Political shake-up rattles succession battle in Vietnam

Imagine changing presidents twice in just one year. That’s what’s happening in Vietnam, and it’s not good news for anyone, especially investors. 

Vietnam, once a bastion of predictability, now finds itself adrift in turbulent waters as when President Võ Văn Thưởng resigned suddenly on March 20, 2024, after just a year in office, it set off alarm bells. He’s now the second president to leave in two years, all because of a big crackdown on corruption. 

The Vietnamese Communist Party decided to accept Thưởng’s resignation, saying he broke some rules. This isn’t a big surprise to people who watch Vietnam closely.

But why did Thưởng have to go? Well, the precise reasons behind Thưởng’s downfall remain shrouded in ambiguity. All they’re saying is that he didn’t follow the rules of the party and the country. Many think it’s all part of the Communist Party’s broader crackdown on corruption within its ranks.

The investigation was spearheaded by Tô Lâm, the 66-year-old Minister of Public Security, who has been at the forefront of Nguyễn Phú Trọng’s anti-corruption drive. Some analysts view Lâm as a potential successor to Thưởng. In fact, Lâm was considered a top contender for the presidency when the position was last vacant a year ago.

However, Lâm has not been without his share of controversy either. In 2021, he grabbed headlines when video footage surfaced showing Turkish celebrity chef Nusret Gökçe, famously known as Salt Bae, presenting him with a gold-leaf adorned steak at a restaurant in London.

This incident sparked outrage in Vietnam, with numerous people questioning the appropriateness of a senior official indulging in lavish dining experiences amid an anti-corruption campaign, especially during the peak of the pandemic.

Is Vietnam’s future uncertain?

This isn’t just about one person leaving his job. It’s about what this means for Vietnam’s future. The country has been doing really well economically, especially after the trade war between the United States and China. Investors preferred Vietnam because it had a stable government and good workers, and it wasn’t as strict as China.

But now, with all this political turmoil, investors might get nervous. They don’t like uncertainty, and Vietnam used to be a safe bet. Now, who knows?

Thưởng’s resignation “is not good for political stability”, said Nguyễn Khắc Giang, a visiting fellow at Singapore’s ISEAS – Yusof Ishak Institute, according to a report by Financial Times. “This causes hesitancy for foreign companies who want to make big investments in Vietnam”, he added.

Even the US is worried. They’ve been trying to get closer to Vietnam to balance out China’s influence in the region. President Joe Biden visited Vietnam last year to show how important the relationship is. But the leadership vacuum comes at a precarious moment, with the economy grappling with declining exports and inflationary pressures. With the next National Congress not scheduled until 2026, the nation faces a period of uncertainty unless a clear path to succession is mapped out.

Investor uncertainty

And it is not just politics that is affected. The crackdown on corruption is causing problems for businesses too. It’s slowing down government approvals for projects, and nobody wants to invest if they’re worried about getting caught up in a corruption scandal.

So, what can Vietnam do to fix all this? Well, they need to be open and honest about what’s going on. People need to trust that the government is doing the right thing and that they’re not just getting rid of people they don’t like. And they need to make sure that businesses feel safe investing in Vietnam. That means making sure there are clear rules and that everyone follows them.

If Vietnam can do that, they might be able to get back on track. But if they can’t, they could lose their reputation as a good place to do business. And that would be a big loss for everyone involved.

As the world watches Vietnam’s political drama unfold, the stakes are high, and the path forward remains uncertain. Only time will tell how the nation will sail over these challenging times, and whether it emerges stronger or weaker on the other side.