With attention again focused on Vietnam, on the occasion of the 25th anniversary of the end of the war, this is a good time to ask, "What happened?"

This isn't a thumb-sucking analysis of the strategic and tactical failures that led to the U.S.' loss. You can find that

elsewhere.

Rather, this is a convenient time to ponder what happened to Vietnam's once-touted potential as the next Asian tiger.

Five years ago, after all, at the time of the 20th anniversary of the war's end, there was a great deal of excitement about the new spirit of economic reform in the country. The Vietnamese government started a policy, known as

doi moi

, in the early 1990s, which included loosening restrictions on economic activity and opening the country for foreign investment. It was a policy loosely based on Deng Xiaoping's Chinese experiment -- still communist in name, but

de facto

capitalist.

Foreigners were excited about the potential and poured money into the country, with Americans joining in eagerly after the U.S. lifted its trade embargo. They were intrigued by a country rich in natural resources, with a hard-working, energetic, well-educated and young (50% under the age of 24) population. The country began to enjoy 8%-9% growth rates, and it seemed possible that could be sustained for a good time, considering the economy was starting at such a low level.

While most of the activity was direct investment, portfolio investment emerged as well, despite a paucity of companies to buy. The most notable instrument for U.S. investors was probably the closed-end

Templeton Vietnam Fund

, managed by emerging markets guru, Mark Mobius.

The positive mood was still around when I visited Vietnam in April 1997 with then Treasury Secretary

Robert Rubin

, the first visit ever by a Treasury Secretary to the country. A visit from such a high-ranking economic official was intended to signal the interest of the U.S. in Vietnam's economic future. History, of course, was ever-present -- we spent an emotional afternoon receiving a briefing from a U.S. Army colonel about efforts to identify MIAs and the Vietnam's considerable cooperation in those efforts.

Nevertheless, the trip was about the future. Businesspeople griped about the vagaries of government regulations, but were basically optimistic about the future potential of the country. And I remember vividly the sight of young, well-dressed Vietnamese speeding around Hanoi and Ho Chi Minh City chatting on cell phones -- and young Americans in the country trying to start businesses. Vietnam, it was said, was "the new Prague."

Not anymore.

These days, foreign investors have abandoned the country like draft dodgers heading to Canada. While the effects of the Asian financial crisis of 1997 and 1998 mostly bypassed the country -- it continued to have positive economic growth throughout the period -- investors became pickier about Asia in general. More importantly, however, the government became more skittish about foreign investment and began to backtrack on economic reform. After years of hassles and uncertainty, many investors had had enough.

Meanwhile, the Templeton fund, faced with few enticing Vietnamese companies in which to invest, evolved into the broader, regional

Vietnam and Southeast Asia Fund

(TVF)

. Despite its name, it has no holdings in Vietnam; most are in Thailand, with Hong Kong and Singapore in second and third places, respectively. The price of the fund has dropped 34% since a high last summer. In addition, a class action lawsuit was filed against Franklin Templeton a couple of years ago. (Click

here for more.)

A slight optimism returned last summer when Vietnam signed a framework for a bilateral trade agreement with the U.S., but the government has since backed off from that. Is Vietnam completely hopeless, then? For the short term at least, probably, despite the fact that the

Asian Development Bank

forecasts a respectable 5% growth in GDP this year, and 6% in 2001.

After all, investors bullish on Asia or emerging markets in general are still steering clear. "We only have a passing interest in Vietnam," says Andrew Foster, assistant portfolio manager of the

(MAPTX) - Get Report

Matthews Pacific Tiger Fund, which is up 11.44% this year. The fund has no investments in Vietnam; the fund's largest country allocation is Hong Kong, with Korea second. "We monitor it at the greatest arm length."

With a lot of other opportunities in Asia for investors these days, the danger for Vietnam is that it will continue to be ignored. At least until the next major anniversary of the war.

David Kurapka's Global Portfolio column appears Wednesdays and Fridays on TSC. In keeping with TSC's editorial policy, he does not own shares in any companies or mutual funds mentioned in this column. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

dkurapka@thestreet.com.