John Forbes Nash Jr Essay Example for Free

John Forbes Nash Jr Essay John Forbes Nash Jr. (born June 13, 1928) is a mathematician who worked in game theory and differential geometry. He shared the 1994 Nobel Prize for economics with two other game theorists, Reinhard Selten and John Harsanyi. After a promising start to his mathematical career, Nash began to suffer from schizophrenia around his 30th year, an illness from which he has only recovered some 25 years later. John Nash was born in Bluefield, West Virginia as son of John Nash Sr. and Virginia Martin. His father was an electrotechnician; his mother a language teacher. As a young boy he spent much time reading books and experimenting in his room, which he had converted into a laboratory. From June 1945-June 1948 Nash studied at the Carnegie Institute of Technology in Pittsburgh, intending to become a technical engineer like his father. Instead, he developed a deep love for mathematics and a lifelong interest in subjects such as number theory, Diophantine equations, quantum mechanics and relativity theory. He loved solving problems. At Carnegie he became interested in the negotiation problem, which John von Neumann had left unsolved in his book The Theory of Games and Economic Behavior (1928). He participated in the game theory group there. From Pittsburgh he went to Princeton University where he worked on his equilibrium theory. He received a Ph. D. in 1950 with the dissertation Non-cooperative games. The thesis contained the definition and properties of what would later be called the Nash equilibrium; 44 years later, it would earn him the Nobel prize. His studies on this subject led to three articles, the first entitled Equilibrium Points in N-person Games, published in the Proceedings of the National Academy of Sciences (USA) (1950), and the others in Econometrica about The Bargaining Problem (April 1950) and Two-person Cooperative Games (January 1953). The only official economic lessons he followed were a series about international trade. In the summer of 1950 he worked at the RAND Corporation in Santa Monica, California, where he returned for shorter periods in 1952 and 1954. From 1950-1951 he taught calculus courses at Princeton, studied and managed to stay out of military service. During this time, he proved the Nash embedding theorem, an important result in differential geometry about manifolds. In 1951-1952 he became science assistant at MIT in Cambridge, Massachusetts. At MIT, he met Alicia Lopez-Harrison de Larde, a math student from El Salvador, whom he married in February 1957. Their son, John Charles Martin (b. May 20, 1959), remained nameless for a year because Alicia, having just committed Nash to a mental hospital, felt that he should have a say in what to name the baby. As was his parents, John became a mathematician, but, like his father, he was diagnosed a paranoid schizophrenic. Nash had another son, John David (b. June 19, 1953), by Eleanor Stier, but refused to have anything to do with them. An admitted bisexual, he carried on intimate relationships with men during this period. Although she divorced him in 1963, Alicia took him back in 1970. But, according to Sylvia Nasars biography of Nash, Alicia referred to him as her boarder, and they lived like two distantly related individuals under one roof until he won the Nobel Prize in 1994, then they renewed their relationship. They remarried on June 1, 2001. In 1958 John Nash began to show the first signs of his mental illness. He became paranoid and was admitted into the McLean Hospital, April-May 1959, where he was diagnosed with paranoid schizophrenia. After a problematic stay in Paris and Geneva, Nash returned to Princeton in 1960. He remained in and out of mental hospitals until 1970, and held a research position at Brandeis University from 1965-1967. Illustrative is the 30-year publication gap between 1966 and 1996 of any scientific work. In 1978 he was awarded the John Von Neumann Theory Prize for his invention of non-cooperative equilibriums, now called Nash equilibria. Nashs mental health improved very slowly. His interest in mathematical problems gradually returned, and with it the ability to think logically. He also became interested in computer programming. The 1990s brought a return of his genius, though it lived in a still feeble mind. In 1994 he received the Nobel Prize in Economics as a result of his game theory work at Princeton as a graduate student. He is still hoping to score substantial scientific results. Between 1945 and 1996 John Nash published a total of 23 scientific studies, plus an autobiographical essay, Les Prix Nobel (1994) [1] (http://www. nobel. se/economics/laureates/1994/nash-autobio. html), first published in Sweden. A film titled A Beautiful Mind, released in December 2001 and directed by Ron Howard, dramatically portrayed some events of Nashs life. It is (loosely) based on the biography of the same title, written by Sylvia Nasar (1999) and received four Oscars in 2002. A deleted scene from A Beautiful Mind reveals that Nash (re)invented the board game known as Hex or (at Princeton) Nash or John, as it was often played on hexagonal bathroom floor tiles. A Beautiful Mind has been criticized for its inaccurate portrayal of John Nashs life and schizophrenia. The PBS documentary A Brilliant Madness attempts to portray his life more accurately.

Underpricing in Turkey: a Comparison of the IPO Methods

Underpricing in Turkey: a Comparison of the IPO Methods Abstract This paper addresses the question of what kind of selling and underwriting procedure might be preferred for controlling the amount and volatility of underpricing in the Istanbul Stock Exchange (ISE). Using 1993-2005 firm and issue data, we compare the three substantially different IPO methods available in the ISE. One is very similar to the book building mechanism used in the U.S., another is the fixed price offer, and the third one is the sale through the stock exchange method. The empirical analysis reveals significant first day underpricing of 7.01% in fixed price offer, 11.47% in book building mechanism, and 15.68% in sale through the stock exchange method. Finally, we also show that fixed price offers can better control the impact of market information on underpricing than sale through the stock exchange method. 1. Introduction Extensive amount of research from a variety of different markets have documented the presence of first-day underpricing upon the listing of initial public offerings. The evidence is well documented by Loughran, Ritter, and Rydqvist (1994) and Ritter1 (1998), (2003) in many developed and emerging markets. In developed markets, in the absence of restrictions on intra-day price movements, first-day underpricing is observed in broad price bands. However, in emerging markets, in the presence of daily volatility limits, first-day underpricing is observed in narrow price bands. In contrast to the daily price limits, significant positive short run returns are observed in a number of emerging markets and substantial amount of money is â€Å"left on the table by issuers. Besides empirical evidence, most of the theoretical models explaining IPO underpricing are grouped under four broad headings by Ljungqvist (2005), these are (i) information asymmetry between the investors, the issuing firm an d the underwriter, these models assume that one of these parties knows more than the others, (ii) institutional reasons, institutional theories focus on three features of the marketplace: litigation, banks price stabilizing activities once trading starts, and taxes, (iii) control considerations, control theories argue that underpricing helps shape the shareholder base so as to reduce intervention by outside investors once the company is public, (iv) behavioral approaches, behavioral theories assume either the presence of irrational investors who bid up the price of IPO shares beyond true value, or that issuers suffer from behavioral biases causing them to put insufficient pressure on the underwriting banks to have underpricing reduced. These theoretical models almost always end with the conclusion that the average IPO is undervalued at the offer price, where the initial investors, in most cases, benefit from possessing information by receiving allocations of shares in IPOs and earn the largest first-day returns. The expectations of issuing firms, investors and underwriters in IPO pricing are considerably different. In an offering, the issuer generally wants to receive the highest possible price to maximize cash flows to the firm. Investors like to purchase shares at a deep discount so that they can realize positive returns *Baskent University, Faculty of Economics and Administrative Sciences, Baglica Kampusu, Ankara, 06530, Turkey, + 90 (312) 234 10 10 /1728, [emailprotected] 1 Ritter (1998), (2003) provides an update on the compilation of Loughran, Ritter, and Rydqvist (1994) in