Political Unrest in Vietnam as President Steps Down
Amidst political turbulence, President Vo Van Thuong's resignation has been acknowledged by the Vietnamese Communist Party, sparking concerns about stability and impacting foreign investors' trust in the nation.
The government announced on Wednesday that the ****Vietnamese Communist Party has approved President Vo Van Thuong's resignation. This development indicates political instability that may impact foreign investors' trust in the country.
According to the government's statement, Thuong was found to have breached party regulations. His actions were deemed to have a negative effect on public perception, tarnishing the reputation of the Party, State, and himself.
The Central Party Committee in Vietnam, which is a key decision-making body in the Communist Party, has accepted Thuong's resignation. This decision came shortly after he was elected about a year ago.
Although the president's role in Vietnam is mainly ceremonial, it is considered one of the top four political positions in the country in Southeast Asia.
Calls made to the presidential office on Wednesday were not answered.
The committee met before an important session of Vietnam's parliament, which is set to take place on Thursday. During this session, deputies are anticipated to officially approve the decisions made by the party.
The government did not provide details on Thuong's shortcomings. However, recent leadership changes in the one-party state have been associated with the anti-bribery campaign. The campaign, known as the "blazing furnace," aims to eliminate corruption but is also seen by critics as a way to engage in political power struggles.
Vo Van Thuong, center, swears in as the president at the National Assembly in Hanoi, Vietnam Thursday, March 2, 2023. Vietnam's legislative has approved Thuong to the presidency post, two months after former president Nguyen Xuan Phuc stepped down. (Nhan Huu Sang/VNA via AP)
Vo Van Thuong was sworn in as the president at the National Assembly in Hanoi, Vietnam on Thursday, March 2, 2023. Vietnam's legislative body approved Thuong for the presidency post, following the resignation of former president Nguyen Xuan Phuc two months earlier. (Nhan Huu Sang/VNA via AP)
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Foreign investors and diplomats have expressed concerns that the campaign is contributing to delays in decision-making in a country that already struggles with bureaucratic processes.
Thuong, 53, resigned shortly after Vietnamese authorities revealed the arrest of a former leader of Quang Ngai province for corruption that allegedly occurred ten years ago, during Thuong's tenure as party chief in the region.
He was previously a senior party official in the economic hub of Ho Chi Minh City, where a large trial is currently taking place for a multi-billion-dollar financial scam. Thuong is known to have a close relationship with General Secretary Nguyen Phu Trong, who is considered the most influential figure in Vietnam and is leading the anti-corruption efforts.
Foreign investors
When former president Nguyen Xuan Phuc resigned last year following accusations of "violations and wrongdoing" by officials under his leadership, it took lawmakers one and a half months to appoint his successor, Thuong.
The swift election of a new president could potentially resolve the current political crisis. However, there are concerns that frequent changes in top leadership may negatively impact business sentiment in a country heavily reliant on foreign investment.
On Monday, the Ho Chi Minh City stock exchange, Vietnam's primary stock market, experienced a nearly 3% drop in the initial hours of trading. This decline was attributed to news circulating about the impending resignation of the president.
Foreign investors’ net sales in the first two days of the week amounted to about $80 million, according to Mirae Asset Securities, a broker.
US President Joe Biden holds a press conference in Hanoi on September 10, 2023, on the first day of a visit in Vietnam. Biden travels to Vietnam to deepen cooperation between the two nations, in the face of China's growing ambitions in the region.
US President Joe Biden traveled to Vietnam on September 10, 2023, to strengthen cooperation between the two countries amid China's increasing influence in the region. During his visit, he held a press conference in Hanoi on the first day of his trip.
Saul Loeb/AFP/Getty Images
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A Vietnam-based adviser to foreign corporates mentioned that if Thuong is removed, policy and administrative decisions may slow down as officials become more cautious about the anti-corruption campaign. However, it was noted that Vietnam's stance on key policies would remain unchanged.
Investors who value political stability may be concerned by the early departure of two presidents within a year.
Florian Feyerabend, the representative in Vietnam for Germany’s Konrad Adenauer Foundation, a think tank, raised concerns about the predictability, reliability, and internal workings of the system that influence investment decisions.
Despite these concerns, he mentioned that the overall political system of governance in Vietnam remains stable. Additionally, Vietnam's foreign policy, which focuses on maintaining good relations with both the United States and China, is not expected to change.
Editor's P/S:
The recent resignation of Vietnamese President Vo Van Thuong, following accusations of party regulation breaches, has sparked concerns about political instability in the country. This development could undermine investor confidence, as foreign investors value political stability when making investment decisions. The swift election of a new president could potentially resolve the current crisis, but frequent changes in top leadership may raise concerns about the predictability and reliability of the system.
Moreover, the ongoing anti-corruption campaign, while aimed at eliminating corruption, is also seen as a way to engage in political power struggles. This campaign has led to delays in decision-making and may further hinder foreign investment in the country. Investors may be hesitant to invest in a country where the political environment is uncertain and the anti-corruption campaign may impact business decisions.
