To Lam has been reappointed as Vietnam's Communist Party General Secretary for a new five-year term, a decision announced during a party congress that concluded early on Friday, ahead of its scheduled end on Sunday. This reappointment is viewed by analysts as a potential concentration of power, a situation last observed in 1991, with some comparisons drawn to leadership models in China and Laos. The move accompanies a significant policy shift toward economic reform and ambitious growth targets, aiming to transform Vietnam into a high-income economy by 2045.
Leadership and Power Consolidation
Mr. Lam's reappointment as General Secretary follows his assumption of the leadership role 18 months prior, succeeding Nguyen Phu Trong, who passed away. He is also anticipated to assume the presidency. Analysts suggest this consolidation of power could facilitate decision-making and reforms, though it also raises discussions about potential impacts on intra-party checks and future successions.
Prior to his current role, Mr. Lam served as head of the Ministry of Public Security, where he oversaw an anti-corruption campaign initiated by his predecessor. This campaign resulted in the removal of several senior officials, including former presidents and the parliamentary head. His career advanced from the security services to the highest levels of Vietnam's political system.
Economic Strategy and Targets
Upon assuming the top party position, To Lam shifted the national focus toward economic performance, emphasizing reform and growth. Policy documents describe these plans as the most ambitious for Vietnam in 40 years. Key objectives include:
- Annual Economic Growth: Achieving double-digit annual economic growth, or 10% or higher, from 2026 to 2030.
- Private Sector Growth: Doubling the number of private businesses by 2030.
- Economic Transformation: Transitioning to an upper-income, knowledge- and technology-based economy by 2045, coinciding with the centenary of Vietnam's independence. This aim includes avoiding the "middle-income trap" experienced by some other Southeast Asian nations.
The strategy involves transitioning Vietnam's growth model from one reliant on cheap labor and exports to one driven by productivity, technology, and an expanded private sector.
Key Reforms and Initiatives
A comprehensive administrative overhaul is central to the reform agenda. This includes:
- Bureaucracy Reduction: Decreasing the number of provinces from 63 to 34.
- Public Sector Layoffs: Laying off approximately 100,000 government employees.
A significant policy shift involves the role of the private sector. Resolution 68, passed in May of the previous year, designated the private sector as "the most important driving force of the national economy," elevating its status to parity with state-run companies. This repositioning is intended to give major private conglomerates a larger role in sectors such as infrastructure, energy, and industrial projects, areas traditionally dominated by state entities. Additionally, environmental protection has been designated as a central task alongside economic and social development.
"Leading Cranes" Strategy
A core component of the economic plan is the "leading cranes" strategy, which involves supporting national champion private companies to enable them to compete globally. Currently, 11 Vietnamese companies are listed among the Fortune 500 in Southeast Asia, with four being privately owned. The goal is to increase this to 20 globally competitive private companies by 2030, drawing parallels to South Korea's chaebol model.
State-owned enterprises (SOEs) also feature in this strategy. As of 2024, 671 SOEs account for 29% of Vietnam's GDP. A more recent Resolution 79 also designated SOEs as potential "leading cranes," aiming for 50 Vietnamese companies, including SOEs, to be on the regional Fortune 500 list by 2030.
Economic Challenges and Dependencies
Despite substantial economic progress and poverty reduction over the past three decades, Vietnam faces several limitations:
- SOE Influence: SOEs often receive preferential access to licenses, funding, and resources, which can create competition challenges for private companies.
- Foreign Investment Dependence: Many Vietnamese industries rely on foreign investment, technology, and export markets. Vietnam often operates at the lower end of the value chain, primarily performing outsourcing for foreign companies, and depends on imported components for key industries.
- Growth Engine Development: The 10% growth target for the next five years is considered challenging due to limited new growth engines and continued reliance on exports, foreign investment, and infrastructure spending in the current global economic climate.
- Demographic and Environmental Risks: The country faces challenges from an aging population and climate risks.
- Institutional Weaknesses: Existing institutional weaknesses also present hurdles to deeper reforms.
International Relations and Internal Dynamics
Mr. Lam's approach is described by analysts as "pragmatic," evidenced by his acceptance of a U.S. offer to join the Board of Peace, emphasizing Vietnam's readiness to contribute as "mediators and bridges to build peace." Vietnam is also balancing its relationships with major powers, including China, its primary trading partner and a rival claimant in the South China Sea.
Internally, this pragmatic reform agenda has generated tension with the party's conservative faction, led by the military. This faction expresses reservations about certain reforms and seeks to maintain socialist discipline. The expansion of the state security apparatus, granting broader police authority over legislation and businesses, has intensified a rivalry with the military, which holds extensive commercial interests. Additionally, the anticipated concentration of power has raised human rights concerns, given reported crackdowns on activists, journalists, and environmental advocates.
Notable Companies
Two companies cited as examples of potential "leading cranes" include:
- FPT: A technology company with over $1 billion in annual revenue and 80,000 employees globally. It secures contracts with international clients for software management and upgrades and has established its own university.
- Vingroup: Vietnam's largest private company, operating across diverse sectors including real estate, healthcare, education, resorts, and solar farms. Its subsidiary, Vinfast, produces electric cars and two-wheelers. While Vinfast has encountered challenges in US and European markets, it maintains a strong domestic presence, supported by policies such as bans on combustion-engined motorbikes in major cities.