Vietnam, which became Asia’s growth engine in the face of Chinese slowdown and registered an economic growth of 8 percent in 2022, has started 2023 with a serious political crisis that can affect its image as a stable investment destination and can force investors to shift business elsewhere in South-East Asia.
On Wednesday, Vietnam’s parliament, the National Assembly, held a special session to approve the resignation of the country’s President Nguyen Xuan Phuc—the No. 2 leader in the Vietnamese political structure.
Vice-President Vo Thi Anh Xuan has been named interim President.
On January 5, another special session of parliament had approved the resignation of two deputy prime ministers.
All three leaders resigned after corruption charges were brought against them and the Vietnamese Communist party’s central committee approved the decision.
Why are the leaders resigning one after another?
Their resignations are part of a massive clean-up drive, undertaken by the party to get the government and party rid of corrupt elements.
Over 30 senior party leaders and government officials have been removed from their posts on anti-graft charges.
There is another angle as well. These resignations are being seen by many as the Communist party general secretary Nguyen Phu Trong’s attempt to consolidate his position and as part of a power struggle between the conservatives and the liberal sections within the organisation.
The general secretary of the Communist party is the most powerful and important post in Vietnam.
Vietnam’s parliament normally meets twice a year. But it has already had two special sessions this month to deal with the emerging corruption scandals, involving a number of senior officials in the government and in the military.
There is speculation that Trong would hold the additional charge of the President’s post or bring public security minister To Lam as President.
Lam had been active in the party’s corruption drive.
There have been widespread speculations in business and diplomatic circles about an ongoing power struggle within the Communist Party over the resignation of the nation’s president Phuc and other leaders.
Observers wonder how much of the current move is to rid the party and the government of corrupt elements rather than this being a reflection of an internal power grab by the general secretary and his supporters.
What about the prime minister?
There are speculations that Prime Minister Pham Minh Chinh could also meet the fate of the dismissed leaders.
In countries where the Communist Party is supreme, the general secretary of the party is the most powerful post and wields the maximum power. Vietnam is no exception.
In Vietnam’s power structure, there are four important positions — party general secretary, president, prime ministers and chairman of the National Assembly.
As head of state, the president represents the country at international conferences and events and plays a ceremonial role.
Trong has been general secretary of the party since 2011 but has also doubled as president after President Tran Dai Quang’s death in 2018. In 2021, Phuc was elected President.
Observers describe the spate of resignations as unprecedented and which allows Trong to consolidate his power further.
He has tried to establish the party's control over policy-making, which had been taken over by technocrats in the government as the economy grew and became complex.
More resignations may follow
While the two deputy prime ministers had resigned from their party positions, the positions of the third deputy prime minister and the foreign minister are also said to be in jeopardy.
In fact, the ongoing purge within the organisation has also affected the municipal leadership in Hanoi and Ho Chi Minh City—the financial capital of the country.
Reports suggest that Phuc has expressed his desire to resign not only from the post of President but also from the politburo and the central committee of the Communist party.
The party secretary of Ho Chi Minh City has been changed thrice in the past two years.
How will all these hit Vietnam?
Vietnam, which grew at 8 percent, the highest among Asian countries, benefitted from the decision of foreign businesses and multinational companies to diversify their supply chains from China and other countries like Malaysia, Thailand and Myanmar that were facing regular political instability.
But the president and the deputy prime ministers who were removed had played a key role in building the country’s image as a pragmatic decision-making and politically stable one to attract foreign investments.
The two deputy prime ministers, Pham Binh Minh and Vu Duc Dam, were praised as able administrators who played a central role in Vietnam’s COVID-19 control that allowed it to be the only Association of Southeast Asian Nations (ASEAN) member to show economic growth during the lockdown period.
Phuc was seen as one of the two leading candidates positioned to succeed Trong as the party’s general secretary.
But Trong disliked him for his pro-western stance and for the Phuc family’s corporate interests.
The two deputy prime ministers, Dam and Minh, on the other hand, had clean personal records but were held responsible for pandemic-related corruption scandals in ministries they were in charge of.
Leaders like Phuc, Minh, and Dam and others who lost their jobs were all seen as pragmatic technocrats who wanted to put Vietnam on a stable macroeconomic trajectory.
Their departure from decision-making could affect investors' attitude towards Vietnam and force them to look at other destinations beyond Hanoi that are more stable.