a short investment period. Underwriters, acting as an intermediary between investors and issuing firms, suffer from a dilemma, if an underwriter determines IPO prices too low, where the foreseen amount of money left on the table will be huge, the issuing firm may withdraw or switch to another underwriter. On the other hand, if an underwriter determines IPO prices relatively high, investors will hesitate to buy new issues, which would result in low commissions and an unwanted effort in aftermarket stabilization activities. Underwriters, however, have an incentive to underprice the shares to ensure that they can sell the offering, and, unsurprisingly, there is extensive evidence that IPOs are, on average, underpriced. Hence, pricing of stocks in IPOs may be the most critical stage of the IPO process. More recently, the literature on IPOs, both theoretical and empirical, focuses on the efficiency mechanisms of the following methods for pricing initial public offerings. At the center of this literature, book building, auctions and fixed price offers differ mainly in price-discovery and share allocation process. Book Building in which the underwriters do road shows and take non-binding orders from Auctions in which the company sets a price range to be used as a non-restrictive guideline for investors, than accepts bids, each specifying a number of shares and a price the investor is willing to pay for them, finally, the market-clearing price set by the investors approximates the real price the shares will command in the market. Fixed Price Offer in which the issue price is set first and than orders are taken from investors who typically pay in advance for part or all of the shares that are ordered. Sale through the Stock Exchange in which the sale is initially conducted in the primary market of the stock exchange by a designated underwriter. Those investors who buy the shares in the primary market must wait until the shares trade in the secondary market in order to sell their shares. The price designated at the time of registration with the securities exchange commissions is set as the opening price. Hybrid Offerings in which the underwriters combine the preceding IPO methods, and design auction/fixed price, auction/book building and book building/fixed price hybrids. For most hybrids, the most common combination is the book building/fixed price offer, where the underwriter uses the book building method to set the price and allocate shares to institutional and foreign investors, and retain the fixed price offer to the domestic retail investors who do not participate in the price-setting process. This paper addresses the question of what kind of selling and underwriting procedure might be preferred for controlling the amount and volatility of underpricing in the Istanbul Stock Exchange (ISE). In this regard, we first compare the three IPO methods available in Turkey. One is very similar to the book building mechanism used in the U.S., another is the fixed price offer, and the third one is the sale through the stock exchange method. Then, we estimate a binary probit on the issuers choice between fixed price offer and sale through the stock exchange method, however, because of the declining importance of the book building mechanism in Turkey, we excluded the book build IPO sample from our binary probit estimations. Finally, we determine the factors that are expected to have an effect on the IPO returns. Our results indicate that, the comparison of the two mechanisms yield that for certain values, namely first day underpricing, IPO amount and fractions of equity sold, fixed pric e offer outperforms the sale through the stock exchange method. To the best of our knowledge, this is the first empirical study on the comparison between fixed price offer and sale through the stock exchange method in the IPO literature. The uniqueness of the data and the availability of the sale through the stock exchange method in the ISE make it possible to conduct a study on the comparison between these two methods. The remaining part of this paper is organized in six sections. In the next section, we provide a comparison of the theoretical and empirical research conducted on IPO methods across many countries around the world. In section 3, we describe the three important Turkish IPO market selling procedures. In section 4, we describe the data and the methodology we used in our empirical tests. Section 5 documents the relationship between market conditions and underpricing of IPOs in different time series and the last section concludes. 2. Comparison of the IPO methods in the literature: Theory and Evidence The efficiency of the IPO methods has been the subject of an academic research over a decade, both empirical studies and theoretical models have tried to explain the advantages of one method over another. The argument that is often made in favor of IPO methods is often empirical as well as theoretical. Researchers studying on the efficiency of the IPO methods try to answer the most challenging question, â€Å"Which one of the IPO mechanism is the most efficient?2. However, according to our comprehensive literature research, both empirical studies and theoretical models listed in Table have some mixed answers. 1. Book Building vs. Fixed Price Offer and/or Auctions Comparison of the IPO methods in the literature goes back to Benveniste and Spindt3 (1988), (1989) and Spatt and Srivastava (1991), they suggest that the American bookbuilding procedure is efficient since it encourages investors to reveal their beliefs about the issues value at a cost of initial underpricing. Book building allows investors to collect information about the value of the stock and price the issue more accurately. To compensate the investors who reveal information, underwriter will favor them when allocating shares. However, fixed price mechanism does not utilize any information about realized buyer valuationsin setting the issue price and is generally inefficient. Loughran, Ritter and Rydqvist (1994) present the first international evidence on the short-run and long-run performance of companies going public in many stock markets around the world. They document that the fixed price method is associated with greater underpricing because of the greater probability of the issue failing and the increased uncertainty associated with the longer time delay between offer and issuance time. Chowdhry and Sherman (1996) point out that two features of fixed price offers tend to lead to greater underpricing, relative to the book building method. The first one is the length of the bidding process, as the time gap between the offer and first day market price widens â€Å"price information leakage occurs, the second one is the common requirement that investors pay in advance for their entire order. Benveniste and Busaba (1997), extend Welchs4 (1992), model of information cascades in investment decisions and present a theoretical comparison of the fixed-price and book-building mechanisms. They exhibit that issuers with a greater concern for risk will prefer a fixed-price offer, because book- building might generate higher expected proceeds, and exclusively provides an opportunity to sell additional shares at full value but it also exposes them to higher risk. Ritter (1998) demonstrates that countries that use bookbuilding typically have less underpricing than countries using f ixed-price offerings, more underpricing under fixed-price offering procedures can be attributed to informational cascades. However, Loughran, Ritter and Rydqvist (1994) and Ritter (1998) point out that IPOs with discretionary allocation (Fixed Price Offering and Book-building) are underpriced more than those with non-discretionary allocation (Offer for sale and Auctions), especially in Auctions. Under discretionary allocation, the first day price increase averaged 37% in fixed price offerings, 12% in book building. Under non-discretionary allocation, the first day price increase averaged of 27% in Offer for sale and 9% in Auctions. 2 In terms of controlling the amout and volatility of underpricing, share allocation and pricing. 3 The literature on underpricing in initial public offerings goes back to Logue (1973), Ibbotson (1975), Chalk and Peavy (1987), Miller and Reilly (1987), Ritter (1984), Rock (1986), Allen and Faulhaber (1989), Benveniste and Spindt (1988, 1989), Grinblatt an d Hwang (1989), and Welch (1989). However, the mechanism by which initial issues are sold has largely been ignored until Benveniste and Spindt (1988), (1989). 