The Unusual Appointment of Vietnam’s New Minister of Industry and Trade

Yesterday, Vietnam’s National Assembly approved the appointment of two new deputy prime ministers and 12 new ministers in the cabinet of Prime Minister Pham Minh Chinh. The appointments were in line with rumours circulated since the end of the 13^th National Congress of the Communist Party of Vietnam (CPV) two months ago. All, except for the Minister of Industry and Trade Nguyen Hong Dien.

The selection of Dien to head the Ministry of Industry and Trade (MOIT) is unexpected. Until recently, the frontrunner for this position was reportedly Nguyen Hoang Anh, chairman of the Commission for the Management of State Capital at Enterprises (CMSC). Anh’s educational and professional background makes him a suitable candidate for the position as he was trained in economics and previously worked at a trading company in his home city of Hai Phong. At CMSC, he oversees state capital in state-owned enterprises (SOEs), many of which were under MOIT’s purview before being transferred to the commission.

In contrast, Dien does not look like a natural fit for the job. A native of the northern province of Thai Binh, he has a PhD in public policy and two undergraduate degrees, one in history and another in economics. He started his political career as the secretary of Thai Binh Communist Youth Union before climbing the career ladder to become the head of the provincial party commission on propaganda and then the party secretary and chairman of the province. He rose to the national political scene only in May 2020 when he was appointed deputy head of the CPV Central Commission on Propaganda and Education.

It remains a big question why the Party appointed a propaganda expert to head an important ministry in charge of economic affairs. A closer look at Vietnam’s current political setting, Dien’s background and recent developments in MOIT may offer some clues.

Dien’s appointment may be an attempt by the controlling faction in the CPV to assert its control over MOIT, which plays an essential role in Vietnam’s economic development. Considered a super-ministry, MOIT manages key sectors of the economy from oil and gas and electricity, to steel production and the digital economy. It oversees all issues related to domestic and foreign trade, ranging from regulating petrol prices to combatting smuggling, promoting exports and negotiating free trade agreements. MOIT’s essential role means that any Party faction who can control MOIT wields an essential tool to push their economic and political agendas.

Dien’s background as a party official from Thai Binh suggests that he may have been supported by General Secretary Nguyen Phu Trong and his allies, especially Tran Cam Tu, head of the CPV Central Inspection Commission. Tu, a trusted ally and the right-hand man for Trong’s high-profile “blazing furnaces” anti-corruption campaign, served as the Party Secretary of Thai Binh from 2011 to 2015, when Dien was the chairman of the provincial people’s council. Given such a close connection, Tu, and ultimately Trong, may have helped Dien secure the position. In exchange, he will be expected to support Trong’s agendas, especially the selection of a suitable candidate to succeed him and the anti-corruption campaign.

With one of his allies controlling MOIT, which has vast influence over key central and local officials, Trong and his allies may have an important tool to swing the vote for Trong’s successor in their favour.

General Secretary Trong was expected to retire at the recent 13^th CPV Congress due to the term limit rule, his advanced age, and health problems. However, he was given an unprecedented third term mainly because the Party could not agree on a suitable candidate to succeed him. With one of his allies controlling MOIT, which has vast influence over key central and local officials, Trong and his allies may have an important tool to swing the vote for Trong’s successor in their favour.

Dien will be expected to fight corruption and impose greater discipline on MOIT where corruption has been rampant, especially among its SOEs. In particular, former MOIT minister Vu Huy Hoang is expected to stand trial later this month on corruption and mismanagement charges. Recently, non-transparent licensing practices regarding renewable energy projects, in which many investors bribed their way to secure their licenses, have caused Vietnam’s solar capacity to surge dramatically to 9,000 MW despite the original 2020 target of 800 MW set in the 7^thnational power development plan. The unfettered proliferation of solar projects has generated problems for the safety of the national power system, causing power regulatory authorities to curtail the capacity of existing solar projects. The curtailment risks undermine the bankability of many solar projects, which will in turn put stress on the banking system as most of these projects are funded by bank loans.

Although Dien’s appointment may appear unusual, it makes a lot of sense from a political angle. Under his leadership, MOIT may take a more prudent position, which may slow down the growth in certain sectors, such as renewable energy. As an outsider, Dien’s unfamiliarity with the ministry’s businesses and steep learning curve may also hold back the ministry’s decision-making process. However, he may be in a good position to reform MOIT to improve its transparency and accountability. If Dien is successful in reducing corruption among the ministry’s officials and SOE executives, Vietnam’s economy, and possibly his political career, will benefit greatly in the long run.

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