The 13th National Congress of the Communist Party of Vietnam met to take decisions on the future leadership and policies to deal with the new challenges and exploit opportunities. 1,587 party members attended the 13th Congress for this purpose. The National Congress meets once every five years to pick new leadership and define broad contours of policies to be pursued.
On the 31st January, the newly elected 200-member Central Committee selected Phu Trong as General Secretary and head of the 18-member Politburo. Phu Trong, the party’s 76-year-old current leader and the architect of the country’s anti-corruption campaign has been nominated to serve a rare third term. This entails giving age relaxation to Trong as there is an age limit for this position. This also indicates that there was no consensus for any other leader.
Trong will be the longest-serving General Secretary since Le Duan, the leader who took control after the death of Vietnam’s founding revolutionary Ho Chi Minh in 1969 and stayed in power till 1984. Trong’s third term itself is a testimony for his excellent guidance to the country in the past decade. Since coming to power in 2011, Trong has emerged as one of the most powerful and popular leaders, particularly after 2016.
Given the current problems faced by Vietnam, the need for continuation of the present policies both in domestic and foreign affairs can hardly be over-estimated. Vietnam during the last five years has passed through several critical phases and the last year was very difficult like most nations because of the pandemic and its impact on development. An examination of Vietnam’s domestic and external policies is relevant in this context.
At the 12th National Congress, six tasks were listed for its tenure. They were broadly- (i) to enhance party building; (ii) to focus on building party apparatuses and to step up struggle against corruption, wastefulness and red-tape; (iii) to focus on raising labour productivity and competitiveness of the economy by pushing for industrialisation and modernisation; (iv) to defend sovereignty and territorial integrity of Vietnam while raising the status of Vietnam internationally in the new conditions; (v) to ensure social and human security, improve social welfare and secure sustainable poverty reduction; (vi) to promote the human factor in all aspects of social life and to cultivate a healthy cultural environment.
While market reforms were introduced in 1986 (Doi Moi) and the CPV had managed to move from the legitimacy of military victory to ‘performance-based legitimacy, in 2016 it was realised that the economy still needed to be restructured to increase the share of high-tech industries, to find new markets for exports, to encourage local private business and to deal with ineffective state sector by improving its institutions. The economic transformation had brought about the emergence of whole new social classes and interest groups, which had their aspirations. The growing middle class craved for better credit facilities, relaxed red-tape and property rights security. Hence these were included in the key tasks for the period 2016-2021.
During 2016-2021, Vietnam’s economic growth was substantial. Even before the pandemic, it was considered a miracle. The World Economic Forum pointed out three factors for this. First, it has embraced trade liberalization with gusto. Second, it has complemented external liberalization with domestic reforms through deregulation and lowering the cost of doing business. Finally, Vietnam has invested heavily in human and physical capital, predominantly through public investments. The intensified efforts for economic development coupled with changes in the system paid rich dividends. Its economic growth was consistently around 7%. Even during the pandemic, it was around 3%. This economic miracle of Vietnam was based on greater emphasis on manufacturing, which was boosted by trade liberalisation, domestic deregulation and investment in human and physical capital.
Crucially, in 2018 inflation rate got stabilised at 3.54%, and unemployment rate was just 2.2% which were amongst the lowest in the world. According to the IMF, Vietnam’s account deficit declined to 2.45% of GDP in 2017, and further reduced to 2.16% in 2018. Vietnam has emerged as one of the favourite destinations for FDIs in South East Asia with FDI inward flow having increased year-on-year since 2011, reaching USD 19.5 billion in 2018, up from USD 17.1 billion in 2017. In the current pandemic environment, a number of manufacturing firms have moved out or are moving out from China and Vietnam has emerged as the most favourite location. Vietnam has taken steps to make environment friendly for the industrial companies to operate from this country. While un-skilled workers are easily available at a cheaper rate, it has potentials to create sufficient skilled workers through training. The improvement in the working conditions of labour has been significant.
Vietnam also took necessary measures to deal with the business crisis caused by the pandemic. Several companies became bankrupt. Vietnam launched a US$ 10.8 billion (about 0.4 percent of GDP) credit support package in early March, 2020 which included policies to restructure loan terms and reduce interest rates and fees. In addition, the government has also offered two budget support packages of US$ 1.3 billion, which include a reduction in taxes and fees for affected companies and an extension of tax payment schedules. The Small and Medium enterprises are being encouraged by providing better credit and other facilities.
Its anti-corruption campaign helped in doing away with the corrupt practices that were creating hurdles for economic development. The crackdown on corruption spearheaded by Trong – was officially dubbed a “blazing furnace”. While some stated that it was politically motivated, it resulted in enhancing people’s confidence in the governance.
Vietnam’s deft handling of pandemic made it a model country for dealing with the deadly virus. Vietnam took a number of initiatives early and understood accurately the nature of the challenge. Vietnam treated it as an enemy of human beings and declared a war against the Coronavirus and took all the precautionary measures to contain the spread. It closed borders, imposed lockdowns, set up quarantine facilities, and carried out rigorous contact tracing and testing through apps in the early phase of the outbreak. Vietnam instituted rigorous quarantine policies with the result that there were only 1500 cases with 35 fatalities. Vietnam also supplied the much-needed medical equipment and protective gears not only in the region but beyond in Asia, Europe, US and South America. However, recent detection of about 84 cases on single day on 28th January, 2021 indicates the need for continuation of precautionary measures.
On the whole, Vietnam did remarkably well in economic, political and human welfare sectors during 2016-2021. However, it is currently at a crucial juncture and a greater push is required to continue on its upward trajectory. While the objectives delineated in 2016 are still relevant, new approaches and alignment of policies would be required in view of globalisation. The coming period would witness new and complicated challenges. This demands an objective assessment of shortcomings and limitations and taking suitable measures to eliminate or neutralise them. If the economic objective is to be achieved by 2030, the GDP growth has to be enhanced to double digits. Hence, efforts to take advantage of the Sino-US trade war and globally available opportunities need to be pursued with greater vigour coupled with further steps for ease of doing business, expansion of training facilities for skilled work-force and infrastructural development needed to boost economic progress.
Views expressed above are the author’s own.
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