Vietnam Premier Pledges to Aid Companies, Boost Economy

Vietnam's Prime Minister Nguyen Tan Dung
Nguyen Tan Dung, Vietnam's prime minister. Photographer: Andrew Harrer/Bloomberg

Vietnam Prime Minister Nguyen Tan Dung said that he intends to stay in his job after lawmakers criticized his handling of the economy.

National Assembly delegates asked the Prime Minister to introduce a “culture of resignation” and provide specific measures to restructure the economy in a session broadcast live on state television yesterday. Dung said he would never “say no to any tasks assigned to me by the Party,” referring to his appointment by the country’s Communist leadership.

Speculation over Dung’s political future has intensified amid escalating unease over his management of the country, including a failure to reform state firms and tackle corruption within elite circles. Dung last month apologized for the government’s shortcomings, a week after the head of the Communist Party admitted top party members had made “big mistakes”. The admissions have prompted concern the country is facing serious political upheaval as economic growth slows.

“What is being laid bare here is a confidence gap between various and increasingly vocal elements within the party and state apparatus on the one hand, and figures at the pinnacle of state power on the other, with Dung in particular being singled out for punishment,” said Jonathan London, Assistant Professor at the City University of Hong Kong’s Department of Asian and International Studies.

Dung vowed to improve oversight of state conglomerates, deal strictly with violations by the nation’s banks and help struggling companies with additional tax measures in 2013, he told the assembly following criticism from lawmakers yesterday, including the call to replace apologies with resignations.

‘Culture of Resignation’

“The Prime Minister should take this chance to show your determination in repairing your mistakes by stop saying sorry, replacing it with a new practice that’s more suitable to a modern culture, which is a culture of resignation,” said delegate Duong Trung Quoc. The comments were not a request for the Prime Minister to resign, Quoc told Bloomberg News by telephone after the session.

Vietnam is struggling to revive an economy that’s set to grow at the slowest pace since 1999 this year, and stem non-performing loans that are at the highest level in Southeast Asia. The rising level of bad debt threatens the stability of the financial system and has made banks reluctant to lend, crimping corporate expansion and domestic consumption.

Two other delegates at yesterday’s session challenged Dung, including over alleged failures to tackle the consequences of mismanagement at state-owned firms. “Some constituents think that your measures to repair the consequences are not sufficient,” said delegate Nguyen Ba Thuyen. “Constituents are getting impatient.”

Leadership Challenge

Dung’s two main rivals, President Truong Tan Sang and Communist Party General Secretary Nguyen Phu Trong, are using the latest economic downturn to challenge his leadership, Tuong Vu, associate professor at the University of Oregon said last month. Competing networks in the party are vying for power and money that come from resources sales, construction projects and monopoly licenses in industries such as banking and energy, he said.

The Prime Minister in September ordered a crackdown on blogs that grew in popularity as they attacked his leadership and highlighted allegations of corruption. Speculation had mounted ahead of the Communist Party’s plenum last month that Dung could be dismissed, according to Carl Thayer, professor of politics at the Australian Defense Force Academy in Canberra.

Vietnam’s economy is “stagnating” due to high levels of non-performing loans and unsold inventories at companies, which Dung said are the main “obstructions” to expansion. The government will consider in the first half of 2013 a package of tax incentives with more exemptions and reductions to help businesses, he said.

Vietnamese businesses are hampered by difficulties in accessing credit, while bank lending is curbed by rising bad-debt ratios, Dung said. Central bank Governor Nguyen Van Binh told the National Assembly Nov. 13 the ratio of non-performing loans as of Sept. 30 is seen at 8.82 percent.

— With assistance by Nicholas Heath

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