Vietnam: New Leadership & Economic Reforms


Professor Carlyle A. Thayer

A new leadership team has been chosen to keep a firm grip on political stability as Vietnam weathers the after-shock of the Asian financial crisis. Late last year Vietnam's three most senior officials - the State President, Prime Minister and Party Secretary-General - resigned from the Politburo. They have been replaced by men from a distinctly younger generation who are committed to the continuation of cautious reforms. The new party Secretary General is Le Kha Phieu, a two-star career political officer who served in the army. Phieu immediately reconstituted the five-member Politburo Standing Board or inner cabinet. Phieu is ex-officio its head and the only incumbent to remain. The new members include President Tran Duc Luong, Prime Minister Phan Van Khai, chairman of the National Assembly Nong Duc Manh and party trouble shooter Pham The Duyet. This new arrangement strengthens policy implementation. Phieu is known as a no-nonsense disciplinarian and staunch defender of the party's ideology. He has no background in economics or administration. So far he has relied heavily on the expertise of his colleagues on the Standing Board and this relationship will continue. Vietnam's leadership changes were made in response to 'the twin typhoons' of peasant unrest in central Vietnam (which surfaced in May-June last year) and the downturn in Vietnam's economy (a fall in GDP growth rates and a drop in foreign direct investment). Vietnam's new leaders have identified bureaucracy, corruption, inefficiency, and wastage as major impediments to opening to the outside world. They wish to preserve Vietnam's national culture and independence while integrating Vietnam's economy into the global economy. But they have made clear that market reforms will not be allowed to undermine state socialism and one-party rule. The new leadership was quick off the mark after the Lunar New Year holidays in addressing the major concerns of the foreign community. The new Prime Minister held an unprecedented meeting with overseas businessmen in Ho Chi Minh City at which they were encouraged to identify problem areas. A hot line has been set up to expedite the handling of complaints. New economic policy guidelines designed to counter declining foreign investment, low domestic saving rates and poor export competitiveness have been announced.

WATCHPOINT: Will the new leadership team be able to maintain experimentation, pragmatism and caution in implementing the new economic guidelines?


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