Delta, and Northern Coastal Region. Meanwhile, the Southern urban pole is anchored by Ho Chi Minh City, radiating its impact across the Central Highland, South East, Southern Coastal Region, and Mekong River Delta.⁹ These urban centers serve as the nation’s economic powerhouses and stand out as the most vibrant and geographically accessible regions, collectively contributing to an 80% share in industrial and service jobs, production, and profits within Vietnam.¹⁰ This concentration, however, led to an uneven urbanization distribution among the country’s six geographical regions.

Urbanization Levels

Nationwide, there were 37.4 million people living in urban areas, equivalent to 37.55% of the country’s population in 2022.¹¹ Vietnam remains at a low level of urbanization in comparison with other neighboring countries in Asia. However, the trajectory indicates a steady rise, aligning with global trends (Figure 3). Projections suggest that, by 2040, more than half of Vietnam’s population will reside in urban areas, reaching 57.3% by 2050.

Pace of Urbanization

The influx of people to the two poles – Hanoi and Ho Chi Minh City and its surroundings has intensified pressures on jobs, housing, and social security, with immigration rates significantly higher than the national average. The immigration rate in these two cities is 2.7 times higher than the national average and 5.3 times higher than that of the rural areas.¹³ However, Vietnam’s urban areas now boast a relatively low incidence of slum housing (Figure 6), attributed to flexible regulations allowing spontaneous, low-cost construction and small-scale housing rentals.¹⁴

Urbanization Impacts

Urbanization and population growth puts substantial pressure on aspects of society including infrastructure, hoursing, resources, services, social cohesion; and the environment. The escalation in vehicular traffic contributes to traffic congestion, releasing significant amounts of dust and emissions, further impacting the environment. The current inadequacy and lack of synchronization among different facilities within the domestic water supply and drainage treatment systems exacerbate pollution in the surface water environment. Concentrating industrial and service activities within urban centers amplifies pollution across multiple fronts—soil, water, air, and heightened disease prevalence. Urban development often involves the breakdown of ecosystems, including the flattening of lakes and ponds, and a reduction in green spaces and parks. Cities, acting as focal points for development, also grapple with the impacts of climate change. Coastal and delta regions frequently experience inundation, with a tendency for expansion. Simultaneously, urban areas in mountainous regions contend with natural disasters such as flash floods and landslides, adding a layer of complexity to the challenges faced by these regions.¹⁵

Looking ahead

The Vietnamese Government is actively supporting urbanization as outlined in Resolution 6 by the Politburo and Resolution No 148/NQ CP. The goal is to achieve an urbanization rate of at least 45% by 2025 and surpass 50% by 2030. Economically, urban areas are anticipated to contribute to approximately 75% of the national GDP by 2025 and around 85% by 2030. Future goals include developing at least five international urban areas seamlessly connected to regional and global networks by 2045.¹⁶

Urbanization remains a vital component of Vietnam’s development, current reforms are necessary to steer it toward a more efficient and sustainable trajectory. Priorities include increased investment in urban infrastructure, particularly in flooding risk management and robust public transport systems. Allocating resources to cities, coupled with measures to address climate and sustainability risks, is imperative to ensure the continued success of Vietnam’s urbanization journey.¹⁷