Thayer Consultancy

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Background Briefing: Vietnams New Cabinet and Leadership Carlyle A. Thayer July 20, 2011

[client name deleted] 1. How do you assess he performance of the Government over the past-five years? What are its achievements? weaknesses? Vietnams Government successfully weathered the global financial crisis through a stimulus package and maintained social stability at the same time. A major achievement has been to maintaining comparatively high economic growth rates during this difficult period. The major shortcoming was the Cabinets failure to maintain effective oversight over state conglomerates such as Vinashin and the inability of the Anti-Corruption Steering Committee to effectively deal with corruption. 2. On the re-election of Prime Minister Nguyen Tan Dung, how do you assess his role in economic management? The Prime Minister is a nationalist who promotes the role of largescale state enterprises to protect Vietnam from global competition. The Prime Minister is also a person accustomed to getting his own way. The Prime Minister now needs to adopt a more consultative approach to decision-making. He should win the confidence of former officials many of whom feel their advice and counsel is treated in a perfunctory manner. 3. What is your assessment of the major appointment in new Government (Prime Minister and Deputy Prime Minsters). The re-election of Nguyen Tan Dung as prime minister will be reassuring to the international community as there was some uncertainly over what leadership role he might assume following the eleventh party congress. Nguyen Tan Dung is a leader who has successfully turned the role of prime minister into a proactive one. In 2007 he unsuccessfully sought to decrease the number of deputy prime ministers and add some new blood. This time the numbers of deputy prime ministers will be reduced from five to four.

2 Two deputy prime ministers are his protgs who have been reelected. Nguyen Thien Nhan will have to prove his is capable in this office after his experience with the education portfolio. Hoang Trung Hai has proven that he is capable in stepping up as permanent deputy prime minister. The two newcomers appear to be good choices. Vu Van Ninh will bring considerable experience as the former minister of finance. Nguyen Xuan Phuc has worked closely with the prime minister in the past and will be effective because he has the prime ministers confidence. The new team of deputy ministers should be more unified and cohesive than before 4. What are the major changes in the new Cabinet? During the last tenure there were two Cabinet reshuffles, the first in 2006 and the second in 2007. This time it there is no need for a twostep Cabinet reshuffle as the timing the national party congress and elections to the National Assembly have been synchronized. Nearly one-third of the new Cabinet are incumbent ministers and their re-election will bring stability to the government. Eight of the new ministers will step up from being deputy minister to minister. They will bring experience and stability to their ministries. The selection of Pham Binh Minh is particularly important after Pham Gia Khiem tenure Two of the new ministers were reshuffled from one portfolio to another. Vu Dinh Hue will bring experience as head of the State Audit Agency to the Ministry of Finance. Dinh La Thang will bring his administrative experience as the chairman of PetroVietnam Group to the Ministry of Transport. There are four newcomers who will be moving from party posts to state ministries: Vu Duc Dam, who will head the Government Office, served as party chief of Quang Ninh province; Nguyen Thi Hai Chuyen, will take over the Ministry of Labour, Invalids and Social Affairs after serving as deputy head of the party Inspection Commission. Nguyen Minh Quang will take charge of Natural Resources and Environment, is the former party chief of the Central Agencies Committee. Finally, Nguyen Bac Son, takes over Information and Communication after serving as deputy head of the partys Ideology and Propaganda Committee. He is probably best qualified for his new job out of the newcomers. All four new ministers will have their work cut out for them and they will have to prove themselves. Quang steps into a difficult portfolio given concern expressed by retiring National Assembly deputies over environmental issues. 5. What should be the Governments priorities for next five-year term? What are the priorities in politics, economics and foreign affairs?

3 In my view the top political priority over the next five years should be to ensure that all provincial party chiefs, all secretaries of peoples councils, and even the state president are directly elected. More authority and resources should be allocated to the National Assembly to improve its committee system. They should be empowered to hold public hearings on important public policy matters and to make recommendations to the National Assembly leadership. As for economics: the top priority must be to continue with the proactive integration into the global economy by reforming stateowned enterprises and removing barriers to foreign investment in domestic enterprises. Vietnam should complete the process of joining the Trans-Pacific Partnership. Finally, Vietnam should aim to become self-sufficient in energy. Vietnam has emerged as an important regional power in Southeast Asia. It will not have the same opportunities to show leadership as it did in the past five years when Vietnam served as ASEAN Chair and was a non-permanent member of the UN Security Council. Priority must be given to playing a constructive role in building up ASEAN and the East Asia Summit as effective multilateral organizations. This means working with the ASEAN Chair as well as major powers to develop an effective international legal regime to prevent conflict in the East Sea. Vietnam can also make a significant contribution to the ASEAN Defence Ministers Meeting Plus by supporting initiatives to have this new body adopt effective and practical proposals related to regional security. 6. What are the major challenges for Vietnam in the next five years? In the next ten years? There are two important challenges in the next five years. The first will be to implement the maritime strategy to develop Vietnams coastal regions with its Exclusive Economic Zone with a particular time of exploiting hydrocarbon resources. The second major challenge is to raise Vietnams tertiary education sector up to world class standards. The most important challenge over the next ten years will be to deal with the effects of climate change by adopting effective and appropriate mitigation strategies. 7. What ate the major opportunities for Vietnam in political, economic and social development? Vietnam will face a major opportunity to adjust its political and economic institutions to the growing changes in Vietnams economy and society. This will mean effectively devolving power from the centre to the provinces and lower levels.

4 It also means allowing new social forces to play their role in the political and economic systems. For example, the Vietnam Communist Party should permit larger numbers of private entrepreneurs to join its ranks. Vietnams political system should reflect the newly emerging political economy. At the same time, Vietnam should create the conditions for a wider diversity of choice in the selection of National Assembly deputies over the next half decade. 8. How will foreign investors view Vietnams new Cabinet? Foreign investors will be reassured by the re-election of Prime Minister Nguyen Tan Dung, his choice of deputy prime ministers and the continuity of his new Cabinet. For example, the elevation of Bui Quang Vinh from deputy to Minister of Planning and Investment will be reassuring. 9. How do Vietnams relations with Australia, India, New Zealand add value to Vietnams international links? Vietnam will continue to develop its comprehensive strategic partnerships with all three countries, under whatever name is used to describe bilateral relations. Each of these countries can contribute to the development of Vietnams educational system and offer experience in integration with the global economy. All three countries offer access to new technologies. Australia is an ally of the United States, India and New Zealand work closely with the U.S. on a variety of international issues. Vietnam can leverage its ties with these three nations in its dealings with other major powers. 10. If consulted by new Prime Minister, what should he do first? Your advice? I would advise the Prime Minister that he and his Cabinet should be more accountable to the public through grater transparency in decision-making. More information should be made available to a public that is becoming more sophisticated in its understanding of public policy. More effort must be made to explain government policies and getting feedback from Vietnamese citizens. The Prime Minister should learn from the bauxite mining and high-speed rail projects that wider consultations in policy-making is necessary.