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Carlyle A Thayer
The Vietnam Communist Party's Central Committee met from 15-25 January at its fourth executive session since the Tenth Congress in April last year. This meeting adopted a number of major policy decisions that will affect Vietnam's political structure, economy and defence establishment in coming years. The fourth plenum was held just after Vietnam was formally admitted into the World Trade Organisation (WTO) as its 150th member.
As long ago as the fifth national party congress in 1982, Vietnam's leaders have attempted to reduce what they describe as the 'chaotic overlap' between party and state structures. This issue is a hardy perennial of Vietnamese domestic politics. The fourth plenum decided to reduce the number of Central Committee commissions, with oversight across a broad range of policy areas, from eleven to six. The party asserts control over the state through party committees in each ministry organized into blocs or functional areas. These will now be regrouped into two separate streams.
The plenum decided that for cost and practical reasons the five yearly national party congresses and general elections to the National Assembly would be bought into alignment and held in the same year to coincide with the commencement of the next five-year socio-economic development plan. At present National Assembly elections are held the year following a national party congress. This results in lame duck incumbents marking time until they are replaced.
Vietnam will hold its next general elections in May this year. The new deputies will elect government officials which will include the new Cabinet. The fourth plenum decided to carry out a major restructuring and merger of state ministries and equivalent level institutions. This matter will be dealt with in greater detail at the fifth plenum. There is a proposal that all member of the party Politburo should stand for election to the National Assembly in order to enhance their legitimacy.
Vietnam's membership in the WTO will impose a host of new requirements on Vietnam as it fully integrates into the world economy. The fourth plenum took the decision to order the party, the army, police and regime-approved mass organizations to divest themselves of commercial enterprises that they presently own and operate. This process is slated to begin this year. These firms will be equitised and sold to private investors.
The Vietnam People's Army, for example, currently runs 140 enterprises and hold shares in another twenty companies. These enterprises are engaged in an incredibly diverse range of economic activities from coffee production, coal mining, garment manufacture, stock broking, and telecommunications to health services. In 2006, army-run enterprises earned US$2 billion in revenue or 3 percent of Vietnam's Gross Domestic Product (GDP). Divestiture will touch on sensitive sources of funding for the military.
The third major policy area considered by the fourth plenum focused on drawing up a coherent integrated national 'Maritime Strategy Towards the Year 2020'. Reports submitted to the Central Committee noted that there was no coherent plan to integrate the economic development of coastal areas with the exploitation of marine resources in Vietnam's territorial waters. Economists estimated that by 2020, the marine economy would contribute up to 55 percent of GDP and between 55-60 percent of exports. Vietnam's new maritime strategy will also integrate environmental protection and national defence and security.
WATCHPOINT: Expect further cuts in the party-state bureaucracy and friction as existing networks of patronage and vested interests are disrupted. Expect the army to turn its energies in the direction of professionalism and modernization. Opportunities will open for foreign investment in Vietnam's maritime sector.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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