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State-owned enterprise (SOE) reform was introduced into Vietnam as a component of the Doi Moi economic reforms that began in 1986 and aimed to replace central planning with a more market-oriented economy. SOEs had performed poorly and were a drain on government resources. In this article we use a political economy framework to trace SOE reform through the various stages of policymaking and implementation. While the number of SOEs has been reduced, privatization ("equitization" in Vietnam) of large enterprises has proved more difficult as it has threatened the interests of powerful stakeholders. We use two case studies of large Vietnamese SOEs to demonstrate and explain both success and failure in SOE reform. Keywords: stateowned enterprise reform, privatization, Vietnam, equitization, the state and economic development.

Since the 1950s Vietnam has pursued a model of state-led industrialization influenced by the East Asian model of economic development pursued by Japan and then by South Korea, Taiwan, and Singapore. But unlike these East Asian "tigers," the Vietnamese model relied on state-owned enterprises (SOEs) for its industrialization. These enterprises have made significant contributions to Vietnam's impressive economic growth rates over the past thirty years. Vietnam's economy has also successfully integrated into regional and global economies, joining the Association of Southeast Asian Nations (ASEAN) in 1995, the Asia-Pacific Economic Cooperation forum (APEC) in 1998, and the World Trade Organization (WTO) as an official member in 2007.

Despite economic achievements and integration, Vietnamese leaders recognize the need to reform the country's SOE sector to obtain greater efficiency and competitiveness. But SOE reform has been one of the most difficult and sensitive areas for reform due to its impacts on both economic issues as well as political and social relations in Vietnam. Thus, a gradual approach to SOE reform has been undertaken as part of the government's policy of economic renovation, or Doi Moi, that began in 1986 (Beeson and Pham 2012). This policy involved a gradual transformation of the economy from a centrally planned system to a more market-oriented one that relied on SOE equitization, the preferred Vietnamese term for privatization. The reform aimed to reduce the number of SOEs, increase the efficiency of state capital invested in SOEs, and improve their business operations (Dung 2006). The program began modestly in the...

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