Vietnam’s Leadership Stirred, Not Shaken

Reshuffling at the top of Vietnam's leadership structure unlikely to lead to policy change.

Vietnam’s National Assembly has named a new president and a new prime minister, developments that analysts say will safeguard the 6.5%-7.0% annual growth rates laid out in the country’s Five-Year Plan and cement Vietnam’s position as one of Asia’s fastest-growing economies. The economy expanded a noteworthy 4.5% year-on-year in the first quarter and could grow by 10% year-on-year this year, according to Capital Economics.

The April announcement follows January’s decision by Vietnam’s Communist Party to re-elect Nguyen Phu Trong as general secretary for a rare third term. Nguyen’s post is widely considered primus inter pares (first among equals) among Vietnam’s “four pillars” of leadership, which also include a largely ceremonial president, a governing prime minister and chair of the National Assembly.

The outgoing prime minister, Nguyen Xuan Phuc, will become the next president, and Pham Minh Chinh, a senior communist party apparatchik, will succeed Phuc as prime minister. Pham has held several top positions in Vietnam’s powerful Ministry of Public Security; under his leadership, Vietnam’s anti-corruption crackdown, known as “blazing furnace,” is likely to receive renewed impetus.

Vietnam emerged almost unscathed from the Covid-19 pandemic and benefited from a rise in US-China trade tensions that precipitated a flurry of reshoring to other Asian countries. By the end of 2020, just 1,465 cumulative Covid-19 cases and 0.4 deaths per million inhabitants had been reported in Vietnam, the UK medical journal The Lancet reported.

Vietnam absorbed almost half of the $31 billion in US imports whose production was shifted from China to other Asian countries in 2019, the Kearney Reshoring Index estimates. Vietnam is now the world’s second-largest exporter of mobile phones and Taiwan’s Foxconn’s is reportedly earmarking $270 million to expand iPad production in Vietnam.

Part of Vietnam’s allure to investors include its low trade barriers and numerous free-trade agreements. The country is a founding member of the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, and recently struck a free-trade deal with the European Union. Furthermore, the US Treasury has removed Vietnam from its list of currency manipulators.