Economic Reformer Chosen as Vietnam Prime Minister : Southeast Asia: Vo Van Kiet, No. 3 in the hierarchy, faces a host of financial problems.

The National Assembly of Vietnam on Friday elected a veteran revolutionary favoring capitalist-style reform as the country’s new prime minister.

The 69-year-old Vo Van Kiet, who boldly introduced Western reforms as mayor of Ho Chi Minh City, formerly Saigon, will confront a host of economic ills as he takes over the government, analysts said.

Kiet succeeds the more conservative Do Muoi, who remains the country’s most powerful figure through his position as head of the Communist Party.

In Vietnam, the Council of Ministers over which Kiet will preside mainly carries out policy laid down by the Communist Party. The National Assembly, once a rubber-stamp institution, has in recent years been the forum for more critical debate but has yet to openly challenge party leaders.

A Japanese diplomat in Hanoi, speaking on condition of anonymity, said the election of Kiet made clear Vietnam’s decision to pursue du moi --reform policy.

Christopher Bruton, a Bangkok-based business consultant specializing in Vietnam, and others said that despite Kiet’s ascendancy, the real power rests in the 13-man Politburo, in which aging conservatives still hold an edge over reformers.

But the Japanese diplomat said the party and Vietnam’s military are ordering Kiet to pursue reform, although how this would work is still in question.

A new Cabinet lineup is expected to be announced today with few major changes except for the replacement of Foreign Minister Nguyen Co Thach, a dapper diplomat who sought closer links to the West but whose independent style does not mesh with Hanoi’s rule-by-consensus tradition.

Thach’s successor is widely expected to be Vietnam’s former ambassador to the Soviet Union, Nguyen Manh Cam.

Kiet has long pushed for reforming the country’s centrally planned, state-directed economy and has been regarded as one of the most liberal figures in the senior power structure.

He helped rout conservatives during the watershed 6th Party Congress in 1986, which set Vietnam on a definite, although sometimes rocky, road toward economic reform. The Communist Party, however, has refused to relinquish its grip on political power.

With an estimated annual per capita income of $200, Vietnam ranks as one of the world’s poorest nations. Kiet also faces such woes as a burgeoning population, natural disasters that destroy vital food crops, an antiquated infrastructure and a trade embargo by the United States.

Kiet, who is reportedly from a poor peasant family in southern Vietnam, is the country’s third-most-powerful figure based on his ranking in the Communist Party’s Politburo.

He has been a party member for 52 years, rising through the ranks as a fighter against both French colonialists and the U.S.-backed government in South Vietnam when he was a leading member of the Viet Cong guerrillas.

Kiet gained entry to the all-powerful Politburo in 1982.