4 Welch (1992) focuses on the fixed-price procedure used in some non-US countries, and shows that this procedure can cause informational cascades: investors who observe the investment choice made by previous investors can update their beliefs about the value of the issued shares. Sherman (2000), (2002) shows that fixed price offer, can lead to higher underpricing than book building. Contrary to the fixed price offer and the auction method, in book building underwriters discriminate investors in the allocation of shares to establish long-run relationship with intermediates. Book building gives the underwriter greater flexibility in designing a solution that reflects the individual issuers preferences. By controlling investor access to IPO shares, book building controls both the winners curse problem that affects discriminatory auctions and the free rider problem that affects uniform price auctions. Book building also reduces uncertainty for both issuers and investors. In a study that covers 47 countries, Sherman (2002) has found that in all countries in which the bookbuilding mechanism has been introduced, pre-existing auction systems have decreased in popularity or disappeared altogether. Ljungqvist, Jenkinson and Wilhelm (2000) use a unique dataset containing information on 2,051 initial public offerings in 61 stock markets around the world, during the period of 1992-1999. The authors examine the relative direct and indirect costs of offerings carried out by book building and fixed-price methods. They find that, the direct costs of book building are typically twice as large as direct costs for fixed-price offers. Compared to fixed price offerings, book building efforts though more expensive produce far less underpricing. Nevertheless, fixed price offering is still an extremely common method that is not likely to be abandoned by the underwriters completely. Compared to book building efforts, fixed price offering is an efficient, low cost way to distribute shares to retail investors, avoiding the high fixed costs of road shows. Aorsio, Giudici and Paleari (2000), Guidici and Paleari (2001) present an empirical study conducted on the Milan Stock Exchange companies bet ween 1985 and 1999. Authors distinguish between fixed- price offers and open-price offers with bookbuilding and find different underpricing levels and statistically significant determinants. They state that if the offering is preceded by book building, the underpricing is significantly lower (8.32 % vs. 28.33% in fixed-price offerings), this method allows the issuing parties to collect information from the institutions and to signal good news or bad news to retailers through the revision of the prospectus price range. Therefore, the cost of raising private information is reduced and the requested underpricing is lower. The evolution of the placing procedure, from fixed price to book building, has considerably improved the efficiency of Italian IPO market. Biais and Faugeron-Crouzet (2002) analyze and compare the performance of book building, fixed price offering, uniform price auction, internet-based Open IPO mechanism, and an auction like mechanism called the Mise en Vente in France. Conclusions emerging from their analysis are; Fixed price offerings lead to inefficient pricing and winners curse. Dutch auctions can also lead to inefficiencies, to the extent that they are conductive to tacit collusions by investors. The book building and an auction like mechanism Mise en Vente can lead to optimal information elicitation and price discovery. Chahine (2002) investigates the relationship between underpricing and the investors interest prior to and after the IPO day on 305 French issues. Empirical results show that book-built issues have a lower underpricing, on median, but a higher variance level, than the auction-like and fixed-price offerings. Despite the high initial underpricing of some book-built issues, book-building procedure appears to better control the information gathering from investors participating in the offering, and to be a more efficient pricing system than the auction-like procedure. Paney (2004) examines the initial returns, characteristics of issuers and long run performance of Indian IPOs on a sample of 84 Indian IPOs between 1999 and 2002. In terms of initial returns or underpricing, Paney (2004) finds that fixed price offering yields higher initial returns on average, as compared to book building. In terms of issuer characteristics, Paney (2004) finds that fixed price offering are used by issuers of fering large proportion of their capital by raising a small amount of money. In contrast, book building is opted for by issuers, offering small portion of their stocks and mobilizing larger sums of money. Kutsuna and Smith (2004) present an empirical study conducted on the Japanese IPOs between 1995 and 1999. Using a sample of 163 book-built and 321 auctioned IPOs by JASDAQ companies, authors document that average total issue cost, measured as a percent of aftermarket price, was significantly higher in the book-building regime than in the earlier auction regime. However, when results are weighted by issue size, the estimated aggregate costs of auctioning and book building are similar. This outcome favors book building over auctions for two reasons. First, auction-method estimates do not reflect opportunity costs related to underinvestment. Second, issue cost estimates ignore other benefits of the more-accurate pricing that book building affords. Anand (2005) examines the differences between book building and Dutch-auction, and shows that the bookbuilding method of offering securities is superior to the Dutch-auction IPOs. Stated by Anand (2005), while the Dutch-auction may seem to lea d to efficient price discovery based on investor demand, recent transactions suggest that price discovery is not always accurate and that, indeed, underpricing occurs even in the Dutch auction. Further, even if the Dutch auction is more fair than the bookbuilt process in terms of allocating securities, the Dutch auction can lead to less capital market efficiency overall and can therefore be questioned as a basis for promoting this type of offering. Jagannathan and Shermans (2005) research on the efficiency of IPO mechanism show that hybrid bookbuildings5, unlike auctions, have proved effective in many different countries, cultures, time periods, and market conditions. Jagannathan and Sherman (2005) propose a new IPO mechanism that could overcome the problems with standard auctions. A method that retains the advantages of bookbuilding, while modifying it to increase transparency. Although not a direct comparison between book building, auctions and fixed-price offers, Cornelli and Gol dreich6 (2001), (2003) examine a unique data set of international book building allocations and find that the underwriter favors both regular investors and investors that supply information on the value of the issue. Degeorge, Derrien and Womack (2005) have presented empirical evidence from Frances IPO market that underwriters employing the bookbuilding process implicitly committed to providing more favorable coverage to the companies they took public in the aftermarket. Authors find convincing empirical evidence that in addition to placing the IPO shares with investors, underwriters employing book-building implicitly commit to providing more favorable coverage to the companies they take public in the aftermarket. Specifically, analysts, affiliated with the lead underwriter of the offering, issue more favorable recommendations for recent book-built IPOs than for auctioned offerings. 2.2. Fixed Price Offer vs. Book Building and/or Auctions The pricing of Initial Public Offerings (IPOs) in the short-run has been analyzed by several theoretical and empirical studies referring to the major international stock markets. Extensive research has revealed that the fixed-price offering all over the world suffer from IPO underpricing especially in these major markets. However, studies conducted by Busaba and Cheng (2001), Bierbaum and Grimm (2003), Chemmanur and Liu (2003), Hsu and Hung (2005) present some evidence on the efficiency of fixed price offering over book building and auctions. Busaba and Cheng (2001) show that the bookbuilding process elicits much information from informed traders at the IPO stage by promising larger allocation of valuable stocks to investors who truthfully reveal their information, and therefore reduce the impact that such informed traders have in the after- 5 In the hybrid bookbuilding offers, all retail investors are allowed to place orders in a public offer tranche, and all have an equal chance of getting shares. The prices, however, are set by professional investors who are given incentives to attend the road show. Jenkinson and Jones (2004), cast some doubts about the findings of Cornelli and Goldreich (2001) upon the extent of information production during the bookbuilding period. market trading. In contrast, the fixed price method, that does not elicits such private information at the IPO stage, enables informed traders to use such information in the after-market at the expense of the uninformed traders. In this regard, if the underwriter building a book can not successfully target a subset of the informed