Vietnam in 2018: A Rent-Seeking State on Correction Course

Summary

The Evolution of Vietnamese Politics

The state of Vietnamese politics since the reunification of the country in 1975 has been evolving as the triumph, crisis, and course correction of first a totalitarian state and then a rent-seeking state. During the period from 1975 to 1986, the triumphant Communist Party of Vietnam (CPV) imposed a totalitarian state that planned everything and forced its programmes on the population. The totalitarian state, however, failed miserably to motivate people to work and soon plunged into a severe crisis. The death of party chief Le Duan and the election of Truong Chinh as general secretary of the CPV in 1986 paved the way for a sweeping correction of the totalitarian state. Known as doi moi, or “renovation”, this correction course was focused on economic reform while delaying political reform, which was watered down to mere “administrative reform”. Doi moi mainly consisted of the gradual introduction of the free market and the selective loosening of totalitarian politics. By the mid-1990s, this hybrid had succeeded in bringing the country out of the grave economic crisis and putting it on a rapid growth path, while maintaining CPV rule and breaking out of international isolation.

As this triple success made doi moi a long-term principle of Vietnamese politics, the hybrid also changed the nature of the Vietnamese state. Whereas the mixture of authoritarianism and capitalism in the “Asian tigers” gave rise to developmental states, the marriage of totalitarianism and commercialism in Vietnam resulted in a rent-seeking state. While the developmental state intervenes to enhance the country's competitiveness in the global market, the rent-seeking state focuses on extracting payments from society. After two decades of doi moi, rent-seeking emerged in the mid-2000s as Vietnam's most powerful policy current, more than regime preservation and national modernization.

When Nguyen Tan Dung was elected as Prime Minister in 2006, rent-seekers achieved primacy in the Vietnamese leadership. Dung pursued an economic policy that relied on high investment and state-owned conglomerates. He appointed cronies regardless of their competence in business and management to lead these “dinosaurs”, turning them into money-extracting devices for the rent-seekers. In early 2008, months ahead of the global financial turmoil that started the same year, Vietnam fell into a prolonged period of economic slowdown.