Islanders on Phu Quoc, close to the coast of Cambodia, heard a loud bang and saw shards of metal up to 5ft-long raining down on them on Tuesday morning.
Local armed forces and volunteers were mustered to help rescue any survivors, believing there had been a disaster.
Officials estimated that the incident had happened around five miles up but airlines in Vietnam, Cambodia and Thailand were contacted and all said they had not lost a plane.
The island's military chief Col Nguyen Van Qui described the craft as an "unidentified flying object" according to Vietnam's state news agency.
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One possibility is that a military aircraft taking part in a secret mission exploded but its country of origin has not claimed it.
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