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Vietnam: Voting for Continuity in a Time for Change

If doi moi (renovation) was a turning point in Vietnam's history, the 2011 Congress of the D'ang Công Sán Viêt Nam (the Communist Party of Vietnam) has sent a clear message to the party leadership that it cannot rest on the modest success of past reform. The congress called for the immediate attention of the one-party government to basic economic, administrative and social problems. What will the impact of the congress be on the short- and long-term political and economic policies and strategies of Vietnam?

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Vietnam: Voting for Continuity in a Time for Change

Ly Thuong Kiet

road map for economic and administrative reforms. This process, in its broadest definition, encompassed many aspects of reforms, particularly changes in the role of the state in economic management as well as in the structures and systems of public sector management. The initial focus was

If doi moi (renovation) was a turning point in Vietnam’s history, the 2011 Congress of the D’ang Công Sán Viêt Nam (the Communist Party of Vietnam) has sent a clear message to the party leadership that it cannot rest on the modest success of past reform. The congress called for the immediate attention of the one-party government to basic economic, administrative and social problems. What will the impact of the congress be on the short- and long-term political and economic policies and strategies of Vietnam?

In preparing this commentary, several documents presented at the Eleventh Party Congress were referred to. In addition, commentaries posted online at www. viet-studies.com, the government’s reports and the World Bank’s databases were also a good source of information. In Vietnam, the party and government circles decline to use the term “corruption” but use terms such as “misbehaviour by civil servants” or “malpractices”. Such semantics, party leaders agree, do not dilute the challenges ahead.

Ly Thuong Kiet is based in Vietnam and studies Vietnamese society and politics.

Economic & Political Weekly

EPW
august 6, 2011

I
n January 2011, D’ang Công Sán Viêt Nam (the Communist Party of Vietnam) held its Eleventh Party Congress (EPC) in Hanoi. Prior to this, in February 2010, the party organised its 80th anniversary. In between these two events, the government battled rising inflation, the debt crisis of Vinashin (one of the biggest stateowned enterprises (SOEs)), and continued anxiety over foreign policy and tense relations with China. In short, it was business as usual. The finance ministry issued a circular on price control, leaders went on friendship missions to neighbouring countries and a meeting of the Association of Southeast Asian Nations (ASEAN) was hosted in December 2010 in Hanoi. Meanwhile, within government circles, the impending party congress was hinted as the reason for delays in policy changes and for the slowdown in policy as well as decision-making.

This note reviews the 2011 Party Congress in terms of its impact on the shortand long-term political and economic policies and strategies of Vietnam. It starts with a background on past party congresses, goes on to summarise the deliberations at the EPC and finally, analyses and discusses in detail the three key issues identified at the congress.

Background

Present-day Vietnam is a one-party state which draws its legitimacy from economic performance and nationalism, while the leadership and ministerial changes remain in the grip of the congress. It is in these two areas of economy and national sovereignty that the party is generally expected to guide and confront the leaders and government and reiterate its commitment to the people. Signs of this first emerged at the Sixth Party Congress in 1986, with the adoption of doi moi (renovation) strategy comprising several key measures and a

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on reforming economic institutions.

In understanding the party-development arena in Vietnam, it is important to note that till 1986, the party was battling post-war issues with conservatives leading policymaking. The 1986 Congress saw the introduction of a “development model” framed as doi moi. The implementation of doi moi, between 1986 and 1996 coincided with the dismantling of the collectivisation system and the decline of Vietnam’s main economic partner, the Soviet Union. The period that followed included strategic political compromises with countries in south-east Asia, China and the United States, in particular.

In early 1996, before the Eighth Party Congress, it appeared that the party’s conservative faction had gained ascendancy over those clamouring for reforms. Visible demonstrations of power included social evils campaigns opposing not only prostitution, gambling and drugs, but also advertising and commercial logos of products. Efforts were made to restrict the operation of foreign investors and their representatives. In sum, the 1996 gathering highlighted the tension between conservatives and reformers. The rift between conservatives and those pushing for reform became more pronounced in the following years, with both groups influencing specific policy documents and party platforms. However, the campaign against “social evils” whipped up by the conservatives only strengthened the reformers who pressed for further changes and greater openness in governance. A post-congress analysis concluded, “…the congress demonstrated the continuation of reforms under doi moi and that the party’s hold on the population remains strong” (Shivakumar 1996a, b).

