Comment on “Has Nguyen Phu Trong's Leadership Curbed Economic Reform? Economic Reform Trends in Vietnam”

• DOI: http://doi.org/10.1111/aepr.12308
• Author: Mai Fujita
• Date: 01 July 2020
• Published date: 01 July 2020

Comment on “Has Nguyen Phu Trong’s

Leadership Curbed Economic Reform?

Economic Reform Trends in Vietnam”

Mai FUJITA†

Institute of Developing Economies, Japan External Trade Organization

JEL codes: P31, P48, D72, D73, O14, O43

Sakata (2020) explores the nexus between authoritarian political leadership and eco-

nomic reforms in Vietnam during Nguyen Phu Trong’s second term as General Secre-

tary of the Communist Party of Vietnam (CPV), which started in 2016 and will end in

less than a year. Sakata’s paper is a timely contribution as it provides a concise and

informative analysis of recent developments in Vietnam’s political economy and

explores their broader implications. My comments in particular focus on the rise of

large private enterprises which received particular attention in Sakata’s paper. This is a

new development, which contrasts with the traditional structure of the Vietnamese

economy, in which large enterprises in strategic sectors were predominantly state-

owned. It is also significant because of the implications it might have for the evolving

relationships between the party-state and businesses in Vietnam.

In an attempt to explain this development, Sakata (2020) presents the “pragmatic

national champion strategy”argument, whereby preferential treatment, formerly provided

by the Vietnamese government to a limited number of state-owned enterprises (SOEs) in

key economic sectors, started to be applied to private enterprises selected by the CPV. To

start with, whether the concept of “national champions,”which refers to a particular group

of enterprises targeted by the government to lead the development of specificstrategic

industrial sectors, as was observed typically in Japan and Korea, is suitable for describing

Vietnamese policies towards large state-owned conglomerates in the pre-2016 period may

require deliberation. It is worth recalling that the roles that large state-owned conglomerates

have been expected to serve in the Vietnamese economy were multifaceted. While a number

of state-owned conglomerates, typically those in shipbuilding and textiles, provide examples

of SOEs nurtured to lead the development of strategic industries, numerous other SOEs

were expected to serve a range of other purposes such as the provision of essential goods,

macroeconomic stabilization, social and regional development, and national security. More-

over, neither of the typical cases mentioned already ended up as “national champions”in

practice because the party-state failed to exercise sufficient discipline over the enterprises.

†Correspondence: Mai Fujita, Institute of Developing Economies, Japan External Trade Organi-

zation, 3-2-2 Wakaba, Mihama-ku, Chiba 261-8545, Japan. Email: mai_fujuita@ide.go.jp

© 2020 Japan Center for Economic Research 323

doi: 10.1111/aepr.12308 Asian Economic Policy Review (2020) 15, 323–324