April 8, 2021

Asia

VIETNAM: Central Committee has chosen the next set of leaders

BY Bob Herrera-Lim

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( 5 mins)
  • No major surprises took place at the national assembly vote the past week on the country’s next set of leaders.
  • The elevation of party insider Pham Minh Chinh as prime minister signals more of a focus on administrative changes, rather than economic policy.
  • FDI and export-led industrialization will still be the cornerstones of growth policy, but more attention may be paid to small and medium and domestically-focused enterprises in the light of the pandemic.

Vietnam’s legislature on Monday, 5 April, selected party insider Pham Minh Chinh to be the country’s next prime minister. Simultaneously, incumbent prime minister Nguyen Xuan Phuc slid over to the position of president. Last Friday, the national assembly also voted in Hanoi Party Secretary Vuong Dinh Hue as its new head. Communist party general secretary Nguyen Phu Trong was reelected to his current position during the party congress in late January.

Some inside baseball first

These changes were formalities since the Communist Party of Vietnam’s (CPV) January congress, which is when the real leadership decisions were made. The main surprise then was the selection of Chinh as the next PM, which went against the tradition of a deputy PM being elevated to the top government post. Instead, the economist Hue, who was a deputy PM and considered the front-runner for the job, became head of the national assembly. However, both are qualified for either position, even though Hue may have been slightly more reassuring for foreign investors.

Other factors — the goal of reducing administrative bottlenecks, especially at the local level, and preparing the next generation of leaders — may have been the deciding factor for Chinh, who was secretary of the CPV’s Central Organization Commission. This post is one of the most powerful in the party since it is responsible for the nomination and approval of personnel appointments nationally. There is some speculation that Chinh may attempt to create a new framework at the local level to reduce the scope and size of the bureaucracy. He would also support the continuation of Truong’s anti-corruption campaign.

Both Chinh and Hue are tied to Truong, which further confirms that this was not a contentious transition and that the risk of political and policy instability for the next few years is low. The main leadership speculation is that Truong may not serve out his full five-year term since he had a stroke in 2018 and was out of public view for several months, and that he may only want to shepherd the country through a smooth transition. But given the party’s opacity on these types of issues, it is difficult to determine the probabilities of this risk. In addition, Hue is now being considered as the potential successor to Truong as general secretary of the party.

Policy outlook

Covid-19: Vietnam is attempting to accelerate vaccine purchases from abroad after an uncharacteristic miscalculation in both domestic and international vaccine timelines. The government relied on domestic development and manufacturing, but this effort will deliver vaccines in volume only later this year or early in 2022. There will be little or no political fallout from this delay, especially given the general recognition of Vietnam’s success in containing the virus and because the economy is doing relatively well. However, this may limit Vietnam’s ability to open up to international travel, especially if variants remain in the wild from many of its major tourist sources.

Economy: Broadly, Vietnam’s leaders continue to recognize the benefits from increased FDI and export-led industrialization but are now emphasizing the need to expand the domestic supplier networks of small and medium enterprises to increase domestic value-added. One additional goal that has emerged recently because of Covid-19 is to help purely domestic enterprises recover. This may slow some domestic market opening if there is greater apprehension within the leadership about increasing job losses. The environment may also receive greater emphasis, particularly increasing the use of renewable energy and reducing industrial pollution.

Over the past three years, Vietnam has entered into four high-profile trade agreements the past three years: CPTPP, RCEP, EU-Vietnam FTA and UK-Vietnam FTA, the most by any of the region’s larger developing countries. Hue, the new head of the legislature and the one with the deepest trade experience among the senior leadership, may fulfill a role in ensuring that Vietnamese commitments are properly implemented in domestic rules and regulations. Another focus may be on improving the system for the allocation of land use rights.

Privatization is a less-pronounced topic in many of the economic policy discussions, which may signal that Vietnam sees less of a risk from state-owned enterprises and their potential for overreach compared to a few years ago.

Foreign policy: The country will not deviate from its existing policy of pursuing a multipolar balance and avoid over-committing to any regional power. Vietnam recognizes the economic value of its relationship with China, especially in its integration into global value chains; its military links to Russia; the industrial capacity being developed domestically by South Korea and Japan; and the security role of the US in Asia. Vietnam will continue to be actively involved in ASEAN, because it recognizes the organization’s ability to sometimes act as a buffer for global and regional pressures, and as a way to mobilize action within Southeast Asia.

Governance changes: The more prominent attempt at change may be at the local level, where Chinh could attempt to streamline party and state positions to reduce overlap and to thin the bureaucracy. This could include eliminating the People’s Councils, the local legislature, since its membership often overlaps with the People’s Committees, which is the executive body. There is also some speculation that Chinh may attempt to tighten party control at the local level by merging state and party positions. Although this would simplify the local structure, it would reduce democratization at the cost of efficiency.

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