investors, a simple fixed price strategy that involves allocating the issue to retail investors produces higher proceeds on average. The comparatively high adverse selection problems associated with the fixed-price method will spill over from the IPO stage to the after-market. This in turn means that liquidity will be relatively more important for IPOs carried out via a fixed- price method than via bookbuilding. Authors show that, compared with a fixed-price offering, the bookbuilding process elicits more information from informed traders at the IPO stage, and therefore reduce adverse selection problems in the after-market trading. However, by the same toke n bookbuilding may require larger informational rents to be paid at the IPO stage. This suggests that underpricing should be larger for IPOs carried out via bookbuilding than via a fixed-price method. Bierbaum and Grimm (2003) compare the fixed price and the uniform auction in a game theoretic framework. The comparison of the two mechanisms yields that for certain parameter values, namely a low variance of the asset and, at the same time, a sufficiently high probability of low demand, fixed price method outperforms the auction in terms of revenue. Moreover, the revenue in the fixed price mechanism is typically less volatile than the revenue in the auction. Chemmanur and Liu (2003) model the effect of costly information production on issuers choice of a fixed-price offer or a uniform-price auction with exogenous entry of bidders. Their model predicts that IPO auctions will exhibit a significantly lower mean and variance of underpricing compared to fixed- price offerings. This is due to the fact that the offering price in an IPO auction aggregates the information produced by outsiders to a significant degree, so that this offering price is greater for higher intrinsic-value firms and lower for lower intrinsic-value firms in IPO auctions than in fixed- price offerings. At the same time, there is less information production in IPO auctions compared to fixed-price offerings where the offering price is set by insiders to induce the optimal degree of information production, so that a lower amount of information is reflected in the opening price of the shares listed in the stock market. Thus, Chemmanur and Liu (2003) demonstrated that, in many situations, firms will prefer to go public using fixed-price offerings rather than IPO auctions in equilibrium, since such offerings allow the firm to induce the optimal extent of information production. Hsu and Hung (2005) present an empirical study conducted on the Taiwanese companies between 1996 and 2000. Using a sample of 280 pure fixed-price offers and 84 hybrid auctioned, authors find that, Taiwanese hybrid auctions are associated with less under-pricing and with a lower variance of under-pricing than versus the pure fixed-price offers, but these differences are not statistically different. On the other hand, we find that the market index returns prior to the IPO pricing date have a strong influence on the under-pricing of Taiwanese IPO auctions and of the pure fixed-price offers. Authors provide empirical evidence of how Taiwanese issuers make the choice of IPO method. Taiwanese issuers that float large IPOs, or which have a pricing conflict with underwriters, will likely use a hybrid auction to distribute shares. On the other hand, when the relative risk level of IPO auctions to fixed-price offers has increased, the issuers will likely avoid an IPO auction. Empirical evidenc e also explains why Taiwanese IPO auctions have lost market share to fixed-price offers. Further results reveal that Taiwanese IPO auctions are not associated with less under-pricing and with a lower variance of under-pricing, nor are they better at incorporating recent market information into the IPO price than the pure fixed-price offers. Authors examination on issuers choice of hybrid auctions or fixed-price offers indicates that Taiwanese issuers condition their choice of IPO method not only on firm characteristics, but also on IPO size and on market conditions. This is why Taiwanese issuers prefer a pure fixed-price offer to a hybrid auction are based on market volatility and the pricing conflict. In doing so, under a volatile market where Taiwanese hybrid auctions have become much riskier relative to the pure fixed-price offers, issuers will prefer a pure fixed-price offer to a hybrid auction, resulting in a lower popularity of Taiwanese hybrid auctions. As listed in Table 1, Fixed Price Offering seems to be the less favorable method comparing to Book building and Auction Methods. It is a fact that, the worldwide introduction of book building method during the 90s has promoted efficiency in the major equity markets. However, Sherman (2002) states that stock markets listing few IPOs each year, fixed price offering is still be the optimal method. 2.3. Auctions vs. Book Building and/or Fixed Price Offer Using a sample of 108 French firms marketed on the Second Marchà © between 1984 and 1991, Leleux and Paliard (1995) show that initial returns are significantly higher for firms issuing through the fixed- price procedure than for firms using auction-like procedures. Leleux and Paliard (1995) state that the auction mechanism is associated with less underpricing and thus more efficient, since this procedure is able to incorporate more information from recent market momentum into the pricing of the IPO. Beierlein (2000) compares the book-bu ilding method to two commonly used auction mechanisms, the discriminatory price auction and the uniform price auction in terms of underpricing and the long run performance of IPOs relative to the market. Using data from Japan, Israel and the U.S., author finds evidence that the U.S. book building is less efficient than the auction mechanisms are. Specifically, underpricing is significantly higher in the U.S. than it is in Japan or Israel and bookbuilding appears to incorporate less demand information into the offer price than the auction mechanisms do. Bennouri and Falconieri (2001) suggest that auction mechanisms are the optimal way to sell new shares because auction procedures are more informationally efficient than bookbuilding. Assuming ex ante uncertainty about the firm true value, then auction mechanisms are able to elicit and incorporate more information from the market as well as from investors into the pricing of IPOs. Draho (2001) suggests that underpricing in bookbuilt IPOs is due to the uncertainty about the price on the secondary market rather than about the firm value, as most of the literature assume. Nonetheless, his results indicate auction-like mechanisms as the most efficient ones, since they are open to all investors who are moreover required to submit price-quantity bids. McDonald (2001) examines the efficiency mechanisms of the sealed-bid uniform-price auctions over book building method in a theoretical framework and concludes that the uniform-price auction, due to its generalized Vickrey auction properties, is indeed an efficient auction mechanism especially for the sale of IPOs over the Internet. Biais, Bossaert, and Rochet, (2002) study the optimal IPO mechanism by which the seller can extract private information to maximize the expected net IPO proceeds. They find that the optimal mechanism they characterize is similar to auction-like IPO procedures used in the U.K. and in France. Kaneko and Pettway (2003) examine the Japanese initial returns before and after the introduction of book building, and find that underpricing in book building method is significantly higher than auctions, especially during hot markets. Results suggest that the move from auction-priced to underwriter-priced IPOs using book building in Japan has significantly reduced the wealth of issuing companies while increasing the wealth of underwriter-selected investors. Derrien and Womack (2003), use the French IPO data for the 1992-1998 period and compare the three underwriting/selling mechanisms available on the French market. One is very similar to the book building mechanism used in the United States. Another is a fixed price procedure. The third one is an auction-like procedure. Authors show that the auction procedure is better than the others at controlling underpricing in general as well as the variance of underpricing of the issued shares in â€Å"hot versus â€Å"cold markets. Fixed price offering method is indeed inefficient and leads to greater underpricing compared to IPOs sold through book-building and auctions. However, the main empirical comparison in this paper is between the two main procedures auction and book building. Authors find evidence that during hot markets auctioning is associated with less underpricing than book building. They attribute the result to the auction methods ability to incorporate more information about recent market performance into the offer price. This result provides