Between 1996 and 2001, the US-Vietnam relationship improved greatly, as Viet nam joined the ASEAN and emerged as a strategic regional player. Memories of the brief

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cross-border war with China in the late 1970s and early 1980s were shelved, for the moment. With strategic alliances with the US and China on track and regional partnerships gaining momentum, Vietnam started to focus on economic performance. This phase saw mixed economic signals with the party stalling reforms to inefficient SOEs, while the macroeconomy relied on foreign investment and exports to spur growth. During this time, the government made several attempts to maintain social subsidies and introduced social taxes to cover the costs of these subsidies. Despite continued economic downturns, the expanded role of the state in the national economy per sis ted. In hindsight, Vietnam attempted to go much further in shaping its economic policies than circumstances allowed. It appeared for a while that the party was changing, with younger and better-educated cadres taking the lead. Since grassroots and provincial party congresses were still in their nascent stages at the turn of the century, it was too early to discern which way the political winds were blowing. The dilemma of the political leadership became more obvious and the run-up to the 2001 Congress saw as much chaos as cohesion.

After the Ninth Party Congress in 2001, most analysts concluded that because of the “start-stop” character of the reform, the party and government confronted significant challenges. The deliberations at the 2001 Congress reflected the impact of the Asian financial crisis that rocked the region in 1997-99 and the general nervousness prevalent in the region. The party faced serious resistance from ideologues anxious to protect the people from the consequences of the Asian financial crisis. On the political and social front, the party was struggling to come to grips with two critical issues: (a) the divide between the pre-war and post-war generations; and (b) the external influences that might persuade younger generations to ignore the party. The longterm influence of independent media and persistent rumours of government censorship were also discussed at the congress. Thayumanavan (2001) noted that this was problematic for the party because “the leadership had relied on its performance in the economy as the basis for its political legitimacy”.

The Tenth Party Congress (2006) was convened in an atmosphere of anxiety, uncertainty and contention over leadership succession created by a corruption scandal involving high-ranking officials. The weeks preceding it saw the resignation of the minister of transport and the arrest of his deputy in a multimillion dollar gambling scandal.He resigned after sustained media criticism over the scandal, a rarity in Vietnam. The government and party leaders were rattled. The country’s most powerful voice, General Vo Nguyen Giap issued a public statement asking the party to address this issue in the national congress. Taking note of the tense situation that prevailed before the congress, for the first time in the history of Vietnam, many newspapers opened discussion forums. On the issue of corruption in public life, the party congress acknowledged that corruption was a serious obstacle to development and combating it was the party’s central priority. However, the extensive debate at the party congress established that the leadership continued to be ambi guous and perspectives tended to vary.

At the 2006 Congress, three people, including the minister of transport and his deputy, were removed from the list of party delegates. Several analysts (for example, Koh 2006) had argued that the final distribution of ministers and top party delegates, at the conclusion of 2006 Congress, showed a marked departure from the regional representation formula. Further, at the 2006 Congress, the party also faced changing attitudes among younger leaders and delegates who had become more assertive. The majority of the delegates demanded amendments that would allow party members to participate in the private sector. The congress ended with a reiteration of Vietnam’s commitment to equity and social justice for disadvantaged individuals, groups and regions. It was emphasised that this could only be achieved through socialist principles and strategies – a cue for senior party members to take over; younger leaders retreated to the wings. In sum, the congress showed a remarkable increase in intraparty democracy and willingness to go beyond mere economic growth; but it also saw

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conservatives consolidating their central role in policymaking.

