Vietnam’s communists remember that socialism doesn’t work
Hanoi’s rulers are looking to the private sector to drive growth.
Vietnam, one of the world’s few remaining avowedly communist countries, has long demonized the private sector. Yet the country’s remarkable growth story in recent decades has been driven by free market capitalism. And it’s now doubling down on that bet as it aims to increase its growth rate to 10 percent this year.
The country’s favorable demographics will begin to shift at the end of the decade, as the population ages like elsewhere in East Asia and fewer workers are supporting more retirees. Vietnam’s rulers dream of transitioning away from an economy driven by cheap labor and low-end manufacturing. They want to be more like capitalist-success stories such as South Korea or Singapore.
To achieve that, they claim they are willing to dispense with even more of the traditional Marxist-Leninist playbook. In January, the Vietnamese Communist Party’s 14th congress — which meets every five years — quietly endorsed a raft of liberalization measures to supercharge business, reduce the size of government and curtail the traditional dominance of state-owned enterprises.
The congress specifically upgraded the legal status of Vietnam’s private sector from a leading role in the economy to the “most important driving force.” That’s a symbolic reversal of the longstanding Communist lexicon, which put state-run companies — most of them moribund — at the forefront of development. It’s also a bow to reality: The private sector already accounts for more than 50 percent of Vietnam’s gross domestic product and 82 percent of the workforce. Vietnam first began sanctioning private sector businesses with a series of 1986 reforms called “Doi Moi,” which means renovation.
Much of Vietnam’s private sector activity, however, still consists of small-scale operations like families running restaurants, stores and coffee shops out of the front room of their home. Many of these entrepreneurs refuse to officially register because of myriad regulations and a tax system skewed to benefit government factories and overseas firms.
Part of the pivot involves scaling back oppressive bureaucracy, a hallmark of the stodgy Leninist state. Vietnam reduced bureaucracy by consolidating the number of provinces from 63 to 34. The government reduced the public sector workforce by 15 percent.
These shifts are largely the result of To Lam, the newly anointed president and party general secretary, who has emerged as his country’s most powerful leader in decades. His biggest problem is that he remains unwilling to expand personal liberties as he lets the free market work more of its magic.
Vietnam still ranks as one of the world’s most repressive governments against dissent and free speech. Freedom House lists Vietnam as “not free,” with a lowly score of 20 out of 100, above only communist Laos and military-ruled Myanmar in Southeast Asia. Reporters Without Borders ranks Vietnam 173rd of 180 countries for press freedom, worse than Russia and Cuba.
To Lam, a former general who headed the security services, is betting he can unleash private enterprise and reap the benefits of free markets without giving anything else away. He’s not the first dictator to try this, and outcomes have varied. Yet it’s telling that he knows his country has no other alternative if it wants to keep growing.
The Washington Post – March 12, 2026