empirical support for the theoretical work by Biais, Bossaerts, and Rochet (2002) who suggests the auction procedure is optimal. In line with the evidence of Derrien and Womack (2003) that an auction procedure is more efficient in incorporating recent market momentum in the offer price compared to fixed price procedure, Vandemaele (2003) uses the French IPO data for the 1984-1995 period and points out the factors that may influence issue procedure choice. Results indicate that, firms facing relatively high valuation uncertainty are high likely to opt for an auction-like procedure and the likelihood of opting for an auction increases as the investment bank reputation associated with the issue decreases. Although not a direct comparison between auctions, book building and fixed-price offers, studies in Pettway and Kanekos (1996) examination on Japanese auctions, Kandel, Sarig and Wohls, (1999) examination on Israeli auctions, and Liu, Wei and Liaws (2003) examination on Taiwanese auctions seem to suggest that IPO auctions lead to less under-pricing. Biais and Faugeron-Crouzet (2001) show that a uniform price auction can prevent tacit collusion among bidders and can truthfully elicit information from investors in much the same way as book building. Bulow and Klemperer (1998) also show that it can be optimal in an auction to set a price at which there is excess demand. 2.4. Research on IPOs in the Istanbul Stock Exchange (ISE) Firms in Turkey may offer their shares to the public through, book building, fixed price offer and sale through the stock exchange method, however, they are mainly underwritten and sold using the fixed- price offering method; a method which is very common world w ide is becoming much less common, particularly for more active markets. Recent empirical studies, focused mainly on the initial returns and under pricing, condu

Gay, Lesbian and Bisexual Issues - Michael Levin vs. Richard Mohr :: Argumentative Persuasive Essays

Homosexuality - Michael Levin vs. Richard Mohr Homosexuality has been on debate for numerous years. It is mentioned in the Bible which is thousands of years old. But recently two philosophers have spoken how they feel about Homosexuality. Michael Levin and Richard Mohr's views on the subject are in conflict with one another. Levin argues that homosexuality is abnormal because it is a misuse of body parts that have evolved for use in heterosexual intercourse (Levin 354). Furthermore, because natural selection has made the exercise of heterosexuality rewarding to human beings, homosexuality has a high probability to unhappiness. Mohr refutes Levin's stance about homosexuality myths and stereotypes. He rejects arguments that homosexuality is immoral or unnatural. Levin exemplifies the point that homosexuality is misuse of body parts with the case of Mr. Smith, who likes to play "Old MacDonald" on his teeth so devoted is he to this amusement, in fact, that he never uses his teeth for chewing but instead takes nourishment intravenously. This is a clear example where Mr. Smith is misusing his teeth. In addition to misuse, Levine states that this man will have a dim future on purely physiological grounds (Levin 355). Since Mr. Smith isn't using his teeth for chewing, his digestive system will suffer from disuse. The result will be Mr. Smiths deteriorating health. Levin incorporates the evolution process into this example. He states that Mr. Smith descended from creatures who enjoy the use of such parts. Creatures who do not enjoy using such parts of their bodies will tend to be selected out. In particular, human males who enjoyed inserting their penises into each other's anuses have left no descendants. Homosexuality is likely to cause unhappiness because it leaves unfulfilled an innate and innately rewarding desire (Levin 355). Mohr takes a completely different stance on homosexuality. According to Mohr, homosexuality is perfectly unobjectionable. The unnaturalness charge that Levin give homosexuality carries a high emotional feeling. This feeling is usually expressing disgust and evincing queasiness. An example of such feelings are some people's response to women who do not shave body hair. Many of the people who have a strong emotional reaction, without being able to give good reasons for them, we think of them not as operating morally, but rather as being obsessed and maniac (Mohr 367). So the feelings of disgust that some people have to gays will hardly ground a charge of immorality. The idea of "natural" is a key defense in Mohr's debate. He states that natural is that it fulfills some function in nature. According to Levin, homosexuality on this view is unnatural because it violates the function of

Speaking In Tongues Essay -- Communication

Communication has been the hub of society sense the beginning of man. It is the way people pass information from one to the next. Animals have been known to communicate with other animals or humans. A dog will urinate in order to mark his/her territory. This action translates possession to other animals, and the dog will act aggressively defending his/her territory if needed. Other animals have actions that will translate possession, hunger, and love. Humans translate these same ideas by body language (which is non-verbal communication) and speech (which is verbal communication). Humans place their main interest in verbal communication, which consist of communication with sounds from the mouth. With any type of communication there are different languages. Many people are unaware that there are many different types of Sign Language. The languages that people speak are generally learned at an early age. After a child is born the parents beginning to speak to it, and automatically the child begins to learn how to communicate with their mouth. Understandably, whatever language, or languages, the parents speak, will be the language the child learns. However, as a person ages the ability of learning a new language depreciates, and the task becomes exceedingly difficult. Understanding this to be common knowledge, it is not surprising to read about the reaction the Jews expressed on the day of Pentecost when the apostles stud before t hem speaking in languages they had never spoken before. Today the term for this particular act is called â€Å"Speaking in Tongues,† and there has been much debate over this issue. The idea raises many questions such as: â€Å"What is a tongue?† â€Å"How did someone acquire this ability?† â€Å"What is the purpose?† And, â€Å"... ... known as the Bible. Keep in mind, if the televangelists who claim to heal by the power of God were able to do so, then why do they wait for people to come to them? Why are they not traveling from one hospital to another healing the sick and raising the dead? It is for the same reason people cannot speak in a language they have not learned, miracles have ceased (1 Corinthians 13:10). The idea of speak in an unlearned language, or speaking in tongues, is a much debated topic among religious enthusiast. This topic, like many others, will continue to be debate until the final trumpet sounds and the church rise to meet Christ in the hair. However, if one was to choose to forget everything he or she has learned about the subject, and study the scriptures for themselves, then they would discover the truth. All miracles, including speaking in tongues, have ceased.

Agamemnon Essay -- essays research papers

In Aeschylus’ Agamemnon there are many different opinions about what kind of king and commander Agamemnon was. Some argued that he was good, while others dispute that his motives were wrong. Clytemnestra, Agamemnon’s wife, gained a strong hatred for him, after he sacrificed his own daughter so he could go to war. Many believe that this was not necessary and could have been overcome. The chorus seems to agree with this to an extent, and feels that Agamemnon could have prayed and requested that he not sacrifice his daughter.   Ã‚  Ã‚  Ã‚  Ã‚  Clytemnestra, after Agamemnon was at war for a few years, began to cheat on Agamemnon with his cousin, Aegisthus. When the two got word of Agamemnon’s return from Troy they began to plot against Agamemnon. Clytemnestra prayed to the Gods to let Agamemnon make it home because she wanted to punish him herself. Even though most of the other ships did not make it home after the storms, Agamemnon’s did. Many believe this is because of the prayer that was prayed by Clytemnestra.   Ã‚  Ã‚  Ã‚  Ã‚  Clytemnestra first set Agamemnon up by placing a purple carpet on the ground for him to walk on. By doing this Clytemnestra was hoping to get Agamemnon to upset the gods so it wouldn’t be a sin for her to carry out her plan. Agamemnon even acknowledges that he shouldn’t walk on the carpet saying that, were he to walk on it, he would display unseemly pride and incur the wrath of the gods: â€Å"Such state becomes the gods and none be...

Health Benefits of Namaz or Salah.

