Thayer Consultancy Background Brief

ABN # 65 648 097 123

Should Investors Be Concerned
By Political Instability in
Vietnam?
May 14, 2024

Q1. How should foreign investors understand and react to leadership resignations in
Vietnam?
ANSWER: Vietnam is preparing for a routine major leadership change at the next
congress of the ruling Vietnam Communist Party scheduled for the first quarter of
2026. Ordinarily, leadership transition is a smooth process that takes place over
several months prior to the congress. Consensus is reached following a number of
straw polls.
Recent leadership changes in the ruling Politburo have created an unprecedented
situation. The General Secretary of the party, Nguyen Phu Trong, has health issues and
is expected to retire at the 2026 congress. The dismissal of President Vo Van Thuong,
Trong’s preferred successor earlier this year, has opened the door for various factions
to compete to fill the void by undermining their rivals.
Q2. Does Vietnam's lack of transparency add to the confusion and difficulties of people
trying to understand what is happening? Does it contribute to conspiracy talk?
ANSWER: Decision-making in Vietnam’s one-party state is opaque at the best of times.
The lack of transparency has been exacerbated by the manner in which high-level
officials have been dismissed. They have been pressured into formally resigning from
their government posts on vague charges of failure to follow party regulations. No
specific details are provided. Public speculation and rumours have filled the void.
In previous years, specific charges were laid and the public accepted the result. Now
the dismissals have been linked to an on-going anti-corruption campaign launched by
the party General Secretary Trong and strongly supported by the Minister of Public
Security, To Lam. This has resulted in two major reactions. The first reaction is to ask
is this the tip of the iceberg and will more dismissals follow? The second reaction is to
ask are the dismissals being orchestrated by the Public Security Minister to advance
his ambitions to be the next party leader?
Q3. Should foreign investors be concerned?
ANSWER: Foreign investors should be concerned but not alarmed. Vietnam’s current
socio-economic policy is set in stone. Economic policy is under the control of the Prime
Minister and his Cabinet. So far no Minister with responsibilities that touch on
economic policy, trade and investment has been involved.
 2

The present leadership upheaval should be viewedf as a speed bump on the road to
the next national party congress. The party Central Committee will likely meet this
month and fill the vacancies of state president and Chairman of the National
Assembly.

Suggested citation: Carlyle A. Thayer, “Should Investors Be Concerned By Political

Instability in Vietnam?,” Thayer Consultancy Background Brief, May 14, 2024. All
background briefs are posted on Scribd.com (search for Thayer). To remove yourself
from the mailing list type, UNSUBSCRIBE in the Subject heading and hit the Reply key.
Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.