Thayer Consultancy

ABN # 65 648 097 123

Background Briefing:
Vietnam: Assessing Performance of High-Profile Cabinet Members

Carlyle A. Thayer October 12, 2011

[clientnamedeleted] RegardingtheperformanceofsomeofVietnam'snewcabinetmembers,couldyou provideanassessmentoftheissuesraisedbelow? Questions: 1. TheMinistryofFinancehassentoutthreeinspectionteamstolookintooil product prices at major fuel traders after a heated debate between governmentofficialsoverwhetherthefirmsaremakinglossesastheyclaim. The inspection was launched after officials of the Finance Ministry and the Ministry of Industry and Trade could not see eye to eye on the recent 2.3 percentcutinretailoilproductprices.ButFinanceMinisterVuongDinhHue said Petrolimex, the largest fuel trader with a market share of around 60 percent,wasactuallymakingprofits,enjoyingareturnofuptoVND780per liter.ThatdidnotevenincludeamarkupofVND300perliterthatfueltraders areallowedtoaddtotheirretailprices,Huesaid.TheMinistryofFinancehas recentlybecometougherwithfuelcompanies.Ithasturneddownaproposal by fuel distributors to raise retail petroleum prices and ordered them to ensure stable supplies for the market. Minister Vuong Dinh Hue said businesses have to be responsible for difficulties caused by their own corporate governance. He also said the ministry would not tolerate threats from any business. If any company wants to quit the market, they will be allowed to do so. If Petrolimex wants to quit, we will set up a new corporationimmediately.Businessescantjustsaywhatevertheywant,Hue said. GiventhatHueisaSlovakiantrainedprofessorwithexpertiseinaccounting, auditing and state budget, do you see grounds for hopes that such a bold move taken by Hue would result in clearer, more consistent and transparent economic policyandavoidhittinggrassrootspeoplewhereithurtmost:thepocket? ANSWER: Vietnams current Cabinet members are the personal choices of Prime Minister Nguyen Tan Dung. Under Prime Minister Dung, ministers must take responsibilityfortheirportfolios.MinisterVuongDinhHuereflectsthecurrentethos of government in Vietnam. The Cabinet has unparalleled power and ministers are inexperienced in dealing with the pressures of a real market economy. The first defaultforastrongwilledministeristothreatenandbluff.

2 2. Minister Transport Dinh La Thang has also grabbed headlines for his tough action against contractors who have kept procrastinating the progress of theirprojectsaswellashiscommitmenttotacklingthelongfesteringtraffic problemsinVietnam.Themostrecenthighprofilecasehappenedlastweek whenThangsuspendedacontractorblamedforthesluggishprogressatthe constructionofDaNangInternationalAirport. Some skeptics have, however, raised an eyebrow over Thangs real motives behindhisaction,sayingheisdoingsojustinpursuitoffame,influence,andpower. What are your thoughts on Thangs recent performance and the skepticism surroundinghim? ANSWER: Prime Minister Dung brought Dinh La Thang from his post as head of PetroVietnam to head the Ministry of Transport. He has received a lot of publicity regardingthehighspeedrail,theroadtothebauxiteproject,cutsinfunding,theuse of public transport and action against contractors. He holds a sensitive portfolio becausetheneweliteinVietnamareaffectedbycongestedtraffic.MinisterThangis obviouslyactingwithapprovaltoportraycabinetministersasdynamic. Vietnamesepoliticalcultureisslowlyevolvingfromeraofcollectiveresponsibilityto ministerial responsibility. When a minister is accorded high publicity some state cadres and party members are uncomfortable. His success are sure to be touted. Some journalists may even be encouraged to give Minister Dinh La Thang good publicity.Wecanbesureofonething,PrimeMinisterDungwillprotecthisministers fromadversepublicity.Thiswillhaveachillingeffectonpressreportingandmakeit difficultforoutsideanalyststomakeajudgmentofwhetherornotThangcanfollow throughonhispromises.ItisnowuptodeputiesintheNationalAssemblytoraise suchquestions. 3. Despite several headlinegrabbing performances of some newlyinstalled cabinet members, critics have remained cautious over a possible dramatic changes in economic policy as more than twothirds of the cabinet's seats wereunchangedorhadbeenpassedtodeputies. ANSWER: The current Cabinet represents more continuity with past policies under PrimeMinisterNguyenTanDunginhisfirstterminofficethanitreflectschangein thedirectionofdeepreforms.TheCabinetconsensusisthatrelativelyhighmacro economicgrowthratesvalidatetheirapproachtoeconomicpolicy.Preservationof stabilityandthestatusquotakespriorityoverlongertermreformsthatwillposition Vietnam to proactively and effectively integrate with the global economy. Many ministerialinitiativesaddressissuesthatreflectpublicconcernbuttheexecutionof policyisnotalwaystransparent.Itissometimesdifficulttoknowwhoseinterestsare being served the national interest or the interests of those who benefit from currentpolicy.Insomecasespolicymayreflectentrenchedinterests.Amorevibrant and independent press subject to its own selfregulation would make governmentpolicyandimplementationmoretransparent.