Namaz The Best Exercise (STD: V, VI, VII, and VIII) What is Namaz? Namaz is the Urdu word for Prayer. The Arabic word for Prayer is Salah. Namaz is the form of Worship of Allah S. W. T performed by Muslims. Namaz is one of the most important of the 5 pillars of Islam. Allah S. W. T has mentioned the benefits and the importance of Namaz as many as 500 times in the Holy Qur’an. Apart from the spiritual benefits that Namaz offers to Muslim worshippers, it is also one of the best forms of exercise that one can do on a regular basis. Namaz has been made compulsory for Muslims 5 times daily the five times are: Fajr: Early morning just before sunrise. It consists of 4 Rakats. Zuhar:: Afternoon paryers post the period of Zawaal (when sun is perpendicular to earth). It consists of 12 Rakats. Asar:: Post afternoon and before Sunset. It consists of 8 Rakats. Maghrib: Just after Sunset. It consists of 7 Rakats. Isha: Late evening after the Sunset is complete and darkness of the night is complete and the cooling effect of the atmosphere begins. It consists of 17 Rakats A Rakat is one complete cycle of Standing, Bending, Prostrations and subsequent Sitting or Standing up again in the Namaz. Each posture of the Namaz has a standard defined procedure and recitations that are observed by every Muslim irrespective of where he lives or what race he belongs to. Muslims follow the methods as taught to us by Prophet Muhammad (Sallallahu-Alaihi-Wasallam). Praying Namaz requires one to be clean in all respects, be it’s the physical self, the surroundings or the intent. No matter how hard a person prays or for how long he lies in prostration (Sajda), unless his intention are clean and motives selfless, the Namaz will not be accepted by Allah. It is required that a person ensures the surrounding is clean and free from sins where he intends to offer Namaz. The Prophet (Sallallahu-Alaihi-Wasallam) advised that except for the washroom or where one relieves himself and the graveyard, Allah has made the whole world as a place of worship for his believers. Namaz makes us disciplined and brings feeling of regularity and gives a direction to our daily life, 5 times a day, if we make it a routine to get up on hearing the Azaan, do the Wuzu (ablutions) and head for prayers, either in a congregation or alone, we feel a sense of Time Management in our daily chores. Interestingly there are various similarities between some of the postures of Namaz and Yoga! Now let us see some beneficial effects of different Namaz postures. Different Namaz Postures And Their Benefits: Posture 1 Name: Niyyat (Takbeer-e-Tahreema) First Takbeer in standing position to begin prayer Instructions: Bring hands, palms open, up to ears, and place thumbs behind earlobes, as â€Å"Allahu Akbar† (God is Great) is uttered. Beneficial Effects: It relaxes our body, straightening back improves posture and improves concentration. It also sharpens our vision by focusing on the floor. Posture 2 Name: Quayam Instructions: After you have touched your earlobes and said Takbeer bring down your hands and place your hands below the navel In this posture your sight should be fixed where you are going to perform Sajdah (Prostration), Place right wrist over the left, Wrap your left wrist with the thumb and the little finger. Rest the remaining fingers on the left forearm; Make sure your hands are tied below the navel, Beneficial Effects: It relaxes legs and back and extends concentration. It stimulates heart, thyroid and other important function of our body. Posture 3 Name: Ruku' (pronounced Rukoo) Instructions: Bend down at waist, placing palms of hands with fingers spread over knees. Back is parallel to ground, such that if a glass of water were on the back, it would not spill. Eyes looking down, directly ahead. Beneficial Effects: Blood is pumped down into upper torso as our muscles are stretched it also tones our muscles. This posture improves personality, generating sweet kindness and inner harmony. Posture 4 Name: Qauma Instructions: Stand straight again with you hands by your sides Beneficial Effects: It relaxes body and releases tension. Posture 5 Name: Sajdah Instructions: Go down to a kneeling position by placing both hands on knees, lowering oneself slowly and easily onto knees, then touch the head upon the ground so that the following seven body parts are in contact: forehead, two palms, two knees, toes of both feet. The end position of this posture is given below. Beneficial Effects: It prevents growth of flabbiness in the mid section and increase flow of blood in the head, including eyes, ears, nose and lungs; allows mental toxins to be cleansed by blood. It increases elasticity of joints. Posture 6 Name: Jalsa Instructions: Sit on your left foot which should be flat the ground, keep your right foot upright with toes faceing the Qiblah and place your hands near the knees in a manner that the fingers face the Qiblah Beneficial Effects: It cleanses respiratory, circulatory and nervous system and brings lightness in body and emotional happiness. Posture 7 Name: Second Sajdah Instructions: Go down to a kneeling position by placing both hands on knees, lowering oneself slowly and easily onto knees, then touch the head upon the ground so that the following seven body parts are in contact: forehead, two palms, two knees, toes of both feet. The end position of this posture is given below. Beneficial Effects: It prevents growth of flabbiness in the mid section and increase flow of blood in the head which allows mental toxin to be cleansed by the blood. It increases elasticity of joints. Posture 8 Name: Quood (Qa'dah-e-Akhira) Last sitting Completing the Salat: Beneficial Effects: It detoxifies liver and stimulates action of large intestine. It improves digestion. Posture 9 Name:Salaam Saying peace to end the Namaz Instructions: Turn your head to the right shoulder and say Salam, then turn your head to the left and say Salaam Beneficial Effects: It is one of the best neck exercises. http://www. janathimessage. co. uk/kids/learning/namaz. html www. chishti. org Namaz The Best Exercise (STD: I, II, III, and IV) Muslims pray five times a day, which each prayer made of a series of postures and movements, each set of which is called a rak'ah. For praying Namaz we should not only keep ourselves clean but our surroundings and the place of worship should also be clean. Namaz teaches us to be disciplined and understand the importance of Time Management. It is the perfect combination of Ablution (Wudu) and Namaz that keeps our soul and body clean and healthy. Interestingly there are various similarities between some of the postures of Namaz and Yoga! Now let us see some beneficial effects of different Namaz postures. Posture 1 Name: Niyyat (Takbeer-e-Tahreema) Beneficial Effects: It relaxes our body, straightening back. It also sharpens our vision by focusing on the floor. Posture 2 Name: Quayam Beneficial Effects: It relaxes legs and back and extends concentration. Posture 3 Name: Ruku' (pronounced Rukoo) Beneficial Effects: Blood is pumped down into upper torso as our muscles are stretched it also tones our muscles. This posture improves personality, generating sweet kindness and inner harmony. Posture 4 Name: Qauma Beneficial Effects: It relaxes body and releases tension. Posture 5 Name: Sajdah Beneficial Effects: It increase flow of blood in the head, including eyes, ears, nose and lungs; allows mental toxins to be cleansed by blood. It increases elasticity of joints. Posture 6 Name: Jalsa Beneficial Effects: It cleanses respiratory, circulatory and nervous system and brings lightness in body and emotional happiness. Posture 7 Name: Second Sajdah Beneficial Effects: Knees forming a right angle allow stomach muscles to be developed. Posture 8 Name: Quood (Qa'dah-e-Akhira) Beneficial Effects: It improves digestion. Posture 9 Name:Salaam Saying peace to end the Namaz Beneficial Effects: It is one of the best neck exercises. http://www. janathimessage. co. uk/kids/learning/namaz. html www. chishti. org

PESTEL Viet Nam Analysis Essay

