Industrial policy reforms for political risk management? Understanding the evolution of automotive industrial policies in Vietnam

ABSTRACT

This paper discusses how outward-oriented industry policies are made or changed in Vietnam, an illiberal state facing a rapidly liberalizing global economy, using the case of Vietnam’s automotive sector as a spearhead sector for industrialization. It provides a new perspective by highlighting collective concerns among state elites in Vietnam, a relevant but relatively overlooked factor in understanding key industrial policy reforms in Vietnam. Specifically, this study argues that the positional characters of Vietnam as an illiberal non-major state in the international asymmetrical liberal order help us see when policy reforms, particularly in outward-oriented industries, are likely to be initiated and in what forms or in what directions changes can be made. Drawing on conceptual discussions of conflicting concerns among the illiberal state elites governing developing countries in a liberalizing global economy, this paper discusses how closely major policy reforms in automotive sector are aligned with elites’ interests in reducing these dual concerns in a balanced way.

KEYWORDS:

• Industrial policy reforms
• automotive industry
• economic liberalization
• illiberal non-major states
• Vietnam
• ASEAN

Acknowledgements

We authors thank anonymous reviewers for their careful reading of our work and valuable feedback.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Similarly, Masina (2012) highlights the protection of national sovereignty as a priority for many policy elites in Vietnam.

2 Chiến lược ổn định và phát triển kinh tế – xã hội đến năm 2000. https://tulieuvankien.dangcongsan.vn/ban-chap-hanh-trung-uong-dang/dai-hoi-dang/lan-thu-vii/chien-luoc-on-dinh-va-phat-trien-kinh-te-xa-hoi-den-nam-2000-1559 (accessed July 15, 2020).

3 With the Decision No. 177/2004/QD-TTg of October 5, 2004, the PM approved the planning for development of Vietnam’s automobile industry to 2010, with potential for development to 2020.

4 Strategy for socio-economic development 2001–2010 https://www.chinhphu.vn/portal/page/portal/English/strategies/strategiesdetails?categoryId=29&articleId=3065 (accessed July 15, 2020).

5 CKD and SKD are methods of supplying unassembled parts for assembly, sent from foreign countries.

6 According to Pham, reformist views were expressed in the PM’s New Year Message 2013 and in the 11th Party Congress (2016, note 52).

7 Pham (2016) identifies these concerns explicitly expressed in the Resolutions at 14th Plenum of Central Committee and the 11th Party Congress.

8 The automotive market in Vietnam keeps growing. In 2014, the number of automobiles sold in Vietnam was 133,565 and the number grew 21.2% annually in 2015–2019 (VAMA Sales Report 2014 and 2015). According to Vietnam Industrial Policy and Strategy Institute, the number of cars sold was estimated to be around 750,000–800,000 in 2025 and 1,700,000–1,850,000 in 2035. See https://tapchitaichinh.vn/tai-chinh-gia-dinh/tang-truong-tieu-thu-o-to-se-dat-226nam-140184.html (accessed July 20, 2020).

9 https://vanbanphapluat.co/decision-no-879-qd-ttg-dated-2014-the-strategy-on-vietnam-s-industrial-development-through-2025 (accessed September 20, 2021).

10 https://vanbanphapluat.co/decision-no-1168-qd-ttg-dated-2014-strategy-to-develop-automotive-industry-in-vietnam-by-2025 (accessed September 20, 2021).

11 Admittedly, Vietnam negotiated with the EU and US the exceptional roles of SOEs in the most sensitive sectors such as Petrovietnam (oil), EVN (electricity distributor), Vinacomin (coal and minerals), air transport, printing, publishing, mass communication, and audio-visual services sector (Deprez, 2018, p. 27).

12 VinGroup Corporate Presentation (June 2021, p. 5). Available at: https://ircdn.vingroup.net/storage/Uploads/0_Quan%20he%20co%20dong/0_Vingroup_2021/Jul/2021.06_Vingroup%20Corporate%20Presentation.pdf (accessed September 20, 2021).

Additional information

Funding

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea [grant number NRF-2019S1A5C2A01080959].

Notes on contributors

Yong-Hun Beak

Yong-Hun Beak is an assistant professor in Dankook University, South Korea. He earned his MA in area studies and PhD in sociology at Yonsei University, South Korea. His doctoral thesis was about economic growth and social development in the northern and southern Vietnam. His primary research interests include diverse social issues of contemporary Vietnam related to health care and welfare.

Ki-Hyun Bae

Ki-Hyun Bae is an associate professor in the Institute for East Asian Studies at Sogang University, South Korea. Her research interests are broadly in international relations and diplomacy with a geographical focus on East Asia. She studies and writes about ASEAN and related institutions, external relations of ASEAN with its dialogue partners, and other various issues around East Asian regionalism. Her recent works are published in Global Governance, International Journal, Pacific Review, Korea Observer and others.

Han-Woo Lee

Han-Woo Lee is an assistant professor in the Institute for East Asian Studies at Sogang University, South Korea. His expertise lies in Vietnamese political economy, specifically the issues of Vietnam's reform process and post-socialist transformation of Vietnam. He is also interested in providing policy analysis on Korea-Vietnam relations. His recent works are published in VNU Journal of Social Sciences and Humanities, The Southeast Asian Review (in Korean) and others.