Vietnam vows change to build modern economy

Vietnam's Communist Party congress Vietnam's new leadership will have to deal with high inflation and a budget deficit

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Vietnam's governing Communist Party has begun its five-yearly congress by admitting its programme of economic growth has strayed off course.

Outgoing party leader Nong Duc Manh said the economy must be restructured to speed up modernisation.

Vietnam is aiming in the next 10 years to become an industrialised country.

However, it has recently been beset by inflation, a trade deficit and the near-bankruptcy of the state-owned shipbuilding conglomerate, Vinashin.

Some 1,400 delegates opened the meeting in Hanoi with the singing of the Communist anthem, the Internationale.

The main task of the congress is to choose new leaders for the party - a new central committee with 200 members will be selected at the end of the nine day gathering.

Analysis

Vietnam is used to growing fast - it has been on the up for 25 years, ever since the government started to mix its socialist ideology with market-based economics.

Today, fancy cars negotiate the narrow streets of its capital. But for most, prices are going up - inflation at 12% is hitting the poor the hardest as the wealth gap widens. The economy is wobbling. Confidence in the currency is low and Vietnam's deficit is growing.

Some of the huge, state-owned enterprises, which were designed to drive growth forward as big business did in South Korea, have moved too far too fast and are now facing financial problems.

Vinashin, the state's ship-builder, has just defaulted on a loan, the country's credit-rating has been downgraded, and investors are asking just how safe their money might be.

Opinion is divided over where the country is now heading. Optimists believe the growth will continue whatever, and some well-placed policies are all that is needed to repair what is really just a crisis of confidence.

The pessimists say big reforms are needed to rethink the way things are done to cut out waste and generate jobs, and to give the vibrant private sector more room to grow.

The delegates' selection will also give some indication of the party's future direction.

The nation must "renew the growth model and restructure the economy to speed up industrialisation and modernisation with fast and sustainable development," Nong Duc Manh told the congress.

"The strategy is to strive towards 2020 so that our country will basically become an industrialised nation."

The Politburo's second-highest ranking member, Truong Tan Sang, who is expected to become the new president, told delegates corruption and mismanagement must be stamped out.

He said some senior party members "lack example in morality and lifestyle, having allowed their wives, children or their staff to abuse power for personal profits."

The BBC's Nga Pham, who is at the congress, says the Communist Party is determined to retain its monopoly on power, but in order to do so, it will need strong, energetic and reform-minded people at the helm.

She says little change in policy is expected at the meeting, but the new leadership will have to find ways to renew old socialist ideas seen by many as impeding economic development.

A socio-economic strategy for the next decade pledges to carry out reforms long sought by foreign investors.

These include the need for a more skilled workforce, better infrastructure, and more efficient state enterprises.

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