Vietnam wants to reassure investors that new leaders chosen last week by Communist officials at its party congress will press ahead with economic reforms as policy makers aim to boost growth to the fastest pace in nine years.
Policymakers will continue "refining and modernising the financial and banking sector", further privatise state-owned companies and upgrade its infrastructure, said Deputy Foreign Minister Le Hoai Trung, who was re-elected last week to the powerful central committee of 200 top officials.
"The message is that we will continue with our economic reforms even though we know there are challenges," Mr Trung said last Thursday at the close of the party meeting that takes place every five years to chart the country's direction. "The reforms have brought about historic and significant results, so we would go forward with it. It's also the wish of the public."
Vietnam's Communist party officials gathered last week to choose a new slate of leaders who will lead the country until 2020 and set a growth path that avoids a repeat of past mistakes, including soaring credit growth that saddled banks with bad debt and preferential treatment of state companies that created inefficiencies.
General Secretary Nguyen Phu Trong was re-elected to the position for a second term while Deputy Prime Minister Nguyen Xuan Phuc was nominated to replace premier Nguyen Tan Dung when his term ends in July, raising questions whether the political transition will slow the pace of reforms.
"Vietnam operates under a consensus-based decision-making framework, and therefore changes in personnel will not immediately alter the policy trajectory," wrote Mr Andrew Fennell, Hong Kongbased associate director of Asia-Pacific sovereign ratings at Fitch Ratings, in a research note.
Vietnam's commitment to a structural reform-oriented policy, including a focus on macro stability and market liberalisation, will remain important factors for the country's macro outlook, according to Mr Fennell.
Still, the new leadership will probably shun bold initiatives and may slow reforms needed to meet the conditions of the Trans-Pacific Partnership trade pact, such as allowing for independent labour unions, said Mr Tuong Vu, an associate professor of political science at the University of Oregon.
"They want stability for regime security," said Mr Vu. "That does not create an open environment for more reforms or faster reforms."
Vietnam is forecast to expand at 6.7 per cent this year and to be among the world's fastest-growing economies. But a cloud over its economic picture is a trade deficit, widening public debt and Hanoi's failure to meet its goal to privatise 289 state companies last year.
"Equitisation of state-owned companies is a very difficult process in any country," said Mr Trung, adding that Vietnam has increased the number of state companies that were privatised. Policy makers "would go forward" with it, he said.
During the congress, several leaders expressed concerns that Vietnam risked falling behind regional peers. Average growth in 2011 through 2015 was 5.9 per cent, lower than the 6.5 per cent-to-7 per cent target that the government had set.
"We are now trying to change to a new development model that aims for sustainability," Mr Trung said. "We would continue with our policies of trying to mobilise international resources including foreign direct investment."
Source: http://www.straitstimes.com
Key words: Vietnam, 'will continue economic reforms'
