The Global Economy in Turbulent Times

CHAPTER 127 Vietnam Wakes Up: Ding Dong Dung¹

I was back in Hanoi in early October 2012 after a long absence. Change is all over, reflecting the impact of breakneck growth. It so happens my revisit coincided with the Vietnam Communist Party’s (VCP) 175-member Central Committee (CC) meeting, preoccupied with two main issues: the political future of its prime minister (PM), Nguyen Tan Dung, and what to do with recent financial scandals amid slackening of its once-red-hot economy in the face of a depreciating dong (its currency).

Word around Hanoi was that Mr. Dung, generally regarded as a pro-West liberal, was under immense pressure to convince his CC colleagues that he deserves a second chance to put the nation back on a firm footing and get the economy onto high gear once again. Mr. Dung is a survivor. A former governor of the State Bank (Vietnam’s central bank), Mr. Dung is a street-smart politician, having fought with Vietcong guerrillas against the United States, and who once served as the nation’s public security chief. He was first appointed PM in 2006 and charged with continuing economic reforms that pushed the war-torn backwater nation into a promising emerging economy. In 2007, he steered the nation into the World Trade Organization (WTO), which triggered a new wave of foreign direct investment (FDI) inflows. Unfortunately, the nation was caught in an inflationary spiral (reaching a high of 23 percent in August 2011), driving the government to tighten policies, slow ...