Highlights of the EPC

The 2011 Party Congress held on 11-19 January in Hanoi was billed as an event to assess the past and chart the political and economic future. Preparations and consultations for the EPC began in late 2009 at all levels, from the villages/communes to national stage. Party cells reviewed the work of the preceding period and submitted a report to the central committee. Through this process, a full draft of the political report was prepared in early 2010. This document contained detailed strategies and procedures to be followed. It allocated responsibilities and tasks for the party and the government, and was then submitted to the party congress for discussion and adoption. These preparatory activities were fairly open, and even outsiders were allowed to join and observe. This characterises the political quality and inner strength of the party and its cadre. The 2011 Congress was attended by around 1,800 delegates from the district level upwards, where except for the opening and closing events, the deliberations were closed.

To start with, 2011 marked the silver jubilee of doi moi policies for political and economic reforms in the country. The extent of openness of the Vietnamese economy was raised at various party forums and platforms. Also given the recent changes in international relations and the tensions with China, it was important to discuss and decide what kind of foreign policy Vietnam was expected to pursue in future. Three important areas were discussed. First, foreign policy and national sovereignty issues, as Thayer (2010a) describes, repeatedly referred to the growth of hostile forces and the need to pursue peaceful evolution (the term “peaceful evolution” refers to the plots by hostile external forces, in alliance with domestic dissidents to take advantage of buzzwords like human rights and demo cracy to overthrow communist rule); second, the need to focus on the quality and efficiency of macroeconomic management and economic development; and third, the issue of corruption and calls for greater openness and transparency in government and party functioning.

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Foreign Policy

The bilateral relations between Vietnam and the US have been troubled by years of occupation and war. Meanwhile, bilateral relations between Vietnam and China have seen extended periods of cooperation and occasional conflicts triggered by regional rivalry and border issues (including a brief border war in 1979). Vietnam’s military intervention in Cambodia in 1978 caused tension with both the US and China. Since then Vietnam has worked hard to improve its relations with both these superpowers. However, there have been occasional terri torial skirmishes between Vietnam and China since the 1980s, and in the last decade, we have begun to witness a growing economic rivalry too.

There are clear signs of domestic discontent and anti-China sentiment, notably since 2007, with students leading anti-China protests in Hanoi and other cities. Commentators like Carlyle Thayer, arguably one of the most knowledgeable on the political scene in Vietnam, reasoned that the anti-China rhetoric within Vietnam’s political elite was triggered mainly by China’s attempt to slow down Vietnam’s marine economy. There were news reports that China even threatened foreign investors (ExxonMobil and India’s Oil and Natural Gas Agency) that their commercial interests in China would suffer if they invested in Vietnam. Thayer (2010b) deduced that these actions had a negative impact on Vietnam’s party conservatives, who prior to 2007, generally remained pro-China. But the public protests resulted in several leaders calling for self-reliance in national security and the party faced a dilemma: Do we allow nationalistic sentiments to rule, as students were seen as patriotic, or clampdown on them? The government and party conservatives opted for a wait-and-see approach. However, in 2008-09, the anti-China sentiments took centre stage. Several leaders questioned the handling of the government’s bilateral relations with its northern neighbour. By late 2009, a loose network of Vietnamese opinion leaders had come together to question the government’s role in protecting territorial integrity and sovereignty. The spread of anti-China sentiment was instant, moving from a small group of political elite to academics and the common

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people, adding a new dimension to the one-party state in Vietnam (Thayer 2009 and 2010b, c). Such protests were doused by the government which acknowledged that China’s approach was not acceptable, while simultaneously working to strengthen the bilateral relation and its share in the regional economy.

Continued domestic pressure within Vietnam led to a recognition in Beijing that its relations with its southern neighbour could not be taken for granted. Within the Chinese leadership, there was recognition that in the near and medium terms, Vietnam would not develop into a rival economic or political power. Moreover, while the ASEAN countries welcome China’s good neighbour diplomacy, they are not appeasing it either and are in fact strengthening their relations with other major powers such as the US, Japan and India. All these factors resulted in China slowing down and adopting a good neighbour diplomacy approach. This did not prevent the 2011 Congress from deliberating on this issue albeit in subtle ways.

