Vietnam sees second president in two years resign

The Vietnamese Communist Party has accepted the resignation of President Vo Van Thuong, the government said on Wednesday, in a sign of political turmoil that could hurt foreign investors’ confidence in the country.

In a statement, the government cited Thuong’s violation of party regulations, noting that these “shortcomings” had a detrimental impact on public opinion, tarnishing the reputation of the Party, State, and his personal standing.

The Central Party Committee, a key decision-making body in Vietnam’s Communist Party governance, endorsed Thuong’s resignation approximately a year after his appointment. Although the president’s role is largely ceremonial, it holds significant stature among the top four political positions in the Southeast Asian country.

Anti-corruption campaign in Vietnam

The committee’s deliberations preceded an extraordinary session of Vietnam’s rubber-stamp parliament scheduled for Thursday, where deputies are expected to ratify the party’s decisions.

While the government statement did not specify Thuong’s transgressions, recent significant leadership changes in the single-party state have been associated with the extensive “blazing furnace” anti-corruption campaign. While ostensibly targeting widespread corruption, critics suspect it may also serve as a tool for political factionalism.

Foreign investors and diplomats have consistently attributed the slowdown in decision-making in Vietnam to the “blazing furnace” anti-corruption campaign, exacerbating the challenges posed by the country’s already huge bureaucracy.

Vo Van Thuong, aged 53, resigned shortly after Vietnamese authorities announced the arrest of a former head of Quang Ngai province for alleged corruption dating back a decade, during Thuong’s tenure as party chief there. He also held a senior position in Ho Chi Minh City, which is currently embroiled in a massive financial scandal, with a significant trial underway.

Thuong was widely seen as an ally of the aging General Secretary Nguyen Phu Trong, the dominant figure in Vietnamese politics and the main force behind the anti-corruption efforts.

Thoung second president to resign

Last year, when former president Nguyen Xuan Phuc stepped down following accusations of “violations and wrongdoing” by officials under his purview, it took lawmakers a month and a half to appoint Thuong as his replacement.

While a new president may swiftly resolve the current political crisis, there remains a risk that frequent reshuffling of top leadership could dampen business confidence in a country heavily reliant on foreign investment.

News of the imminent presidential resignation prompted a nearly 3% drop in the Ho Chi Minh City stock exchange on Monday, with foreign investors selling around $80 million worth of shares in the first two days of the week.

The removal of Thuong could further delay policy and administrative decisions, as officials become more apprehensive about the trajectory of the anti-corruption campaign. However, they emphasized that Vietnam’s fundamental policy positions would likely remain unchanged.

The departure of two presidents in quick succession may unsettle investors who value political stability. Recent events have raised doubts about the predictability, reliability, and internal mechanisms of the Vietnamese system, crucial factors for investment decisions.