Vietnam’s Prime Minister Dung Re-Elected to Second Term, Wins 94% of Votes

Vietnam reelected Prime Minister Nguyen Tan Dung to a second five-year term today in a single- candidate vote that was a formality after his reappointment to the 14-member Politburo in January.

Dung was chosen by 94 percent of lawmakers in the National Assembly, according to Do Van Chien, head of the body’s ballot monitoring committee, who announced the results in Hanoi. The confirmation clears the way for Dung to announce a new cabinet next week that the assembly will then vote on, according to a schedule given to reporters.

“The party chose to maintain stability” in sticking with Dung, said Raymond Burghardt, former American ambassador to Vietnam who is director of seminars at the East-West Center in Honolulu. “By keeping the leadership stable, that avoids unpredictable consequences, but it also means that they’re putting their faith in an approach that has tended to favor state-owned enterprises over the development of a strong private sector.”

During Dung’s first term, the government’s economic policies faced criticism from groups such as the International Monetary Fund. Policies gave the impression that the government favored short-term growth over economic stability needed for expansion over a longer period, the IMF said in a December report.

State-Owned Enterprises

Dung also came under fire for the near-collapse of the state-owned Vietnam Shipbuilding Industry Group last year, with at least one lawmaker calling for a no-confidence vote on his leadership. Dung and other leaders acknowledged “shortcomings" in managing Vietnam Shipbuilding, and the government vowed to speed up privatizing state-owned firms, deputy premier Nguyen Sinh Hung told the National Assembly in March.

Dung’s cabinet choices will include Nguyen Van Binh as leader of the central bank, according to three people with knowledge of policy makers’ discussions on the matter who spoke last week.

Inflation accelerated for the 11th straight month in July to 22.16 percent, the highest inflation rate among 17 Asian economies tracked by Bloomberg. The country’s benchmark VN Index is also Asia’s worst performer and has slid 16 percent this year.

In February, Dung passed a resolution to rein in consumer prices by tightening monetary and fiscal policies, curbing lending growth to below 20 percent and trimming the budget deficit.

‘Positive Sign’

‘‘It’s a positive sign that he’s taken moves that are probably unpopular,” said Matt Hildebrandt, a Singapore-based economist at JPMorgan Chase & Co. “The issue now is, what’s his personal willingness to put his reputation on the line to make the tough decisions to slow inflation and get investor confidence back?”

Vietnam also named Truong Tan Sang, a Politburo member and the Communist Party’s head of secretariat, as president yesterday. Nguyen Sinh Hung, who served as deputy prime minister, was elected as chairman of the National Assembly.

Dung “has drawn some lessons from the previous term,” said Quach Manh Hao, deputy chief executive of Thang Long Securities Joint-Stock Co, Vietnam’s third largest brokerage. “It will be better in the next term if he speeds up the privatization process and reforms the governance structure so that companies will be more effectively managed.”

Dung, who is from the southern Mekong Delta province of Ca Mau, was first elected as prime minister in 2006. He served as standing deputy prime minister for almost nine years before becoming premier.

Under Dung, Vietnam joined the World Trade Organization in 2007. Vietnamese exports to the U.S. surged to $14.8 billion in 2010 from $1.03 billion in 2001, when a trade accord between the two countries took effect, according to the U.S. International Trade Commission.

To contact the reporter on this story: K. Oanh Ha in Hanoi at oha3@bloomberg.net

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