Vietnam may officially allow private business owners into the Communist Party for the first time, a move that could boost the country’s image with foreign investors a decade after China adopted similar measures.
The party will vote on and approve the measure on January 18, three delegates said in interviews on the sidelines of the National Congress in Hanoi. The change would build on a policy approved at the previous congress in 2006 that allowed existing party members to run private businesses.
“This has received support from almost all of the delegates and we will definitely pass this in a few days,” Huynh Van Toi, a delegate from Dong Nai province, an industrial zone near HCM City, said today. “It will help increase the confidence of foreign investors because they will see how we value the private sector.”
Allowing entrepreneurs to join the party would highlight their growing influence in a country where the constitution mandates the state must hold a “leading role” in the economy. Local and foreign private businesses accounted for 81.5 percent of industrial output in 2008, up from 50.4 percent in 1996, according to the latest government figures.
About 1,400 delegates are participating in the 11th National Congress, an event held every five years to select the committee that appoints the Politburo, Vietnam’s most powerful body. In addition to Toi, delegates Nguyen Duc Kien and Nguyen Manh Hung said the vote would take place January 18 and that it would be approved.
“Everyone would look at it as a positive,” Tony Foster, managing partner at Freshfields Bruckhaus Deringer in Hanoi, said by phone today. “The more business-oriented the party is, the happier foreign investors would be.”
To join Vietnam’s Communist Party, which has 3.6 million members, candidates need recommendations from two members who have worked with them for a year and must pass a 12-month probation period, according to the party’s website. Vietnam has about 90 million people, data compiled by Bloomberg show.
“A party member is a revolutionary soldier within the pioneering group of Vietnamese working class,” the website says.
Allowing business people in the party would mark shifting views of work and exploitation, said Vu Duy Hai, chair and general director of HCM City-based Vinacam Joint-Stock Co., which trades fertilisers and agricultural products.
People “didn’t think that using labour created jobs for society,” Hai, a party member for 20 years, said by phone today. “Calling that exploitation is not correct. When they work for us, their lives improve.”
In 2002, former Chinese President Jiang Zemin altered Communist Party doctrine and encouraged private entrepreneurs to join. The move ushered in Chinese billionaires who have aimed to influence policy, including a push last year to thwart plans for a property tax.
Vietnam’s Communist Party “is not necessarily for the working class only,” Nguyen Duc Kien, a party official from Soc Trang province in the country’s south, told reporters in Hanoi today. “We should appreciate a good businessperson who can make money legally and create jobs for people at the same time.”
In the 1950s, as many as two-thirds of Communist Party members were wealthier people who joined to fight for independence from the French before leaders purged them and brought in poor peasants, according to Tuong Vu, an assistant professor at the University of Oregon.
Three decades later, party leaders introduced limited private ownership of companies as part of a shift to a market economy called doi moi, or renovation.
“Over time, despite the party’s hesitation, policy will become more friendly to private businesses, simply because they are now the backbone of the economy,” Vu said in an e-mail. “The main goal of the party, nonetheless, remains to develop the state-owned sector, and through this sector control the economy.”
Vietnamese state-owned enterprises account for 40 percent of gross domestic product, according to the government.
Prime minister Nguyen Tan Dung, the ex-central bank chief who may secure another five-year term if he’s reappointed to the 15-member Politburo this week, faced criticism before the Congress began over his management of debt-ridden, state-owned Vietnam Shipbuilding Industry Group, known as Vinashin.
The Communist Party seeks growth of 7 percent to 8 percent until the year 2020 and wants to almost triple per capita income to $3,000 in that time, general Secretary Nong Duc Manh said January 12. A lending surge of 28 percent last year fueled concern of rising prices and an eventual jump in defaults that was reflected by a 2 percent drop in the benchmark VN Index, Asia’s second-worst performer in 2010 after Shanghai.
Allowing business owners into the party “is part of a wider blurring between the private and public sector,” said Jonathan Pincus, an economist at the Harvard Kennedy School in HCM City. “It’s not a one-way street. It’s also a way for the party to communicate its wishes and strategies to the business community.”