Tension with China, crippling drought, lack of funds will test Vietnam’s new ruler

A crippling drought in the Mekong Delta rice bowl and slumping oil revenue are creating fresh headwinds for Vietnam as a new prime minister with less economic experience prepares to take over.

For Nguyen Xuan Phuc, a behind-the-scenes technocrat, the challenges facing the communist leadership have increased since he was nominated for premier at a twice-a-decade party congress in January.

Given territorial tensions with biggest trading partner China, and with the risk a sprawling Pacific trade pact becomes a casualty of election year politics in the US, Phuc, 61, will need to move quickly to show he’s committed to carrying out reforms and attracting investment, analysts said.

“They need to show Vietnam continues to be an attractive destination for foreign investment and a relevant economy in the region,” said Nguyen Xuan Thanh, a Ho Chi Minh City-based senior fellow at Harvard’s Kennedy School of Government. “They need to provide growth and job creation. A less than 7 per cent growth will be very, very disappointing.”

The National Assembly is expected to rubber-stamp Phuc’s election on Thursday to replace Nguyen Tan Dung, who lost his bid to become party chief after Nguyen Phu Trong was re-elected to the post for a second five-year term. Phuc was not known for grand initiatives as vice premier, mostly overseeing a three-year campaign to streamline the bureaucracy, though he studied economics at the Singapore National University.