Vietnam steadily transitions to liberalised economy

After years of strong economic growth and surging foreign direct investment, Vietnam today is emerging as a key middle-income country in the Southeast Asian political and economic sphere. A nation of ancient traditions, with a youthful and energetic population, the Socialist Republic is also moving through a period of additional economic reforms, while continuing to leverage its strategic location and strong international relations to further boost its rapidly growing overseas trade activity.

All this for a country that, a few decades ago, was emerging from half a century of devastating warfare to find itself largely isolated from the global economy. The country’s political system has thus shown a demonstrable ability to master economic changes, and the year ahead will see its flexibility and ability to adapt tested still further. Meanwhile, Vietnam has become a powerful and important actor in the political geography of an increasingly weighty region in global politics.

Tradition & Modernity

Archaeologists assert that Vietnam was among the first places in the world to see the development of agriculture, with settlements in the northern Red River valley dating back thousands of years. Independent dynasties rose and fell in this region until the 2nd century BC, when the first of a succession of Chinese invasions began. These conquerors would come to occupy and rule northern Vietnam for 1000 years. Meanwhile further south, in what are now the central and southern parts of the country, the Funan and Cham civilisations flourished.

In the north, Chinese rule was eventually brought to an end by Ngo Quyen, who was king of Vietnam from 939 to 944 CE. From this period onward, the northern state advanced south, a process that continued into the mid-18th century and is known as the Nam Tien. During this period, the current frontiers of the state were largely established. Vietnamese forces defeated the Cham and the Khmer kingdoms, while also eventually fighting off a Chinese Ming dynasty incursion.

Western Empires

Western interaction with Vietnam began in earnest during the 16th century after the arrival of Portuguese traders and, somewhat later, French missionaries. One of these, Alexandre de Rhodes, helped develop the Latinised Vietnamese alphabet. The 17th and 18th centuries saw further Western contact, along with successive civil wars and revolutions within the Vietnamese kingdom. In 1859, Rigault de Genouilly arrived with a French expeditionary force and captured what became Saigon. The six provinces of the Mekong Delta then fell under French control, with the colony named Cochinchina. French rule then gradually expanded, with complete control established by 1886. Vietnam became part of French Indochina, along with Laos and Cambodia.

This period of French rule lasted until 1954, when the French army was defeated at Dien Bien Phu by the Viet Minh – a national resistance movement led by the Communist Party of Vietnam (CPV) and its leader, Ho Chi Minh. At the subsequent peace conference in Geneva, Vietnam was divided into a communist north and a capitalist south, the Republic of Vietnam, which was later supported by increasing involvement from the US.

Conflict quickly resumed, with what is known in the West as the Vietnam War, and in Vietnam as the American War. This lasted until 1975, when Saigon, now Ho Chi Minh City, fell to the Viet Cong (the largely South Vietnamese National Liberation Front) and the North Vietnamese Army. Conflict continued, however, even after reunification, with Vietnamese troops overthrowing the Khmer Rouge regime in neighbouring Cambodia in 1979, a campaign that triggered a short-lived Chinese invasion of the north. Vietnamese troops remained in Cambodia until 1989, a year that also saw the beginning of the dissolution of the Soviet Union (USSR). The USSR had been Vietnam’s principle international ally and backer since the 1950s.

Independence Era

The end of the Cold War heralded major changes, although the government, under the CPV general secretary, Nguyen Van Linh, had already begun to initiate a programme of reform, later known as Doi Moi. This was formally launched with the 6th National Congress of the CPV in 1986, which allowed competition between the private and public sectors and removed many internal economic controls. This socialist-oriented market economy grew rapidly, with change driven by private enterprises. In 1992 a new constitution was introduced, while in 2002 CPV members were also allowed to engage in entrepreneurial activities. In 2007 Vietnam was admitted to the World Trade Organisation and a new constitution came into effect at the start of 2014.

This informs the government’s economic plans, which emphasise the importance of the private sector and foreign investment. A new team was installed at the 2016 CPV Congress, with many eyes now watching to see how they may move that reform agenda ahead in the years to come.

Executive Power

There are three essential positions in Vietnam’s executive: the president, the prime minister and the general secretary of the CPV. The president is the head of state of the Socialist Republic of Vietnam, the head of government is the prime minister, and the CPV chief is the general secretary. Currently, these positions are held by Tran Dai Quang, Nguyen Xuan Phuc and Nguyen Phu Trong, respectively.

The president is also commander-in-chief of the Vietnamese People’s Armed Forces (VPAF) and chair of the Council for Defence and Security. The president is nominated by the CPV Central Committee and elected by the legislature, the National Assembly. He or she serves for a five-year term with a two-term limit. The president also has the procedural duty of appointing the prime minister and the government, with the approval of the legislature, the National Assembly.

The prime minister is also nominated to the National Assembly by the CPV Central Committee and is the primary head a government comprising deputy prime ministers, ministers and other members of the party. It is the highest administrative organ of the state and is also elected by the National Assembly for a five-year term.

As a single-party state, the CPV, therefore, continues to have the leading role in government and in the power structure, with the general secretary as the party’s highest office. The party’s supremacy is indeed guaranteed by article IV of the constitution, and it has some 4.4m members.

The CPV’s highest body is the National Congress, which meets every five years. At the congress, delegates from local party organisations vote to decide on policies and candidates for various party committees and offices. Included among these is the 150-member Central Committee, which is tasked with delegating authority for day-to-day operations to the Politburo and the Secretariat, the latter tasked with implementing the decisions of the Central Committee and the Politburo.