A. Introduction of Viet Nam Vietnam is approximately 331688 km2 in area and occupied the eastern coast of the Southeast Asian peninsula. The northern part of the country part consists mostly of highlands and the Red River Delta. The south is divided into coastal lowlands and extensive forests. Because of differences in latitude and the marked variety of topographical relief, the climate tends to vary considerably from place to place. During the winter or dry season (November to April), the monsoon wind blowing from the northwest brings considerably moisture. Consequently the winter season in most parts of the country is dry. Major Vietnamese cities include Hanoi in the north, Da Nang in the mid coastal region, and Ho Chi Minh City (formally known as Saigon) to the south. Vietnam has considerable energy resources such as oil, gas and coal and its 41,000 km long waterways provide the basis for hydropower. The country is rich in minerals such as bauxite, iron ore, lead, gold, precious stones, tin, chromate, anthra cite, granite, marble, clay, white sand and graphite. In addition, Vietnam has a considerable fresh and saltwater fauna, dense tropical forestry resources and it possesses great agricultural potential. The history of Vietnam, reference to the Geneva Accord signed in 1954. The accord ended French colonial rule, and the country was partitioned into the Democratic Republic of Vietnam, led by Ho Chi Minh and the Republic of Vietnam in the South. The capitals were Hanoi for the North and Saigon for the South. Fights led by Ho Chi Minh to unite the country started in 1959 and lasted until 1975. Hanoi became the capital of the country whilst Saigon was renamed Ho Chi Minh City. Following reunification, the Vietnamese government’s initial plan was to manage the economy via methods of central planning. Based on experiences gained during the 1976-1980 five years plan, subsequent central plans introduced more relaxed policies with respect to agricultural collectives, State Owned Enterprises and allowed more scope for private initiatives. These measures were instrumental in elevating poverty.  Growth rates during the early 80’s were higher than during the 1976-1980 five year pl an, however it became evident that further policy shift were necessary to enable the Vietnam economy to perform closer to its potential. Economic reform was the key point of discussion at the Sixth National Party Congress held in December 1986. The process then initiated of moving from a centrally planned economy to an open, socialist-oriented and multi-sector market economy known as Doi Moi (renovation). In 1992, the National Assembly revised the post-unification constitution to better reflect the aspirations articulated in the Doi Moi process. Economic performance since 1986 has justified the policy of relaxation of central control, the challenge faced by Vietnam has been the maintenance of rapid economic growth and integration into the global economy. B. â€Å"P.E.S.T.L.E† REPORT ON VIET NAM 1. Politics The Socialist Republic of Vietnam is a single-party state. Its current state constitution, which replaced the 1975 constitution in April 1992, asserts the central role of the Communist Party of Vietnam in all organs of government, politics and society. In 2011, Viet Nam held the 11th Congress of Vietnam Communist Party, in which happened the Election of the Party Central Committee for the new term. Mr. Nguyen Phu Trong was elected to be the General Secretary. After the Congress, there happened the fist Congress of the Parliament, term 13th, in which Mr. Nguyen Sinh Hung was elected to be the President of the Parliament, Mr. Truong Tan Sang the President of the Country, and Mr. Nguyen Tan Dung was elected to continue the position of Prime Minister. This Congress also issued 4 degrees: first, approving the State Budget, second, agreeing on the program of building laws and ordinances in2012, third, beginning the study of the amendments and supplements of the 1992 Constitution and establ ishing the revised draft of the 1992 Constitution, and finally, the degree on the issuance of certain additional tax measures to remove difficulties for enterprises and individuals, contributing to economic development in 2011. In 2011, the disputes over the East Sea was the main cause of some changes in relations between Vietnam and some important countries in the world, especially the  Vietnam – China and Viet Nam – U.S. Tension in the East Sea has escalated due to China’s provocative acts in May, 2011. Then happened many anti-Chinese protests in Ha Noi and Ho Chi Minh city. In this context, the relation between Viet Nam and the U.S was proclaimed to be elevated to strategic partnership.4 And late 2011, the tensions in the Vietnam-China relations down to the visit by the senior officials of the two countries. In terms of politically domestic policy, the government kept a political stability, and showed some positive signs. For example, the freedom of the press seemed to be extended. In addition, the government was also more aware of its limitations and of the policy mistakes. Concretely, at the Fourth Conference of the Party Central Committee (XI), Mr. Nguyen Phu Trong said: ―Besides the achievements, the Party building work still has many limitations and shortcomings, weaknesses, even spanning multiple defects; these limitations would reduce people’s trust in the Party; if not corrected, they will be the challenge for leadership of the Party and the survival of the regime. 2. Economy The year of 2011 was important for the economy of Viet Nam because this is the first year in the latest Socio-Economic Development Strategy (2011-2020), with the goal of becoming an industrialized and modern economy by 2020. This strategy goes on to identify the country’s key priorities to meet this ambitious target: stabilize the economy, build world-class infrastructure, create a skilled labor force, and strengthen market-based institutions. According to Vietnam Development Report (VDR) 2012, meeting these aspirations will not be easy. In fact, the country has experienced bouts of macroeconomic turbulence in recent years—double-digit inflation, depreciating currency, capital flight, and loss of international reserves—eroding investor confidence. Besides, rapid growth has revealed new structural problems. The quality and sustainability of growth remain a source of concern, given the resource-intensive pattern of growth, high levels of environmental degradation, lack of diversification and value addition in exports, and the declining contribution of productivity to growth. Vietnam’s competitiveness is under threat because the power  generation has not kept pace with demand, logistical costs and real estate prices have climbed, and skill shortages are becoming more widespread. And these difficulties strongly existed in 2011. Concretely, the inflation in 2011 was 18.13%; the growth of GDP has slowed (5,89%). Domestic and international gold price gap increased. The Corruption index 2011 from Transparency International ranked Viet Nam at the position 112. This shows that Viet Nam has been faced one of the most difficult challenges of economic development. In terms of financial, according to the document of World Bank, in 2011, foreign direct investment inflows (to Viet Nam) continued at a steady pace, although new commitments declined. International reserves increased in the first half of the year while the Vietnamese dong benefitted from a period of relative calm. In the last quarter of the year, however, exchange rate fluctuations increased due to volatility in gold prices, deepening uncertainties and the seasonal increase in demand for foreign currency as the year end approaches. With approximate 9 billion U.S. dollars, the amount of money coming from overseas Vietnamese was one of the biggest sources of foreign currency in 2011. This amount is equivalent to the amount of FDI. Hong Kong, Singapore, and Japanese are the countries that contributed the biggest investment to Viet Nam in 2011. Hai Duong, Ho Chi Minh city, and Ha Noi are three places that has been most invested in recent time. The sectors that most attract the attention of foreign investors are processing industry, electricity supply, and accommodation and dining service. However, according to the analysis of a chief economist, Dr. Allan Pham, though facing the difficulties as mentioned above, the economy is coming to a better prospect in 2012, especially with a certain success in the fight against inflation of the country (the inflation has been trending down since the 4th quarter of 2011). Following is the figure of the selected macro indicators of the economy in recent years: Key Indicators 2007 2008 2009 2010 2011 2012 GDP growth (%) 8.5 6.2 5.3 6.78 5.8 6.0 CPI (%) 12.6 23 6.52 11.75 18.0 12-14 Trade deficit (USD) 12.5 17.8 12.2 12.4 12.1 13.3 Exports (USD) 48.4 62.5 56.6 71.6 80.2 86.5 Imports (USD) 60.8 80.3 68.8 84.0 92.4 99.8 FDI commitments (USD) 21.3 66.5 21.5 18.6 15.0 18.0 FDI disbursement (USD) 8.0 11.5 10.0 11.0 12.0 12.5 Credit growth (%) 54 21 37.7 27.6 15 18 SBV Base rate 8.2 8.5 8.0 9.0 9.0 9.0 Deposit rate (%) 7.0-8.0 7.0-8.5 9.5-10.5 10.0- 11.0 14 12.0 Lending rate (%) 10.0-12.0 10-12.5 10.5-12 13.0-13.5 18-20 14-16 USD/VND (bank rate) 16,016 17,468 18,600 19,500 21,500 22,500 Foreign Affairs At present, Vietnam has established diplomatic relations with 168 countries, and it has economic and trading relations with about 165 countries. Vietnam joined the United Nations in 1977. Vietnam became an official member of the Association of South East Asian Nations (ASEAN) in 1995, and has concluded a cooperation agreement with the European Community. Relationships with multi-national financial institutions such as the World Bank (WB), the International Monetary Fund (IMF) and the Asian Development Bank (ADB) have been re-established. Viet Nam has been participating in the ASEAN Free Trade Area (â€Å"AFTA†) since 1996 and became a member of the Asia Pacific Economic Cooperation Forum (APEC) in 1998. Vietnam became an official member of the World