The documents prepared for the EPC made several references to hostile forces and peaceful evolution, revealing the prominence of the security-conscious group of party leaders (Thayer 2010a, b and Thayer 2011). These leaders believed that reform was necessary but “peaceful evolution” was the real danger. The political position of the security proponents was that bilateral trade agreement with the US brought benefits but might also hurt the security of the party, which could fall prey to the American global agenda to spread democracy, in the US style. They cited instances like continued demands by the US government on domestic issues in Vietnam, such as curtailing the suppression of political and religious dissidents. The other group of leaders, who were proreforms and “reaching out” to the US and other nations called for broad-based economic and political potential of Vietnam. The country’s work as part of the ASEAN was often cited as an example. In any case, a balan cing act was needed on the part of the government.

In response to hard-line rhetoric, party leaders added their voice to calls for greater caution in Vietnam’s foreign policy. All said, despite differences between the two

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nations, the China factor always plays a special role in Vietnamese politics. In sum, a challenge faced by the leadership was how to further develop foreign policy while reassuring every section (including the war-veterans, pro-liberals, conservatives and both pro- and anti-China factions) that the future course would be just and fair. That said, overall, Vietnam’s bilateral relations and regional alliances have made steady progress, a factor which China could not afford to ignore.

Macroeconomic Management

In Vietnam, central planning was never as entrenched or as pervasive as it was in other transition economies. Rural production remained independent and national policymaking affected only a limited range of goods and activities, even though doi moi introduced a contract system for agricultural production, allowed state enterprises to trade in open markets, and relaxed administrative constraints on private sector activity and domestic trade, allowing rapid development of private markets for agricultural goods. Despite statements to the contrary, the country’s overall financial health and persisting inequalities continue to raise questions at the congress.

Despite the global downturn, the growth rate of the gross domestic product (GDP) of Vietnam reached 6.7% in 2010 with GDP touching $102.2 billion. Vietnam’s industrial production has also grown. Industry and construction contributed about 40% of GDP in 2010, up from 27.3% in 1985. Agriculture remains the mainstay of the economy and Vietnam continues to be among the world’s primary exporters of rice. Increasingly, the key drivers of growth have been accelerated international integration, market liberalisation and job creation in the private sector. Despite progress, by 2010, the trade deficit was up to $13 billion. Inflation continued to be one of the most troubling challenges for Vietnam in the past few years. On a yearto-year basis, in 2010, inflation averaged about 10%, much higher than the estimates. Rising inflation has been partly influenced by several factors such as spiralling world food and oil prices and frequent floods in the country’s central provinces. From 2007, the government

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resorted to various measures to curb inflation by tightening monetary policy, cutting public expenditure, issuing administrative orders for price control, and so on. Yet, inflation remained high with food inflation higher in several provinces. The estimated 10-12% gap between the official and black market exchange rates was seen as the basis for the weak foundations of the economy. With rising inflation and trade deficits, macroeconomic stabilisation turned out to be the priority for the government. In recent years, subsidies have been cut, though state enterprises still receive priority access to resources, including land and capital. However, to date the government continues to maintain control of the largest and most important companies.

At the government-donor dialogue in December 2010, while pledging sums totalling $7 billion as development assistance, several multilateral and bilateral institutions stressed that macroeconomic stability should be recognised as a prerequisite for Vietnam to accelerate its socioeconomic development as a middle income country. They also cautioned that in combating and restoring stability, ad hoc and trade restrictive measures such as the new price registration and import licensing systems are unsustainable.

Most recent studies confirm that Vietnam has achieved substantial economic progress in terms of poverty and inequality, since the doi moi process began in 1986. Since 1993, the growth in real GDP has averaged around 7.5% a year and the poverty rate reduced from 58% in 1993 to about 13% in 2008. Additionally, the inequality in per capita expenditure is relatively low in Vietnam by international standards. However, both poverty and inequalities continue to persist along with unequal access to productive resources – raising serious concerns at all levels. Commentators have argued that wage and income disparities have already had an impact on urban-rural divide and government expenditure. Acknowledging such concerns, in spite of recent progress and the country’s gradual transformation into a manufacturing and services-based economy, party delegates have declared poverty as the most important issue to be addressed.

