Vietnam elects PM amid South China Sea churn, economic challenges

Amid the ongoing volatility in South China Sea, Vietnam’s Parliament elected Nguyen Xuan Phuc as prime minister at a time of widening public debt and the challenge of sustaining momentum in one of the fastest growing economies in Asia. In an overwhelming mandate, 446 of the 490 members in the National Assembly voted to elect Mr Phuc as the head of government. He was picked up at the Communist Party’s congress in January as the sole candidate to replace Nguyen Tan Dung.

Mr Dung was a strict reformist whose decisiveness won him broad supportm but it also became a reason to be sidelined by conservatives over the fear that he would become too powerful. “I will do my best to serve the country and people,” Mr Phuc said after the vote.

Economic & Political Challenges

Mr Phuc takes office when the country is facing huge public debt, widening budget deficit and China’s territorial assertiveness in the South China Sea. The country is also witnessing an unprecedented drought and salt intrusion in the main rice-growing area of the southern Mekong Delta. In economic reform process, Mr Phuc’s immediate challenge is to restructure the state-owned sectors and banking system. He is also expected to cut Vietnam’s dependence on foreign investment and improve country’s fiscal position.

“It will be very difficult for Mr Phuc to overcome the economic difficulties left by the government of Nguyen Tan Dung,” Communist Party veteran Tran Tuan Hung said. “How can he can resolve public debt, budget deficits and corruption? I don’t rely or expect much from him,” Mr Tran said. Many believe that Mr Phuc will toe the official party line for major decisions. “As the head of state’s highest organ, the executive organ of the National Assembly, the Government members and I will strive to build a strong and united Government,” the newly elected Prime Minister said in his acceptance speech.

Strategic Challenges

Vietnam has set the economic growth target at 6.7 per cent for 2016 despite persistent drought threatening agricultural output. Mr Phuc is expected to follow Mr Dung’s foreign policy, but experts say that the new prime minister may be more careful if he wishes to speak up against China. Mr Dung is widely known for pushing Vietnam’s integration into the global economy and for taking a strong stand against China in the territorial dispute in the South China Sea.

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