Vietnam Set to Approve New Leadership

Truong Tan Sang is set to become Vietnam's ninth president, a post first held by revered founding father Ho Chi Minh (AFP/File, Hoang Dinh Nam)

JULY 25, 2011
By NGUYEN PHAM MUOI
The Wall Street Journal

HANOI—Vietnamese lawmakers said they were likely to approve Truong Tan Sang as the next president Monday, as the communist country moves to cement its leadership for the next five years at a time of major economic challenges.

Mr. Sang, 62 years old, will move to the largely ceremonial role from his current position as a Standing Member of the Central Party Committee, the second-most powerful post behind the general secretary of the Communist Party.

He will succeed Nguyen Minh Triet, 70, who is set to retire.

Mr. Sang's likely confirmation by the National Assembly, Vietnam's most powerful lawmaking body, comes ahead of the expected official approval on Tuesday of Prime Minister Nguyen Tan Dung for a second five-year term, after Mr. Dung survived a potential revolt over his perceived mishandling of the economy and the debt woes of state-run Vietnam Shipbuilding Industry Group, also known as Vinashin.

Vinashin was on the brink of bankruptcy last summer after amassing $4.4 billion in debt, damaging the government's efforts to build up large, state-run conglomerates.

The new government and the cabinet, which is expected to be unveiled next week, will be confronted by an economy that was once one of the most promising among emerging markets but still needs a desperate shake-up.

Carlyle Thayer, a professor at Australian Defence Force Academy at the University of New South Wales and an expert on Vietnam, said the promotions more likely signaled a continuation of the status quo rather than a meaningful shift in policy.

The officials set to be promoted are "known quantities; they're technocrats" from within the system, he said. "So there's continuity."

"There is no sign of massive reform," he added.

Battered by spiraling inflation and rising trade deficits, the Vietnam government was pressured earlier this year into shifting away from its long-standing policy of focusing on growth, and under the so-called Resolution 11 will trim credit growth, ban the use of foreign currencies in the market, limit the use of gold, trim public investment and boost domestic production.

The policy changes appear to have had little impact so far. Data released on Saturday showed that inflation rose 22.16% in July from a year earlier, the fastest increase since December 2008, and quicker than the 20.82% year-on-year increase in June. For the January-July period, the country had a trade deficit of $6.639 billion.

The markets have also shown little confidence, with the main index falling 15.5% year-to-date.

"People's tolerance of inflation is getting less and less. Pressure on the new cabinet on this front is naturally overwhelming," said Vuong Quan Hoang from Hanoi-based DHVP Research & Consultancy, adding that the country's large trade deficit won't be fixed in the short term, while unemployment could also emerge as a major problem.

"The chances of economic turmoil are likely over [Mr. Dung's] term since these problems have not been addressed adequately, and have not even appeared clearly on the new agenda."

Meanwhile, lawmakers voted Saturday to appoint Deputy Prime Minister Nguyen Sinh Hung as chairman of the National Assembly, the assembly said in a statement. Mr. Hung recommended Mr. Sang as the sole candidate for the position of the state president.

They also chose Vietnamese central bank Gov. Nguyen Van Giau as chairman of the National Assembly's economic committee. Mr. Giau is expected to leave his post at the bank later this week. He will be succeeded by Nguyen Van Binh, who is expected to be appointed by the government early next week.