Conservatives versus Reformers/Progressives in Vietnam

Updated On: Dec 29, 2008

The global financial crisis has opened a divide between conservatives and reformers/progressives within the Vietnamese Communist Party.

Before the outbreak of the US sub-prime and global financial crises, Vietnam was already facing tremendous challenges with heightened inflation (around 22%), sizable current account deficit (about 19% of GDP in 2008) and decreasing foreign investments.

The global financial crisis has added two more challenges – less remittances from overseas Vietnamese and a decline in tourism coupled with foreign exchange shortfall.

The Vietnamese response so far has been to follow global applications of fixes, including a US$1 billion stimulus package that started on 2 December 2008 and corporate tax reduction announced on 12 December 2008.

Such measures have not come easy. Vietnamese PM Nguyen Tan Dung had to pit his expansionist  reformist/progressive group against conservatives like Party Secretary general Nong Duc Manh who is more in favour of slower sustainable growth to root out pollution, inflation and corruption, picking on such sentiments rising within the middle class.

The fallout from PM Tan Dung’s declining political legitimacy posed by slower growth is real. Conservatives are using their numbers in the party politburo and central committee felt (they are still in the majority).

In 2007, the conservatives rejected some of PM Dung’s appointees to the Cabinet, use their power base in the Information and communications Ministry to arrest journalists investigating corruption in the Transport Ministry and mobilized the Ministry of Public Security to ignore his calls for corruption investigation.

They also instigated the unprecedented holding of three central committee meetings to discuss political issues and transfer the power to run Vietnamese economy from the Cabinet to the politburo. PM Tan Dung’s crucial allies, the Finance Minister and the Bank Governor are now increasingly isolated.

PM Tan Dung’s rapid economic growth promises are increasingly difficult to sustain as Vietnam’s growth slows down along with the global economic downturn. He has a tenuous hold on power and can only depend on Vietnamese comparative advantages ike a young population (75% under 35 years gold), English language fluency amongst it workforce and high literacy rates amongst it population to keep those investments coming.


AFP, "Vietnam economy grows 6.23 pct in 2008, below target" dated 25 December 2008 in the Google/AFP website [downloaded on 25 December 2008], available at http://www.google.com/hostednews/afp/article/ALeqM5jKmuiAs2w4jG-ex-k9EvD...

Gale, Bruce, “A tenuous stability” dated 24 December 2008 in the Straits Times (Singapore: Straits Times), 2008, p. A16

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