Vietnam’s Communist Party General Secretary To Lam secured reappointment for another five-year term this week, presenting his vision of a “national rise” to nearly 1,600 party delegates. The party congress concluded ahead of schedule on Friday, signaling either strong consensus or suppressed dissent. To Lam ascended to the top position eighteen months ago following his predecessor’s death, and observers note this represents the strongest concentration of power in one individual since 1991.
Upon taking charge, To Lam pivoted sharply from his predecessor’s anti-corruption campaign toward economic reform and growth. His transformation includes drastically reducing bureaucracy by cutting provinces from 63 to 34 and eliminating over 100,000 government positions. These represent the most ambitious reforms Vietnam has pursued in four decades, signaling fundamental shifts in economic strategy and governance structure.
Resolution 68, adopted in May, marked a watershed moment by declaring the private sector “the most important driving force” of the economy, elevating it above state-owned enterprises for the first time. The politburo simultaneously announced breathtakingly ambitious targets: double-digit annual growth, doubling private businesses by 2030, and achieving upper-income status by 2045. This represents Vietnam’s boldest attempt to escape the “middle income trap” that has ensnared other Southeast Asian nations.
To Lam’s strategy centers on developing “leading cranes”—nationally competitive private firms modeled after South Korea’s 1970s chaebol system. Vietnam currently has only eight companies in the Southeast Asian Fortune 500 top 100, with merely half being privately owned. The goal targets 20 globally competitive private enterprises by 2030. However, 671 state-owned enterprises still account for 29 percent of GDP, enjoying preferential access to licenses, funding, and land that disadvantages private competitors.
Internal party resistance emerged almost immediately. Resolution 79, passed earlier this month, reestablished state enterprises as “leading geese,” setting an ambitious target of fifty Vietnamese firms reaching the regional Fortune 500 by 2030. This apparent reversal suggests conservative opposition within the party structure remains formidable despite To Lam’s consolidated authority.
Vietnam’s largest private company, Vingroup, exemplifies both promise and peril. FPT, an impressive homegrown technology firm generating over $1 billion annually with 80,000 employees across 30 countries, demonstrates Vietnam’s capacity for innovation. Vingroup, however, dominates hospitals, schools, resorts, solar farms, and attempted building a high-speed railway before withdrawing last month. Its VinFast electric vehicle venture has lost approximately $11 billion since 2021, sustained only through Vingroup’s immense wealth and political support.
The central challenge remains creating globally competitive firms without fostering politically-connected rent-seekers. Vingroup thrives domestically through government connections but struggles internationally; VinFast’s cars are dismissed as inferior by foreign competitors. Experts warn that poorly executed reform risks replacing state monopolies with private conglomerates exploiting political connections, potentially crowding out small-to-medium enterprises that generate most employment and innovation.
Vietnam’s economic transformation over thirty years reduced poverty dramatically and created manufacturing prowess. Yet dependency on foreign investment, technology, and overseas markets persists. Companies like Samsung dominate manufacturing through imported components and technology. Unlike Vietnam, regional competitors Thailand, Malaysia, and Indonesia stagnated after initial growth, lacking homegrown technology giants. Vietnam faces this same challenge at a precarious moment, as access to American markets—critical to its economy—faces uncertainty under new tariffs and geopolitical tensions.
