As Pacific Rim leaders arrive in Hanoi for the Asia-Pacific Economic Co-operation summit, Vietnam is being touted by all and sundry as 'the next Asian tiger' or even 'the new China'.
It all sounds depressingly familiar. The same headlines appeared in the early 1990s, when the prospect of Vietnam's doi moi restructuring policy, coupled with the lifting of US sanctions, promised to catapult it into the economic fast lane.
Then, eager Hong Kong companies pumped more than US$2 billion into more than 100 joint ventures in the country. At the same time, enthusiastic portfolio investors poured hundreds of millions of US dollars into half a dozen specialist country funds.
Most ended up disappointed. Foreign companies found themselves thwarted at every turn by impenetrable tangles of red tape woven by a protectionist bureaucracy. Corruption was endemic. The legal system was at best unreliable, at worst rigged. Local managers performed nowhere near international standards and the infrastructure was lousy.
Frustrated by the lack of financial liberalisation, many of the funds handed money back to investors and shut up shop. For most Vietnam bulls, the infatuation was dead long before it was finally buried by the Asian financial crisis of 1997.
Now the breed is back. With Vietnam expected to clinch its accession to the World Trade Organisation before the end of this year, upbeat analysts are forecasting a business boom and predicting that Vietnam will finally live up to its economic promise.
Investors appear to agree. With a capitalisation of just US$3 billion, the five-year old Ho Chi Minh City stock market is one of Asia's smallest. But with a gain of 83 per cent so far this year, its index is easily the region's best performer (see chart).
