Vietnam party chief calls for stronger, state-led economy as congress starts

HANOI - Vietnam's Communist Party chief on Thursday urged continued "total reform" of the economy, which he said was moving in a positive direction but had missed some targets and still lacked a coordinated approach.

In opening remarks to the party's five-yearly congress during which the party leadership would be decided, Nguyen Phu Trong said the state should take the lead over the private sector in driving the economy to ensure fair competition and ward off graft and cronyism.

In a modest recap of the past five years, Trong said the economy was more stable having emerged from problems such as inefficiency in state-run firms and high levels of bad debt. He did not give any economic forecasts or cite data.

"The economy has passed through many difficulties and challenges," he told delegates. "The scale and potential has increased, the macro-economy was essentially stable, inflation was controlled, economic growth was maintained at suitable levels."

The congress comes as Vietnam's economy saw its fastest growth in five years at 6.7 percent in 2015. It also was a record year for both merger and acquisition activity and foreign investment into a country emerging as a cheaper alternative to China's factories.

Growth has been supported by solid exports, consumption and manufacturing, mostly of TVs, phones and apparel, and its agreement of trade pacts covering its major markets, including the Trans-Pacific Partnership.

The congress opened amid controversy, with Prime Minister Nguyen Tan Dung facing a political exit after his omission from leadership nominations approved by the party's outgoing central committee, according to several party sources.

Though Dung has been widely credited with driving unusually fast-paced liberalisation, many experts see little change in Vietnam's economic priorities under a new leadership.

Trong himself is among the leader nominations and could extend his tenure as party chief, the sources said.

In his address, Trong pushed for reforms to continue in financial markets, investment and state firms. He also said corruption remained serious and some party members had strayed from socialist ideology. "The recession of political ideas, morality and lifestyle of some groups of party members has yet to be countered. Some groups, it has even become more complex," he added.

Hugh Young, managing director of Aberdeen Asset Management's business in Asia, said there was appetite towards Vietnam but some uncertainty about the leadership and the economy. "Depending on the outcome, investment could either slow or speed up," he said. "People want to invest in Vietnam and a little encouragement will go a long way."