State-owned Enterprises

Vietnam's ruling Communist Party promises economic reforms as top leaders criticised

Embattled Vietnamese prime minister survives over economic missteps, but restructuring of state firms and the banking system looms

PUBLISHED : Wednesday, 17 October, 2012, 12:00am
UPDATED : Wednesday, 17 October, 2012, 4:56am

Vietnam's ruling Communist Party has promised economic reforms and a restructuring of state firms and the banking system after a top-level meeting that criticised senior members - thought to include the embattled prime minister - but left them in their posts.

The banks are swimming in bad debt, much of it owed by the huge state enterprises at the heart of the economy. Moody's downgraded Vietnam last month and said bank reforms should be implemented quickly.

The central committee, a powerful body of more than 170 senior members of the party, "came to the decision not to discipline the collective of the political bureau and a comrade member of the political bureau", the party said.

Some analysts had predicted that Prime Minister Nguyen Tan Dung, in power since 2006, might be ousted. He has faced questions in parliament over a scandal involving Vinashin, a big state shipbuilder he championed but which almost collapsed in 2010 under US$4.5 billion in debt.

Bloggers have accused him of greed, cronyism and economic mismanagement. The authorities responded with a crackdown on dissent and three high-profile bloggers were recently jailed for up to 12 years for anti-state propaganda.

The plenum urged that the business climate be improved and foreign investment encouraged, according to a report by the official Vietnam News Agency (VNA). While it advocated the restructuring and renovation of state-owned enterprises (SOEs), "the committee continued to affirm their core role", according to the report.

"Resolute adjustments must be made so that the SOEs can have appropriate structures and take the lead in scientific and technological renovation ... and maintaining the socialist orientation of the economy," it said.

However, it said non-core investments should be ended and the state should withdraw from firms in which it holds less than 50 per cent of capital.

The central committee also ordered amendments to the 2003 Land Law to tackle corruption, speculation and lawsuits in the interests of socio-political stability, the VNA report said.

Bloggers expressed strong disappointment that the communist chiefs did not do more to hold leaders to account for their missteps.

The party "has missed a huge opportunity", said prominent blogger Osin Huy Duc.

"The prime minister was again given the power by the central committee. But it's the sort of power that was gained by turning one's back against the people."

Fellow blogger Huynh Ngoc Chenh credited the party with "a step towards democracy".

"However, coming 80 years after it was established with the initial goal of fighting for national independence and democracy, that first step is too late, too small and too timid."

Jonathan Pincus, dean of the Fulbright Economics Teaching Programme in Ho Chi Minh City, said the plenum had opted for continuity in policy - restructuring the financial system and SOEs were long-standing aims, even if progress had been slow.

"No more details were provided, but perhaps we can expect more bank mergers and continued pressure on public investment financing," he said.

The central bank said in July that bad debt in the banking system had risen to 8.6 per cent of loans as of the end of March, almost double the previously published figure. Banks have slowed lending to tackle the problem. Authorities have also tried to tighten lending conditions to keep a lid on inflation.

Additional reporting by Agence France-Presse