The Politburo is, thus, a highly important centre of the nation’s political power. This body acts as a director of the activities of the government’s various agencies, and it is headed by the general secretary. The current Politburo is the 12th to direct the country, following its election at the 12th National Congress, which was held in January 2016. It has 18 members in addition to the general secretary.

Legislature

The National Assembly is the Socialist Republic’s top legislative organ, and convenes every year for two, 30-day sessions. In between these sessions, it is represented by the Standing Committee. The assembly is a unicameral body, with 496 members, elected for five-year terms. Some 475 of the current assemblymen are members of the CPV, the rest being independents. The most recent election was in May 2016.

Candidates for the assembly are approved first by the Vietnamese Fatherland Front (VFF), an umbrella group of pro-government mass organisations, led by the CPV and including a range of social, religious and ethnic organisations. The highest body in the VFF is its central committee. The mass organisations themselves have an important role in the country’s politics. They include the Women’s Union, with some 12m members, the Farmers’ Association, with 8m members, the General Federation of Trade Unions, with 4.2m members, and the Youth Union, with around 5.1m members.

While in the past the National Assembly acted largely to approve government policies, which are introduced to it by government ministers in the form of bills, in recent times it has become a forum for more lively political debate.

In 2001 a constitutional amendment also gave the assembly the authority to decide budget allocations and to move votes of no confidence in office holders. The chair of the National Assembly also recently passed to a woman for the first time, with the election of Politburo member Nguyen Thi Kim Ngan in March 2016. She is the leader of the assembly’s Standing Committee, which also consists of several deputy chairs and other assembly members who are prohibited from also being members of the government.

Judiciary

The highest body in the Vietnamese legal system is the Supreme People’s Court (SPC). This is itself led by the Chief Justice, who is elected by the National Assembly. The hierarchy below the SPC runs first to the superior people’s courts, based in Hanoi, Ho Chi Minh City and Da Nang, then to the provincial-level people’s courts, and finally to the district-level people’s courts. There are several specialised courts at the supreme and provincial levels, such as the Criminal Court, Civil Court, Economic Court and Labour Court.

People’s Jurors for the courts are nominated by the VFF Central Committee, which are then appointed by the National Assembly Standing Committee. Courts of the first instance usually consist of two of these jurors and one judge. Judges and procurators are all members of the CPV. Within the VPAF, the Central Military Tribunal, subordinate only to the SPC, is the highest judicial body.

Prosecutorial authority resides with the People’s Office of Inspection and Supervision, with each court, both civilian and military, having its own people’s prosecutor. Additionally, the Supreme People’s Procuracy is the highest authority within this branch of the nation’s justice system.

The basic legal code is built on a principles of “socialist legality”, a body of law built by combining elements of Marxist-Leninist ideology and French civil law. One significant aspect of socialist legality is its view of private property and the activities of the private sector. The code’s Soviet origins giving it a more comprehensive view of law within a command economy, a configuration in which cooperatives and state ownership were the norm. Thus, recent years have seen many changes in the legal code, with the National Assembly facing a major workload in passing new laws and amendments to the law during its two, 30-day annual sessions.

Local Leadership

Currently, around 55% of overall state expenditure and 75% of capital expenditure is made at the subnational level, demonstrating the degree of decentralisation that already exists in the country. At present, Vietnam divides into 63 provinces and cities, including two “special cities” (Hanoi and Ho Chi Minh City) and three so called rank-one cities (Hai Phong, Da Nang and Can Tho). Local government in provinces and cities is governed by the 2003 Law on Organisation of People’s Councils and People’s Committees.

Each of the nation’s provinces and municipalities is headed by a People’s Council, which elects a People’s Committee as its executive organ. This in turn is led by a chairperson and usually consists of between nine and 11 ordinary members. The local CPV head, or secretary of the local CPV executive committee, is also a key figure, mirroring the arrangement at the national level.

Underneath the province or municipality levels are rural and urban districts, which then further subdivide into commune-level towns, communes and finally wards. However, there is a fair amount of experimentation being applied to this structure. In recent years the local government structure has been undergoing reforms, with pilot projects ongoing in some areas that are aiming to find more efficient forms of organisation.

A National Programme on Public Administration Reform was under way between 2011 and 2015, and the results of this are now being examined. A new “Law on Local Government” was also passed in 2015. The overall objective is to move away from the highly centralised forms of administration that existed under the previous, command economy, towards more decentralised, market-oriented structures. In 2009 the first Public Administration Performance Index was introduced, to give local authorities a way to measure popular perspectives on their performance, a move that is likely to herald changes in the years ahead.

Onging Reforms

Vietnam is expected to continue its programme of administrative reforms in the near term, as it seeks to adapt to the expansion of the private sector and introduce market forces into more areas of the economy. This is expected to have implications for the political superstructure, with local government being one area in which this is likely to become increasingly evident.

At the same time, there are still powerful, centralising forces within the state, and the speed with which changes can be achieved could be highly regulated by the key organs of power: the CPV Central Committee and the Politburo.

Regardless, as the country continues to prosper – with strong economic growth projected to continue in the coming years – Vietnam appears certain to continue to assert itself at a regional level. It will do this not only as a leading member of ASEAN, but also by leveraging its strategic geographic location and positive relations with the international community to forward its economic, political and geostrategic interests in the wider region.