Bruce Lee, general director of Taiwan’s Elma Vietnam Industrial.

In Bien Hoa, a mishmash of factories, noodle stands and shacks carved out of jungles along the roadside, the Taiwanese manufacturers know these problems all too well. They’ve long been among the biggest investors in Vietnam, pledging in 2010 to spend a total of $1.45 billion on projects over the next few years. But that figure fell to $565 million last year. Normally media-shy at home, these businesspeople can’t wait to sound off about being coerced into raising wages to avert a strike or suspecting that government officials are too busy pocketing money to get serious about economic improvements.

“If you asked me now, ‘Should I go to Vietnam?’, I would say not to,” says Bruce Lee, general director of family-owned precision machinery firm Elma Vietnam Industrial, which survives on nine years’ worth of tight customer relations--a standard formula for staying in the black. “It looks cheap, but prices are going up fast, and there’s not much domestic market development.” He doesn’t recommend China, either, except for parts of western China that may work better for some companies taking advantage of new incentives for ­factory operators.

No immediate, mass exodus is expected from Vietnam, but companies will leave by attrition, predicted Leo Chiu, consultant with the 3,000-member Council of Taiwanese Chambers of Commerce in Vietnam. “Everyone likes to express how strong they are, show their muscle,” he says, noting that publicly, companies say they’re committed to staying. “But businesspeople know where the money is, and as soon as their mouths are closed, they run for it.”

Vietnamese officials downplay the economic problems, blaming the global financial crisis of 2008 rather than more commonly cited causes such as corruption, the bursting of the property and ­finance bubbles, poor investment decisions by state-owned enterprises and weak macromanagement by the government, says Jonathan Pincus, dean of the Fulbright Economics Teaching Program in Ho Chi Minh City.