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Vietnam’s Communist Party Picks New Leaders

Vietnam's Prime Minister Nguyen Tan Dung attends the closing ceremony of the 11th National Congress of the Party in Hanoi, 19 Jan 2011

Vietnam's Prime Minister Nguyen Tan Dung attends the closing ceremony of the 11th National Congress of the Party in Hanoi, 19 Jan 2011

Vietnam’s ruling Communist Party has picked new leaders at a meeting in the capital Hanoi. Analysts say despite concerns about economic instability there were no surprises and the current Prime Minister, Nguyen Tan Dung, looks set to retain his job. But the leaders will need to rein in inflation or risk future growth.

Vietnam’s Communist Party Congress ended Wednesday with the announcement of its top leaders.

The party’s central committee re-elected Prime Minister Nguyen Tan Dung to the Politburo. Despite the country’s economic problems, he is widely expected to be re-appointed to another term as prime minister later this year.

However, the central committee placed two of his rivals for the top spot high up in the Politburo membership, an indication, some political analysts say, of the party’s attempt to balance the prime minister’s power.

Carl Thayer, an expert on Vietnam at Australia’s Defense Force Academy, says the reshuffling went largely as expected.

"It’s a system that always seeks out the middle ground and doesn’t move to extremes,” Thayer said. “It always moves gradually and cautiously. So, I think that’s what we’re seeing here. It’s business as usual and it’s people that we know. And it will take a while for even the newcomers on the Politburo to really assert themselves. It’s a culture where seniority matters so that will carry on in importance."

Thayer says once re-appointed, Prime Minister Dung is likely to continue his policy of funding big state projects such as a high-speed train.

He came under criticism last year when a heavily indebted state-owned ship builder defaulted on an international loan, driving down Vietnam’s credit rating.

Vietnam is a one-party state and the party congress, aside from choosing leaders, sets out a five-year plan for the country. About 1,400 delegates gathered in Hanoi over the past week for the party. The congress met as Vietnam, despite its fast growth, faces serious macroeconomic problems, including a growing trade deficit and rapid inflation.

Jonathan Pincus is an economist with the Harvard-Vietnam Program in Hanoi. He says global pressure on consumer prices is expected to grow this year making it all the more important for Vietnam to control its fiscal and monetary policy.

"I don’t think that requires a massive change in policy,” said Pincus. “I think to re-establish stability simply would require a more conservative fiscal policy, in other words, reducing the government’s fiscal deficit. And, very close attention to monetary policy to make sure that credit growth stays within the limits set by government so that prices don’t get out of control."

After two decades of central control, Vietnam’s economy has been gradually liberalized. But some large state companies still depend on government hand-outs.

When Vietnam opened up to market forces and the global economy, private businesses became the driving force of annual growth that has averaged about 7 percent over the past 20 years.

At the congress, the Communist Party for first time voted to admit private business owners as members, a recognition of their importance to the economy.

But state-owned enterprises are still at the core of major industries, such as energy and telecommunications. Some economists say they are inefficient monopolies that drain state funds.

Le Dang Doanh is a retired advisor to the government on economic issues. He says the big state companies’ inefficiency is the overwhelming problem with Vietnam’s economy.

"Vietnam needs to reform strongly in order to overcome the macroeconomic instability and also to mobilize the potential resources,” Le Dang said. “If Vietnam could implement needed reform the economy will continue to grow. If not, Vietnam will face multiple challenges."

The party congress expressed concerns about the economy but also optimism that the imbalances can be brought under control.

Le Dang Doanh says the delegates are overly optimistic about the situation and that Vietnam needs to balance experienced leaders with younger, reform-minded ones to better face new challenges as it expands in the global market.