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Vietnam, its new regime and the regional trade landscape

Vietnam’s national congress ended in January. The five-yearly event decides the course of the nation and all top appointments. Politically they are of course intriguing but the latest could have a marked effect on the prospects for economic reform in the South-East Asian nation.

" The terms of the TPP will push some reforms, from transparency to important SOE reform and yes, human rights it is hoped."
Helen Clark, Freelance journalist

On April 2, Tran Dai Quang was sworn in as Vietnam’s new President, relinquishing his post as head of the police. Quang, 59, was elected with a 91.5 per cent majority from the legislative National Assembly, though his position was announced after congress.

Former Prime Minister Nguyen Tan Dung, in power 10 years, failed in his bid for top post in the country, the General Secretary-ship which stayed with Nguyen Phu Trong. Nguyen Xuan Phuc replaces Dung.

Vietnam-expert Professor Carlyle Thayer at the Australian Defense Force Academy says Phuc has “considerable experience in provincial affairs and at the highest level.” He, along with Quang and newly elected National Assembly chair Nguyen Thi Kim Ngan all have high approval ratings and experience. Ngan, wrote Professor Thayer, is a “star performer”.

Quang’s background worries some as it may signal a more authoritative turn and fewer freedoms. Does this matter when it comes to economic reform in Vietnam?

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Vietnam's newly elected President Tran Dai Quang is sworn in during a ceremony at Parliament House in Hanoi in April. SOURCE: Getty Images

THE TPP

The US has always pushed hard on human rights, freedom of speech especially, and this has been a hurdle to closer relations in the past.

Often these relations have been more strategic than economic but the Trans-Pacific Partnership changes that. On January 14 US ambassador Ted Osius said that Vietnam could yet lose its membership in the TPP should it not meet its human rights commitments. That said, those comments are frequently framed in Vietnam (and elsewhere in the region) as more for US domestic consumption than hard chips on the table.

When sworn in Quang quickly affirmed his commitment to ongoing economic reform. According to the Wall Street Journal, Quang said he would “push ahead with the country’s Doi Moi economic reforms, and work to ‘strengthen Vietnam’s prestige and position in international arena.’”

He echoes General Secretary Trong who was quoted by Reuters saying roughly the same thing in January.

Trong is a strong believer in democratic centralism and a consensus-led Politburo which has been expanded to 19 members. He is also a big believer in the Party, whist under Dung’s tenure it was the government which grew in strength and importance. The government however has been less ideologically pure but often more efficacious. 

Dung was known as a reformer, but economic reform under him still did not get to where foreign analysts or say, the World Bank, would have liked. Trong’s visit to meet US president Barack Obama last year - the first-ever for a Communist Party General Secretary - has shown that he can change his mind somewhat, given his earlier hesitation regarding the United States.

DOING MORE

One of Trong’s reform interests is in rooting out corruption, which has plagued Vietnam. Transparency International rates Vietnam at 112 out of 168 in its Perceptions of Corruption Index and it has a score of 31 out of 100. Corruption is a problem for domestic politics too and to maintain legitimacy the government must be seen to be doing more about it.

However the focal point for reform is the Trans-Pacific Partnership. The terms of the TPP will push some reforms, from transparency to important State Owned Enterprise sector reform and yes, human rights it is hoped.

The Marxist-Leninist hardliners of the Party are pro-TPP for obvious reasons such as larger markets and more chance for exports; it will also lessen the longstanding trade imbalance with China which has long had a worrying political dimension.

It was the increasingly powerful Central Committee which passed it. Though the expanded 19-member Politburo may be consensus driven and unshakable in their belief of the centrality of the Party to the governance of Vietnam, it does have some clever technocrat and moderniser members. But a consensus-driven body often moves more slowly.

Newly appointed speaker of the National Assembly Nguyen Thi Kim Ngan, the first woman to ever hold the office, was a firm supporter of the TPP, as was PM-elect Nguyen Xuan Phuc and Foreign Minister Pham Binh Minh.

Minh helped steer Vietnam closer to the United States whilst maintaining the importance of multilateralism in foreign affairs.

What will drive reform is the obvious strong will in some parts of the government and Party. The deeper question is whether this official support continues to be reflected in broader public opinion. In Vietnam today, the key word is “integration”. That phrase has survived the regime change and suggests an outward focus and indeed reform of some sectors continue to be an emphasis.

What may slow it is the need for consensus and a possible creep in authoritarianism as well as the inherent suspicion any dyed-in-the-wool Marxist-Leninist like Trong has for aspects of the global free market, or relinquishing (or at the very least greatly reforming) the complex state-owned enterprise sector. 

While many observers believe reform of the SOE sector is important, the TPP and other agreements being pursued by Vietnam in themselves won’t disrupt that sector of the economy, indeed allowance is made for SOEs. How and when that sector is approached is a question for the future.

Helen Clark was a Hanoi-based foreign correspondent and magazine editor for six years. She has written for Time, The Economist, the Australian Associated Press and The Diplomat, among many others.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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