Vietnam’s Accelerated Power Transition: Glad Tidings for Investors and Foreign Partners

In recent days, Hanoi has been abuzz with rumours that the Politburo of the Communist Party of Vietnam (CPV) has reached a consensus on their pick for the state president position, which has been left vacant since President Nguyen Xuan Phuc’s resignation on 17 January. The chosen candidate is said to be the Standing Member of the Secretariat of the CPV Central Committee, Vo Van Thuong. If all goes to plan, the Party’s Central Committee will likely meet on 1 March to officially approve the decision, and the National Assembly will hold an extraordinary session the following day to elect Thuong as president. Thuong’s current position may be taken over by Phan Dinh Trac, Head of the CPV Department of Internal Affairs.

Despite holding some advantages in the presidential race, Minister of Public Security To Lam reportedly removed himself from the nomination list. As a security official, his nomination may have faced resistance from other Politburo members, who could be concerned about the influence of the public security apparatus on the country’s political system (Prime Minister Pham Minh Chinh is also a former public security official). The election of Lam may also be viewed negatively by certain European governments and could cause difficulties for Vietnam’s diplomatic efforts. In July 2017, Trinh Xuan Thanh, a former PetroVietnam official who had fled to Germany to avoid prosecution on corruption charges, was abducted in broad daylight in Berlin and brought back to Hanoi to face trial. Outraged by the incident, the German government temporarily suspended its strategic partnership with Vietnam and reportedly “blacklisted” Lam due to his alleged involvement in the abduction. 

The withdrawal of Lam, therefore, paved the way for the rise of Thuong, who hails from the southern province of Vinh Long. Born in 1970, Thuong is the youngest Politburo member and still has a long runway ahead of him. As such, some analysts, including this author, believed that he can wait until the next Party congress in 2026 for further promotion, giving other senior officials the chance to be promoted now.

However, the decision to elevate Thuong earlier than expected seems to have been shaped by some other considerations. The Party may have wanted to restore the norm of having balanced regional representation in the top four positions, namely CPV general secretary, state president, prime minister, and National Assembly chair. Since April 2021, there has been no southern politician in the top four positions.

… a power transition will bring closure to the “unfinished business” from the 13th Party Congress, when the high-level personnel appointments did not go according to Trong’s plan and resulted in an unusual settlement.

More importantly, Thuong is seen as an ally of General Secretary Nguyen Phu Trong and National Assembly Chair Vuong Dinh Hue, who is reportedly favoured by Trong to succeed him. The election of Thuong to the presidency can therefore facilitate this succession plan. The emergence of a politician from an opposing camp could complicate the power transition process.

At its 13th National Congress, the Party failed to elect a new leader to succeed Trong despite his age, health issues, and personal desire to step down. As a result, Trong had to remain in office for a third term, contravening the Party’s two-term rule. His current focus is formulating a successful succession plan. Another failure to appoint a leader to replace him would create a severe leadership crisis that could jeopardise the Party’s regime stability. The decision to replace Phuc with Thuong as president and finalise his election this week instead of waiting until the National Assembly reconvenes in May can thus be viewed as a way to expedite Trong’s succession plan. 

A pending question remains regarding when Trong will hand over his position to Hue, particularly in light of the ongoing situation surrounding Prime Minister Chinh. Previously seen as a potential candidate for the general secretary position should he manage to remain in office until 2026, Chinh has recently come under intense scrutiny for his purported close ties to businesswoman Nguyen Thi Thanh Nhan, who has been given a 30-year jail sentence in absentia for her involvement in a major corruption scandal.

In the event that Chinh succumbs to pressure and resigns, two potential scenarios arise. In the first, Hue may take over the prime minister position and serve until the next party congress in 2026, when he will succeed Trong. Alternatively, Trong may step down and hand over the general secretary position to Hue as soon as Chinh resigns. If this occurs, Vietnam will soon have an entirely new leadership, with Hue as general secretary, Thuong as president, and two other senior figures appointed to the prime minister and National Assembly chair positions.

Either way, such a power transition will bring closure to the “unfinished business” from the 13th Party Congress, when the high-level personnel appointments did not go according to Trong’s plan and resulted in an unusual settlement. It will also end the political uncertainty surrounding the nation’s leadership and help restore confidence among investors and foreign partners. With less internal politicking, the new leadership will be able to focus on pressing issues, such as the long-standing bureaucratic inertia and delayed licensing process that has frustrated investors in recent years. 

Viewed from that perspective, the election of Thuong to the state presidency this week and the CPV’s wish to accelerate its leadership transition should be encouraging news for Vietnam’s foreign investors and partners.

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