The setting of the movie is 1985, as mentioned by Rambo to a prisoner. Vietnam was reunified in 1976, and the North Vietnamese flag was adopted (a yellow star on a red background - http://en.wikipedia.org/wiki/Image:Flag_of_Vietnam.svg) as the national flag. However, the flags shown throughout the movie is of the Vietcong (National Liberation Front), a yellow star on a half-red, half-blue background (http://en.wikipedia.org/wiki/Image:FNL_Flag.svg). The NLF ceased to exist on reunification.