The congress debated on the centrality of core development issues over related policy areas such as trade, migration, minimum wage for workers, climate change and good governance. Some of the precongress documents and reports examined how institutions are governing and handling wage rates, trends in employment and unemployment, inequality, diffe rential access to home ownership, etc. The documents also acknowledged that poverty has been concentrated in social and geographical pockets and gender remains a significant determinant of poverty. Documents shared at the congress acknow ledge that income inequality was greatest in large cities and parts of the upland areas. Not surprisingly, these areas were also largescale labour supplying zones. The number of extremely poor people was found to be very low but this was off-set by losses in wage-inequality and resultant household income inequalities. About two-thirds of the in equality was found within districts rather than between them. At the congress, there were calls for continued social subsidies and enhanced social safety nets for the poor. In the era of galloping inflation, low wages and large income disparities are a marker for discontent.

Any discussion on poverty and income inequality in Vietnam leads to a debate on escalating administrative corruption levels. This was well-illustrated by an event that shocked the nation in 2007. That year, in response to the serious economic damage caused by the floods, the central government disbursed $12 million to impoverished Vietnamese in the run-up to the Vietnamese new year (Tet). These cash handouts were apparently pocketed by corrupt local officials, sending shock waves across the nation. In some provinces, local officials had deducted “tea money” or the gifts were taxed to the point that there was little left. It tarnished the government’s image to such an extent that the leaders are still struggling to recover from this shame. But few were surprised by this evidence of rampant corruption in admini strative circles, not a comforting situation for any government.

Some commentators have concluded that both Vietnam and China have a high level of de facto decentralisation of the state functions and activities and this results in a high potential for informalisation and corruption, and a growing set of performance accountability problems in the delivery of public services. While some of the issues raised in this analysis may be relevant, others demand more debate. Nevertheless, it is increasingly recognised in Vietnam that there is a growing gap between the clear need for expansion in services production and delivery, and the declining capacity of the state to ensure accountability and performance (for example, Painter 2008).

Corruption and the Need for Openness and Transparency

The party wants to gain people’s trust through efficient administration and making civil servants free of corruption. The party’s concern for legitimacy also requires its leaders, even today, to distance themselves from Vietnam’s domestic business people. That way they would be able to justify the continuation of their one-party rule. Since inefficiency and widespread corruption would lead to the collapse of the political system, administrative reforms have been initiated since 1991. But it has also been argued that excessive reform could loosen the party’s grip on the government and bureaucracy. In facing this dilemma, as several analysts have observed, in the initial phase of doi moi the party seems to have tolerated a certain degree of misappropriation as a necessary evil. They also point out that due to budgetary constraints Vietnamese civil servants are poorly paid and therefore seeking additional income to maintain a family was seen as acceptable. In sum, this group has argued that what matters is not whether there was an exchange of money outside the rules for performing certain admi nistrative tasks, but how large that sum was and whether they fairly shared it among themselves. This subtle approach in understanding “corruption” has in many

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ways prevented any serious charges of corruption being levelled against party leaders, at least till 2006.

The scandals that broke prior to and in 2006 (Nam Cam scandal in the south and ministry of transport, at the national level, to cite two examples) damaged that image. On this subject, some liberals had taken a circuitous route and highlighted, even at the 2001 Congress, that preventing party cadres from holding private property or engaging in business or small trade has led to double standards and is not feasible. There were others who argued that the essential reform needed to meet the minimum requirements of governance for initiating sustained growth was ideal for encouraging clandestine business and property holdings, which, they reasoned, allowed corruption at various levels. At the 2011 Congress, the party, for the first time in its history, saw delegates openly calling for stringent anti-corruption measures, particularly among higher echelons of leadership, highlighting the significance of good governance. This was attributed to the fact that not only the party, but the government is also smarting from the floodgates opened by the 2006 revelations of corruption involving high-ranking officials in the ministry of transport. More such revelations of administrative corruption in government circles have emerged since then.

