Vietnam Country Update

Modest Reforms in Sight

At its national congress in January 2011, the Communist Party will consider such political reforms as a new way of choosing its top leaders, in order to increase accountability – an issue of growing concern following high-profile corruption cases as well as allowing business owners to join…
The party general-secretary, as well as President Nguyen Minh Triet, are likely to be replaced, and the policy leanings of their replacements will have important implications for the business climate over the next five years…
While it is likely that their replacements will be generally supportive of reforms and foreign investment, growing pressure from hard-liners could result in the elevation of more conservative figures to leadership positions…
Even if Prime Minister Nguyen Tan Dung remains in his post, some of his reformist underlings could be replaced by conservatives, and that would constrain his ability to implement his agenda…
Inflation Concerns Persist
Dung’s position has been weakened partly by growing concerns among party members that the government’s economic policies have created imbalances – most evident in the form of high inflation – that are generating dangerous social tensions…
A strong economic recovery has been fueled by strong external demand and gains in industrial output, but the pace of expansion will slow in the final quarter of 2010, amid diminishing support from the global inventory cycle and easing demand for exports…
The bigger concern for economic policy makers is inflation, which will remain on an upward trajectory for the remainder of 2010, with limited potential for easing in 2011.

Economic Forecasts for the Three Alternative Regimes