A year in office, Vietnam PM faces daunting task
HANOI - Vietnamese Prime Minister
Phan Van Khai marks one year in office next week faced
with a slowing economy, shrinking foreign investment
pledges and mounting concern over the country's balance
of payments.
Khai, a reformist from Vietnam's free-wheeling south,
was doing his best in the face of constraints the country's
collective-style leadership placed on decisive economic
reform, analysts said.
The 64-year-old Russian-trained technocrat wanted to
improve the business climate and streamline bureaucracy,
but he remained hemmed in by Communist Party
conservatives who favour gradual reforms, the said.
``In terms of maintaining macroeconomic stability in a
considerable thunderstorm he and his team have done
relatively well,'' said Adam Fforde, of the Australian
Vietnam Research Project, referring to the Asian
financial crisis.
``He is doing a good job...in those areas where he has
influence. The question is whether he's capable of
continuing if the strength of the storm becomes greater,''
Fforde told Reuters by telephone from Canberra.
Khai was installed as prime minister on September 25 last
year. He has the task of steering a decade-old process of
economic reform through Vietnam's worst downturn since
the doi moi (renovation) measures were launched.
On several occasions this year Khai, who appears keen to
avoid the media spotlight, has met disgruntled foreign
investors and reassured them about Hanoi's commitment
to economic reform.
But some foreign businessmen and diplomats express
doubt about what Khai can achieve, and how fast.
``I think his (pro-reform) comments have to be taken with
a pinch of salt because he is constrained and the
bureaucracy just doesn't listen,'' said one Asian diplomat.
The key gripes of foreign investors in Vietnam focus on
red tape, corruption and the cost of doing business,
whether it be hefty taxes or high charges for international
telephone calls.
Investors also say reforms that look good when they leave
Khai's office take time to be enforced or get watered
down.
All of this coincides with predictions of Vietnam's slowest
year of economic growth since the early 1990s.
Most economists forecast an economic growth rate of 4-5
percent in 1998 and the International Monetary Fund has
called Vietnam's macroeconomic picture ``grim.''
Nevertheless prices have remained relatively stable even
though the government has set an inflation target this year
at just under 10 percent compared with 3.6 percent in
1997.
One major concern is Vietnam's balance of payments,
especially with overseas investment pledges well down on
previous years and foreign exchange reserves already
low.
Hanoi gives no precise figure on foreign currency
reserves at the central bank. Last month an official put
the figure for total foreign exchange in the local banking
industry, including the central bank, at 10 weeks of
imports, or some $2.5 billion.
Nick Freeman, head of Indochina Research at ING
Barings in Bangkok, said any prime minister in Vietnam
faced a daunting task at the moment but that Khai
deserved a vote of foreign confidence.
``I'm convinced Khai is the man for the job. He is an
ardent pro-reformer, smart, and knows what he is doing,''
Freeman said.
``I think he is going as fast as he can on reform.''
Besides being prime minister, Khai is ranked three on the
powerful Politburo, behind the Communist Party general
secretary and the country's president.
In the end, political analysts said trying to determine who
has influence in Vietnam involved plenty of guesswork.
The domestic media paints a picture of a united leadership
on economic reform and any debates over policy
generally take place behind closed doors.
By Dean Yates - Reuters - September 14, 1998.
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