Understanding the Decline in Foreign Investor Sentiment towards Vietnam during the 1990s

After opening its economy to foreign investment in the late 1980s, Vietnam experienced an upward surge in foreign capital inflows during the first half of the 1990s, followed by a marked contraction in the latter half of the 1990s. This ebb and flow of foreign capital can be attributed to a number of factors, one of which was the rise and fall of foreign investor sentiment towards the country. This article attempts to depict the principal issues that lay behind that change in sentiment towards Vietnam, and discusses the extent to which a better relationship between host country policy-makers and the foreign investor community might have resulted in a less pronounced decline in foreign investment inflows during the latter part of the 1990s.