The 12th Party Congress of Vietnam has finally elected top leaders and members of the politburo after years of power struggle between Prime Minister Nguyen Tan Dung and General Secretary Nguyen Phu Trong, making a breakthrough in maintaining unity within the Vietnamese Communist Party, which has suffered disunity and division as a result of unprecedented internal fighting between its two factions.
Mr. Trong was reelected under special condition as Secretary General. According to local media, he will stay in power for one more year to oversee and ensure a smooth power transition within the party and the government.
Mr. Tran Dai Quang was elected President, Mr. Nguyen Xuan Phuc was elected Prime Minister, and Mrs. Nguyen Thi Kim Ngan was elected Speaker of the Parliament. The number of politburo members, the highest decision making body of the party, has increased from 16 to 19. Among them, three are female.
The challenges for the new leadership include sustaining robust economic reforms and international integration, strengthening good governance, and reducing economic inequality and social injustice.
Vietnam has seen about 5.5% GDP growth over the last five years. While the poverty rate in the country was reduced from 29% in 2002 to about 5% in 2015. In 2015, per capita income reached $2,200, making Vietnam a middle-income country.
However, Vietnam needs to deepen reforms to overcome a middle-income trap. It requires gradual transition from labor-intensive and resource-based industry toward a more productivity-driven growth trajectory and a knowledge-based economy.
A study by McKinsey & Company suggests that Vietnam should address investor concerns about inflation, currency stability, and rising interest rates; strengthen productivity and growth-enablers to enhance competitiveness; develop a coordinated, industry-specific government growth agenda and improve government performance to deliver growth agenda.
In addition, Vietnam still faces mounting social and environmental issues and challenges. More measures and resources are required to improve nutrition for the children particularly in rural areas and protect the environment. Solid waste, water pollution, urban pollution, and deforestation are key environmental issues.
Ethnic minority groups and communities in remote areas are marginalized. Inequality and poverty of vulnerable groups, particularly women and children in rural areas, are main development challenges. Ethnic minority households make up half of the nation’s total poor households, with their average income equaling only one-sixth of the rest of the country’s.
Vietnam needs to develop a holistic social protection policy to support vulnerable groups and ethnic minorities. An inclusive growth and sustainable development model is required to address social and environmental issues.
Insofar as foreign policy, there should be no change in terms of strategy and approach. Vietnam always errs on the side of independence, self-reliance, diversification and multilateralization of relations.
According to Foreign Minister Pham Binh Minh, who was recently voted into the politburo, Vietnam has reached strategic partnership agreements with 15 countries and comprehensive partnership with 10others.
Such diverse partnerships help Vietnam to build political and strategic trust as well as foster cooperation in trade and investment, defense and security, social and cultural ties. Such partnerships help Vietnam strengthen its leverage on the international stage and deal with challenges concerning territorial sovereignty.
The key challenge for Vietnam is to forge a stable balance of its relations between China and the US. Some foreign observers argue that Mr. Trong is closer to China than Mr. Dung, who is believed to have closer relations with the US. Therefore, the new leadership of Vietnam will shift in China’s favor.
To understand Vietnam’s foreign policy, we need to look from the angle of a complex interdependence and strategic diversification. More importantly, we need to understand the dynamics of domestic politics. As nationalism in Vietnam is on the rise, Vietnamese leaders will be firm or even more assertive on its maritime claims in the South China Sea. In that case, tension between Vietnam and China in the South China Sea will heighten.