By Martin Petty
HANOI (Reuters) - As Vietnam's Communist Party opens its five-yearly Congress on Thursday, the country's progressive prime minister is headed for the political wilderness, an unexpected development that clouds the outlook for reform of the fast-growing economy.
Premier Nguyen Tan Dung, widely credited with driving a recent wave of economic liberalization, has been omitted from nominations for key leadership posts to be agreed at the week-long meeting, several party sources told Reuters.
Dung, 66, had been tipped by business leaders and experts as almost certain to become party chief and to install a protege as prime minister, a scenario that would have consolidated his power but which could have tested four decades of consensus rule in a country with no paramount leader.
Dung's office did not respond to requests for comment.
Asked about widespread speculation on social media that Dung would be out of a job, a deputy information minister declined to comment at a briefing on Monday to discuss the Congress. Dung has reached his two-term limit as prime minister.
His effective ouster could unnerve investors drawn to a rising manufacturing star with an expanding consumer market of 90 million people.
"A lot of investors are holding back to figure out the politics. I've never seen such a divisive leadership change in a communist country," said one Western private equity investor with business interests in Vietnam.
Party sources with knowledge of a key meeting last week said Dung was not among candidates endorsed for four top positions by the party's outgoing central committee.
His exclusion, say analysts and diplomats with party contacts, indicates a pre-emptive move by conservatives wary that Dung's ambitions could challenge the status quo.
"They want to block his path to power by any means necessary," said Jonathan London, a Vietnam expert and professor at Hong Kong's City University.
The gambit is not guaranteed to succeed, however. Leadership candidates can be nominated at the congress itself, state media has quoted one party official as saying.
London does not exclude the possibility of Dung engineering a comeback.
"Dung has enjoyed a lot of support in the party and among lower ranks of the elite," he said. "If anyone were to mount a campaign to overturn this, it would be him."
A source with direct knowledge of the four nominations said incumbent General Secretary Nguyen Phu Trong, 71, had won party approval to extend his tenure even though he has passed retirement age.
Dung's deputy, Nguyen Xuan Phuc, was nominated as premier, Minister of Public Security Tran Dai Quang as president and legislative vice-chairwoman Nguyen Thi Kim Ngan nominated to head the national assembly, the source said, confirming names also cited by diplomats.
The four nominees did not respond to requests for comment.
Vietnam's economy has been energizes by the opening up of dozens of business sectors under Dung and his government's pursuit of free trade accords.
The economy grew 6.7 percent in 2015, with record foreign investment of nearly $15 billion, mostly into a manufacturing sector used by giants such as LG, Sony, Intel and Samsung.
Experts say Dung has cultivated support among business groups and the wider party. His strong rebuke of China for moving an oil rig into part of the South China Sea claimed by Vietnam in 2014 also won wide public backing.
Vietnam warned China on Tuesday against a repeat of the incident after the same rig entered disputed waters.
(Additional reporting by Saeed Azhar in Singapore; Editing by Simon Webb and Dean Yates)