Land and Natural Resources

If the ministry of transport dominated discussions at the party congress in 2006, land and natural resources sector was in the limelight in 2011. Stories of land-related corruption are all over Vietnam. Dang Hung Vo, former vice minister and a party delegate and one of the authors of recently completed research on this subject, reasoned that unless the party and government leaders focus on greater transparency and accountability in land administration and management, risk factors inherent in triggering bribery and corruption will be hard to contain. He reasoned that government officials assigned to safeguard the system are in fact a large part of the problem, particularly at senior levels. He advocated the establishment of public checks and balances, failing which the scale and volume of corruption within the

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government circles are bound to escalate on land matters. This was reflected at the party forums at the provincial and national levels too, with delegates demanding an open and transparent process for land allocation for private and public purposes and payment of adequate compensation for acquired land. There were suggestions that the government should focus on land use efficiency as part of broader rural development and food security. Given the intensity of the issue nationwide, not surprisingly, the minister for land in Vietnam Pham Khoi Nguyen was voted out at the party congress for poor performance, and inability to control corrupt practices in land management and he lost his nomination to the next cabinet. His failure to be renominated was described as a way to create space for newer and younger party leaders in government. Though, the 2011 Congress did not see many changes to the leadership line-up, it is a clear signal that the party is taking corruption charges seriously. Clearly, political and government circles are nervous about the subject of corruption in public offices and the growing number of capitalists, drawn mainly from the country’s political elite. On the issue of corruption, so far, the govern ment is seen as lagging behind in gaining public confidence.

In highlighting the area of foreign policy and governance, the openness of the media came in for serious deliberations. Delegates pointed at the recent government executive order that banned local journalists from using unnamed confidential sources in their reports as this would impede “people’s interests”. Obser vers commented that the selection of Nguyen Phu Trong as party’s secretary general at the January 2011 Congress should be seen as a hardening of the government’s stance towards the media. It was reported that at the beginning of the congress, Dinh The Huynh, the editorin-chief of Nhan Dan, the party’s official news outlet, joined other leaders of the party hierarchy in calling for an end to all forms of pluralism. On the other hand, the party has taken a serious note of widespread discontent on administrative corruption and has given a definite signal to the government to crack down on erring party cadres. Such exposures are possible only because of a free flow of information, the party acknowledged. Additionally, the

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younger generation is already hooked on to the outside world through the internet and other means placing an additional burden on the “old” school which assumes information flows only from newspapers or television. Finally, occasional media clampdowns should be seen as a part of a process by which a country like Vietnam incrementally attains maturity, and, therefore, cannot be interpreted as signs of government control or denial of free information flow. More broadly, Vietnam may provide a valuable lesson on what can happen to a single-party state if it persists in curtailing free media while ignoring the threats posed by rising food inflation and economic inequalities among its population, along with increasing incidence of corruption and changing attitudes among younger leaders and party delegates.

Prime Minister Nguyen Tan Dung himself was attacked by conservative ideological groups for his management of the economy. Several influential leaders held the prime minister and his government culpable in the Vietnamese financial crisis of 2007 that predated the global one, as well as the macroeconomic instability in late 2010. The near-bankrupt Vinashin, the shipbuilding conglomerate, which is directly under the control of the prime minister, further dented his reputation and rumour mills claimed that more such collapses are in the offing. The new forest and mining concessions, mostly given to Chinese, also put the government in a bad light. Despite all these allegations, the prime minister and his colleagues are not held responsible for the failures, as the political analyst Koh and others put it, “benefiting from the system of collective political leadership where all major decisions taken by the PM are duly endorsed by the party’s political bureau”. In reality, the political bureau is supreme as it has no institutional counterpart to place checks and balances on the decisions made. Hence, the party is less critical of the prime minister and the government as a whole. In the end, the 2011 Congress endorsed only a modest leadership changes.

