Unleashing Officials, Unlocking Funds: PM Le Minh Hung Confronts Vietnam’s Economic Challenges

Challenges have hit Vietnam’s new Prime Minister Le Minh Hung hard and fast. In April 2026, barely two months into his tenure, Vietnam’s annualised inflation hit 5.5 per cent — its highest in six years. Meanwhile, criticism is mounting towards the slow disbursement of public investment, with trillions of Vietnamese dong reportedly lying dormant in government accounts.

A former governor of the State Bank of Vietnam and widely regarded as a technocrat, Hung has been hailed as the “fixer” the economy needs. He is mandated to deliver double-digit growth while preserving Vietnam’s reputation for macro-stability. At 55, he is Vietnam’s youngest prime minister since 1955 — a deliberate bet on competence over seniority.

But Hung is not a standard technocrat. Beyond his central banking credentials, he served as head of the Communist Party’s Central Organisation Commission — the body that manages officials’ personnel files, promotions, and internal records. He knows who is stalling and why. Where a conventional economist can only adjust incentives, Hung is positioned to rewrite the political calculus for reluctant officials: to make inaction, not boldness, the career risk.  Whether that structural advantage proves enough to navigate the macroeconomic headwinds bearing down on Vietnam will be revealed in the coming months.

Hung’s most significant first-month reform has been an aggressive assault on the infamous “sub-licenses” (“giấy phép con”). These regulatory hurdles are traditionally maintained by ministries and departmental bureaucrats to guard their regulatory power and allow corrupted officials to extract rent from the private sector. For decades, these redundant, opaque administrative procedures have acted as serious barriers to Vietnamese entrepreneurship. Hung has moved at a pace that has caught many off guard: by 29 April, the government had issued eight resolutions to abolish 184 administrative procedures, simplify 394 more, and decentralise 134 to local authorities, with a stated target of cutting compliance time and costs by more than half.

The scale is striking. Previous prime ministers Nguyen Xuan Phuc and Pham Minh Chinh both promised similar reforms; Hung has so far delivered at a speed neither matched. He has signalled that the old “asking-giving” practices, which created sub-licenses and restrained autonomy of ministries and local governments in planning and implementing investment projects, are incompatible with Vietnam’s planned high-growth trajectory. “Removing bottlenecks to support growth” has become a refrain in meetings of officials and businesses alike.

He knows the track records and vulnerabilities of the officials who are currently refusing to act. His task is therefore to create “safe harbours”: binding political and legal frameworks that clearly distinguish bold action from corruption.

The external macro-environment offers little relief. Vietnam is among the ASEAN nations hardest hit by the inflationary ripple effects of the Iran-US conflict: a surge in global oil prices drove domestic transport costs up 11.1 per cent year-on-year, pushing annual inflation to 5.5 per cent and past the government’s 4.5 per cent target. A central banker’s instinct is to raise rates, but Vietnam’s economy, which has been weighed down by a restructuring property market and cooling global demand, desperately needs cheaper credit to sustain its double-digit growth ambitions. With commercial banks’ fixed mortgage rates hovering at 8–10 per cent and variable rates climbing to 14–15 per cent, Hung faces a genuine dilemma: tighten credit to control prices, or apply a lighter touch to preserve growth. There is no painless option.

Compounding these external shocks is an internal structural paradox: the chronic under-disbursement of public investment. As of 7 May, only around 15 per cent of the year’s allocated funds had been spent, despite repeated directives from the top. The problem is not a shortage of money, but a system too rigid to deploy it. Public investment law tightly controls inputs, imposes layers of approval before a project can begin, and limits flexibility even when circumstances change. When land prices rise or project designs need adjusting, local governments must refer back to the central level, losing months in the process. Compounded by the chilling effect of the anti-corruption campaign which intensified in 2016-24, an unspoken rule has taken hold: “better to be slow than wrong.”

This is where Hung’s background makes a difference. He knows the track records and vulnerabilities of the officials who are currently refusing to act. His task is therefore to create “safe harbours”: binding political and legal frameworks that clearly distinguish bold action from corruption. Policy advisers have called for a shift from rule-issuing to policy operations, and from controlling inputs to assessing results. Hung can accelerate this transition, not by waiting for legislative reform, which could take years, but by issuing government guidance that shields officials who approve project adjustments within defined parameters. His years at the helm of the Party’s personnel system give him the political credibility to make such measures stick.

Two caveats temper this optimism. First, Hung operates under General Secretary To Lam, who has concentrated authority to a degree not seen since the early reform period, a concentration that can break logjams but also narrows any prime minister’s room for independent manoeuvre. Second, Hung has never held a provincial leadership post, leaving him with limited first-hand exposure to local governance, the level at which disbursement failures are most acute. He will need to build a capable cabinet, draw on seasoned policy advisers, and maintain close channels with provincial governments to compensate for this gap. Hung’s first month in office is notable: rules abolished, targets set, signals sent. But abolishing rules is the easier part of the job. Deploying the 85 per cent of public investment capital still sitting idle and holding inflation below target amidst the backdrop of escalating global commodity prices are the harder tests. Administrative boldness will mean little if the culture of caution and inaction resurfaces despite the determination of the central government. Hung has the credentials, connections, and institutional knowledge to meet the moment. He should use this leverage to hasten the public investment in infrastructure projects and contain inflation – results that the Vietnamese will want to see soon.

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