The Vietnamese head of state leaves under a cloud

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The Vietnamese head of state leaves under a cloud

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Tthe Communist Party Vietnam is one of the most secretive organizations on the planet. The facade she presents to her own people and to the world is one of circumspection, conformity and consensual order. So losing a head of state early last year, who left under a cloud of corruption, was reckless. Losing a second, Vo Van Thuong, at the end of March is downright disconcerting. It’s not just ordinary Vietnamese who should care. The same goes for foreign investors, who have bet big on Vietnam as Southeast Asia’s fastest-growing economy.

Mr. Thuong, in his early 50s, was the youngest president in history. A propaganda ace, he thought he was going somewhere. He succeeded Nguyen Xuan Phuc, who resigned in January last year after taking responsibility for a scam involving pandemic test kits (he insists neither he nor his family were involved) . Mr Thuong enjoys his public role. But a planned visit to Vietnam by the King and Queen of the Netherlands was abruptly canceled at Vietnam’s request. Then, on March 20, the party’s central committee announced that Mr. Thuong had resigned from all his posts. His “violations and failings” had left “a bad mark” on the party’s reputation. The vice-president, Vo Thi Anh Xuan, a rare woman in the upper echelons, replaces him for the moment. Since then, Mr. Thuong has not been heard from again.

Of course, the presidency is only one of four key positions. Authority is generally distributed among four “pillars”: the party general secretary (the most important position), the prime minister (who heads the government), the president, and the speaker of the National Assembly. The current general secretary is Nguyen Phu Trong. He has exceptionally held this position since 2011. He is almost 80 years old and will surely step down at the next party congress in 2026, if rumors of poor health allow him that long. Any break behind the facade must be considered in the context of whoever succeeds it.

Mr Trong’s key principle is that the party cannot survive without tackling growing corruption. His “fiery furnace” campaign had already stunned ministers, a deputy prime minister and a series of senior leaders in Ho Chi Minh City, Hanoi and the provinces. To complicate matters, powerful party figures are using Mr. Trong’s campaign as a pretext to vie for power.

Mr Thuong was a protégé of the secretary-general, but that ultimately did not help him. According to Le Hong Hiep of ISÉESAccording to the Yusof Ishak Institute, a Singapore research organization, Mr Thuong’s alleged wrongdoing relates to his tenure as party secretary in Quang Ngai province from 2011 to 2014. The investigation into corruption at a local promoter has already brought down a handful of provincial officials. The powerful and ambitious public security minister To Lam, at the heart of the anti-corruption campaign, could be involved in Mr Thuong’s downfall. Certainly, Mr. Lam will be keen to position himself to occupy the top job in 2026.

A delegation of 60 American companies, including Boeing and Meta, has just visited the country. For those interested in Vietnam’s development, Mr. Thuong’s fall poses an enigma. On the one hand, this confirms that the effects of corruption reach the top of the party. The scale of corruption nationwide is enormous, judging by the ongoing trial over an alleged $12 billion fraud at the Saigon Joint Stock Commercial Bank. The amount allegedly defrauded is well over double the notorious Jan. 1 fraud.BMDthe Malaysian sovereign wealth fund now insolvent.

It’s an uncertainty for those who have looked to Vietnam to hedge against any trade bets on China at a time of great-power rivalry between China and America. Annual foreign direct investment is pouring into Vietnam, increasing by more than a third last year to $36.6 billion.

On the other hand, multinationals know how to navigate somewhat corrupt economies. Corruption, for all its costs, can grease the wheels of commerce by making deals. Furthermore, in Vietnam, the foreign-invested manufacturing sector is far less plagued by corruption than state-run sectors.

The worst is when reform stagnates – and this, analysts say, is happening now, while officials are terrified of the fiery furnace coming for them and lack the courage to open the economy further and encourage investments. Mr. Trong once said that fighting corruption while ensuring stability was like “catching a rat without breaking the pot.” Rats are caught, but can the pot remain intact? Vietnam is about to find out.

Read more from Banyan, our Asia columnist:
Series of setbacks for Myanmar junta presents opportunity (March 21)
Pakistani generals appear increasingly desperate (March 14)
What the war in Ukraine means for Asia (March 7)

Also: How the Banyan Column got its name

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