While several commentators deduced that while the leadership line was a strong indication of continuity, there are protagonists who believe that change is possible within this or the next generation, and

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strong pressures must be put on the leaders to effect these changes as soon as possible (Koh 2011). This group was quite active in their reasoning that any delay in effecting changes would be irrevocably late. In that sense, while the 2006 Congress saw the decline of regional distribution of party and government positions, the 2011 Congress reaffirmed the Vietnamese political culture that places a high premium on unity and consensus. In endorsing the government and leaders, the 2011 Congress also reaffirmed its support for the SOEs and termed SOEs as “state sector” and a key for economic development.

Time for Policy Changes

This article began with the objective of

understanding the party’s continued role in Vietnam. An essential task before such an analysis, however, is to determine exactly the extent of opening and openness the country is seeking and the party’s role in it. In that sense, the first 25 years of doi moi has seen modest and gradual change. A noteworthy aspect of this modest record is reflected in reforms pursued across the economy, progressively declining the role for the SOEs, administration, media freedom, and continued emphasis on social subsidies. Broadly speaking, the reforms have triggered economic growth without disturbing national institutions. It now viewed the economy as a combination of government enterprises, institutions and other private sectors. There has been a significant advance in Vietnam’s regional integration as well. The experiences have also dispelled notions that communism and one-party rule are biased against the market economy, with privileged policies, limited access to information, and so on. This cannot be seen as a characterisation of the strategies at work in Vietnam. Also, the party’s continued role in state affairs, particularly in defining the strategic directions in political and economic affairs

remains solid.

On the economic front, it appears, however, that returns from the first round of economic policy reforms are dropping off as international competition picks up, mainly in rice and other products. While the economy has been responding well to the changes summarised above and the country is able to weather frequent economic shocks, the legacy of many years of running the economy on a war footing meant that many of the legal and institutional underpinnings remain poorly developed, as are the mechanisms of

public financial management. These were

well-illustrated by the numerous public protests and simmering discontent on corruption and governance that have come to pervade large parts of the country in recent times. The state and the party system remain slow in responding to these paradigm shifts. Across dominant streams of thought and policy prescriptions,

the general consensus seems to be that the govern ment is the problem. Noting this, the 2011 Congress acknowledged the persistent gap between laws and implementation. The party debated at length about the ideological and strategic implications of reform, and the challenges of reconciling the transition with the prevailing

socialist orientation sending positive signals across the board. There were marked debates on the government’s inability to

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manage inflation, escalating food inflation in particular, national debt, rising unemployment, wage inequalities, continued importance of SOEs to the national economy, and corruption. While Vietnam is on track to achieve middle-income country status in the coming years, its more ambitious goal of becoming an industrialised country by 2020 and simultaneously, reduce the level and extent of poverty demands institutional and policy changes, i e, some hard decisions from the party and the government.

The deliberations at the congress suggest that corruption has been flagged, as has the need for good governance. This has now become associated with the legitimacy of the party itself and sidelining the issue was not easy. On the subject of corruption, a large majority of party delegates seem to believe that a broad interpretation of good governance fails to acknowledge the importance of the stages of development the country is currently in. This group tends to reason that administrative reform is a vast and complex process with a significant financial burden. Opponents to this view contend that vested interests and rigid conventionalism prevent any desirable measures. Equally interesting is the fact that common citizenry is willing to freely discuss the issue of corruption and informal payments. And with a few exceptions, even those who deny large-scale corruption are seriously concerned with day-to-day events. The congress sent a clear message that a developing nation like Vietnam cannot afford to take refuge in archaic or regressive assumptions that are divorced from both reality and their past experience. Finally, no society is perfect. Each has its inescapable inequalities and injustices which need to be redressed. The challenge for Vietnam’s party leadership is to get its members to see this and then mobilise moral and ethical energies in the state, party, and indeed, the nation.

