News and Analysis, Vietnam - Central Committee Moves to Reduce Number of Army Run Companies, 04 Feb 2007

Vietnam: The Plenum session of Vietnam’s Communist Party Central Committee announced that it will greatly reduce the number of Army run companies over the next year, transferring them to the State where they will then be eventually turned over to private investors. The Army currently owns and operates over 100 companies ranging from shipbuilding to textiles to communications. Thanhnien News reported in an interview with Major General Ho Sy Hua, head of the Ministry of Defense’s Economic Department, that military firms in Vietnam generated about 2.2 billion USD’s in revenues during 2006 and represent about three percent of Vietnam’s gross domestic product. The Central Committee endorsed the policy of transferring companies engaged in strictly non-security related production. Those factories involved in the production of defense articles will remain under the Army’s control. (Comment – This policy reflects steps taken by the government to address the growing maturity of Vietnam’s economy and its increasing integration with the world market. Of note, on 11 January 2007, Vietnam became a member of the World Trade Organization. It also bodes well for the process of streamlining and professionalizing the Vietnamese armed forces, allowing them to concentrate on more traditional military roles. Faced with aging equipment, oversized personnel numbers, and a changing security environment, the Peoples Army of Vietnam is looking for ways to modernize and this action moves them in a positive direction. What exactly will be the process for the transfer of the Army’s economic interests over to the civilian sector has yet to be clearly articulated.) [slr]

For a partial listing of military run companies in Vietnam, see the Ministry of Defense, Economic Department’s website at: http://www.ckt.gov.vn/