NIKKEI ASIAN REVIEW

3-11-17

Power struggle unfolds behind Vietnam's state reforms

Southeast Asian nation's leader seen moving to prolong stay at the stop

ATSUSHI TOMIYAMA, Nikkei staff writer

HANOI -- Vietnam's leader has declared a sweeping government overhaul that will slash 400,000 public-sector jobs. But the campaign seems as much about his consolidating power in the one-party state as about righting its finances.

"This is a revolution," Nguyen Phu Trong, the Communist Party's general secretary, told a plenary session of the Central Committee on Oct. 4, referring to the administrative reforms.

The Vietnamese state apparatus is described as riddled with vested interests that survive by nepotism and bribery. Uncontrolled growth of the bureaucracy brought the number of civil servants to 2.8 million last year, up 70% since 2010.

There is more to Trong's "revolution" than talk. His plans call for eliminating jobs and punishing corrupt high-ranking politicians and civil servants, among other measures. Coming from someone known for obfuscation, "this time, you get the sense that it's for real," a government source said.

Under pressure

Vietnam's fiscal problems are real, too. Public-sector debt reached 64.7% of gross domestic product at the end of 2016, just shy of the government's 65% ceiling. An urban rail project in Ho Chi Minh City has fallen behind schedule owing to a lack of funding and may miss its scheduled opening in 2020. A further drop-off in state revenue looms next year, when tariffs on trade within the ASEAN Economic Community, a regional bloc, fall to zero.

But speculation holds that Trong had another motivation besides the budget for tackling the bloated public sector: securing his grip on power. Vietnam's most powerful figure was reappointed as general secretary last year. In light of his advanced age -- 73 -- there had been speculation that he would be replaced in 2018, before the end of his current five-year term. Now, Trong appears to have the momentum to keep going until 2021.

Official corruption is also being targeted in the name of administrative reform. Dinh La Thang, a former chairman of Petrovietnam, was forced out of the powerful post of party secretary in Ho Chi Minh City in one of several crackdowns involving the country's largest state-run enterprise. In August, another group executive, Trinh Xuan Thanh, was taken into custody in connection with huge business losses.

Both were close to ex-Prime Minister Nguyen Tan Dung, a political rival of Trong's who was forced out in 2016. Some suspect it was no coincidence that these allies fell just before Trong declared his "revolution."