The 2011 Congress confirms that in terms of discussions on corruption and governance, Vietnam has advanced beyond the wildest imagination of any previous era. A positive outcome, however, has been an increased popular awareness and party and government’s eagerness to avoid public reprisals. It has also triggered calls

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for delimiting the government’s role in economic matters and putting in place a number of support measures to encourage greater transparency in the public sector and government operations. In the medium to long run, with the twin challenges of corruption and foreign policy, it remains to be seen if the government will continue to maintain its independence or if the party will feel obliged to intervene in the functioning of the government. In any case, Vietnam is worth watching this decade for more than just its feud with China over a few islands in the South China Sea though that would demonstrate the country’s willingness to take political risks to protect its economic growth and independence.

Conclusions

The diversity of experiences, the variety of institutional changes effected, and the significant variation in its political and economic policies the country has pursued since doi moi has shown that most of the initiatives and efforts were taken with a clear focus, commitment and a willingness to learn. There has been continuing debate about the benefits and costs of political and economic reforms. It includes the ways in which patterns of investments in agriculture, industries and social services are grounded. The initial evidence suggests that provinces and regions continue to maintain autonomy both at the party and government structures. Recent reports of corruption and governance warn against complacency over the sustainability of the development strategies and in turn, doi moi. In case of leadership, the Tenth Vietnamese Communist Party Congress in April 2006 carried out significant changes in the party leadership and govern ment. The congress showed increased intra-party democracy. However, no significant changes were made in the 2011 Congress and only a handful of leaders lost renomination to the government, though it importantly included the minister responsible for land management. The wait continues for the younger leaders to emerge. Taken together, the 2011 Congress signalled no significant change in Vietnam’s political system, with the D’ang Công Sán Viêt Nam maintaining a single-party state. But governance reforms are clearly underway, driven by

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economic reform and a desire to maintain social stability. In that sense, in incremental terms, governance is changing.

If doi moi was a turning point in Vietnam’s history, the 2011 Congress has sent a clear message to the party leadership that it cannot rest on the modest success of those reform processes alone. It called for attention to more basic issues about the economy, social safety nets and social protection measures and administrative reforms to deal with the overall problems of governance. With regard to corruption, while government programmes and measures do not provide solutions to all problems, they do carry with them authority and resources to change behaviour. Many of the goals of the party could be best achieved by improving the status of the masses through public policy. The party has a challenge of ensuring that its goals and objectives are not ignored in the public policy initiatives. One thing that became obvious is that a thorough overhaul of the government and its institutions and policymaking should be at the top of the agenda, if the leadership is to leave a legacy of its own.

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Painter, M (2008): “From Command Economy to Hollow State? Decentralisation in Vietnam and China”, The Australian Journal of Public Administration, Vol 67, No 1, pp 79-88,

Shivakumar, M S (1996a): “Reconstructing Vietnam War History”, Economic Political Weekly, 6 January.

– (1996b): “Development Policies in a Changing World: Lessons from Vietnam”, Economic Political Weekly, 14 December.

Thayumanavan (2001): “Vietnam: One Step Forward, Two Steps Back?”, Economic Political Weekly, 15 September.

Thayer (2009): “Vietnam and the Challenge of Political Civil Society”, Contemporary Southeast Asia: A Journal of International and Strategic Affairs, 31(1), 1-27.

  • (2010a): “Vietnam's Relations with China: The Next Five Years” in the Background Brief Vietnam: Pre-Congress Manoeuvrings, 14 November, available at http://www.viet-studies.info/kinhte/ThayerVietnam-Pre-Congress-Maneouvrings-and-the-ChinaFactor.pdf.
  • (2010b): “Vietnam's Relations with China and the United States”, available at http://www.scribd. com/doc/54501895/Thayer-Vietnam-s-RelationsWith-China-and-the-United-States.
  • (2010c): “Background Briefing: Vietnam Party Leadership and the 12th Pleanum”, 22 March, available at http://www.scribd.com/doc/287 81002/ Thayer-Vietnam-Party-Leadership.
  • (2011): “Background Briefing: Vietnam 11th Natio nal Party Congress”, 12 January, available at http:// www.scribd.com/doc/46833409/Thayer-Vietnam11th-National-Party-Congress.
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