Trade Organization (WTO) on 11 January 2007. In January 2008, the country started a two year term as an elected non-permanent member of the UN Security Council. Vietnam signed the bilateral trade agreement (BTA) with the United Sta tes in 2000. Besides aspects of international trade, the BTA covers a variety of other areas, including intellectual property rights, trade in services, development of investment relations, business  facilitation and the obligation to ensure transparency of laws and regulations. The BTA essentially constitutes a commitment by both countries to open their markets to each other. Intellectual Property In recent years, the Government has taken various measures to increase the legal protection of intellectual property and has created an environment of respect for intellectual property as compared to other neighboring countries. Intellectual property rights are protected by the Civil Code (1995 and 2005), the Law on Intellectual Property (2005) and a host of subordinate legislation. Vietnam is a long-time signatory to the Paris Convention, the Madrid Agreement on International Trademark Registration, and the Patent Cooperation Treaty (â€Å"PCT†) and became a member of the World Intellectual Property Organization in 1976. On 27 June 1997, Vietnam entered into an Agreement on copyrights with the US. According to the Viet Nam-US Bilateral Trade Agreement, Vietnam is under the obligation to adhere to the Berne Convention. The National Office of Intellectual Property (â€Å"NOIP†) is the authority responsible for the registration of industrial property and for the resolutio n of disputes with regard to industrial property in the first instance. Foreign organizations and individuals seeking to register their industrial ownership should file their applications through an authorized agent, who will transfer their application to the NOIP. The Office of Copyright Protection under the Ministry of Culture, Sport and Tourism has also been established and is responsible for the protection of copyright. Works may be registered with the Office of Copyright Protection; however, registration is not a prerequisite for copyright protection. Currently, patents are protected for a period of 20 years. A certificate of utility solutions may be granted for 10 years. A certificate of industrial design is granted for 5 years and may be renewed every 5 years. However, the total effective period of a certificate cannot exceed 15 years. Certificates of trademarks are granted for 10 years with no restrictions on the number of renewals. Investment Guarantees The Government of Vietnam guarantees fair treatment for investors. Capital and other legal assets of investors will not be expropriated or confiscated by law or administrative measures and businesses with foreign-invested  capital will not be nationalized. Foreign investors are allowed to remit abroad investment capital and profits, loan principal and interest, and other legal proceeds and assets. Expatriates working for businesses with foreign-invested capital or for a business cooperation contract are permitted to remit their income abroad. The Vietnam government respects intellectual and industrial property rights and the interests of foreign investors relating to technology transfers into Vietnam. Economic Risks Global Finance Crisis is the hottest issues that people discuss most in this few years. The global financial crisis that started from the United States raises a very broad impact to Vietnam. Inflation Inflation has been in double digits since 2007 and peaking at 28% in August 2008. The fiscal deficit accounted for 4.5-5% GDP in 2008 while trade deficit reached US$17.5 billion (or over 20% of GDP), a level that signals vulnerability to a sudden drop in external demand (Figure 2). A high rate of investment combined with a sizeable fiscal deficit resulted in rapid growth in aggregate demand in the first half of 2008. Massive capital inflows generated asset price inflation, especially in real estate and land prices. Export Decline Vietnamese exports have suffered the strongest negative impact. With economic problems in the US, EU and Japan, which together account for more than 60% of Vietnamese exports, Vietnam saw a significant decline in export revenues. Vietnam’s export revenues fell 6.5% in November 2008 and a further 24% drop in January 2009 (year-on-year) (Figure 3). Orders for manufactured exports including garments, footwear and furniture dropped quickly, while seafood5 producers are also under pressure. The decline of orders has caused great difficulties for exporting companies, many of them are at risk of closing down.6 Vietnamese exports’ growth is forecasted to decline from 30% in 2008 to 13% in 2009. Unemployment Unemployment has worsened. At February 28, 2009, 66,700 workers (out of 45 million workers) lost their jobs in 2008 with national unemployment rate of 4.65%. Thus, it is estimated that over 80,000 workers lost their jobs  nationwide in 2008. The latest forecast of Vietnam Labor and Employment Agency estimates the figure to hit 400,000 nationwide in 2009. Job cuts are rising especially in big cities11 with industrial, processing and exporting zones. The situation may worsen in 2009 with an unemployment rate of 5% and at a projected economic growth of 6.5%. High unemployment has already affected domestic demand and consumers’ sentiment in Vietnam, which are bearish in recent months. 3. Socio-Culture 3.1 Education Viet Nam’s population enjoys a relatively high standard of education. In fact, Confucian ethics has strongly influenced upon Vietnamese’s viewpoint of social values, and education has always been considered as one of the best values that a person should desire to achieve. Nowadays, education has been still considered as one of the most important issues that the country has to pay great attention. Recently, at the 11th Party Congress, the government is determined to develop a national education policy as one of the priorities of the country. As a result, the country has gained big success in education. Concretely, according to the 2009 Census results, there are only nearly four million people who have never attended school (5.0% of the total population aged 5 years and over) and as compared with the 1999 Census this number has decreased 5% (6.9 million people, account for 10.0% of population aged 5 and over). This shows the significant progress of Vietnam’s educat ion sector in minimizing the number of people who never go to school. The official figures also point out that the literacy rate for the population aged 15 years and over increased by 3.7% (from 90.3% in 1999 to 94.0% in 2009). The female literacy rate increased 4.9%, while the male literacy rate increased 2.2%, significantly narrowing the literacy rate gap between men and women. Ha Noi, Hai Phong and Ho Chi Minh City are three provinces having the highest literacy rate (97.9%) while Lai Chau has the lowest (59.4%). This data shows that the literacy rate was not only increased quite rapidly but also express successes of Vietnam’s gender equality work in the education sector.13 Certainly, besides such successes, Vietnamese education system also has faced many challenges,  including poor infrastructure, lack of equipment and teaching materials, low wages precipitating an acute shortage of skilled teachers and academic staff, a relatively poor linkage of higher education with research, production and employment, and some contradictions of the system. As the analysis of RFA, the situation of education in Viet Nam in 2011 had some notable points as following: There were three positive points of the education in Vietnam in 2011. The first point is the plan of â€Å"reducing the load of textbooks† from primary to secondary school of the Ministry of Education and Training. The second is the plan of achieving universal preschool education for children of 5 years old. In this plan, the Ministry of Education will build public kindergartens for children at age 5 in the mountainous areas; and the poor students will be exempt from tuition fees, with the plan of over 95% of children enroll in 2 sessions / day by 2015. And the third is the policy of training and vocational training in poor areas such as the Highlands. On the contrary, there were also many crucially negative points of the education in 2011. First of all, there was the imbalance in enrollment in universities and colleges between students with practical needs. The sectors of social sciences, agriculture, forestry and fishery were registered by only 2.5% of exam registration reco rds (while Vietnam has up to 70% of the population are farmers). And the sectors in demand such as business, tourism †¦ had to be encountered the difference between training and recruitment practices; and this leads to the fact that graduates get difficulty to find job. Secondly, teacher’s salary does not meet their living when inflation is high; and this leads to some problems: the teachers could not focus on their business as they had to find extra jobs, or to open extra classes. Thirdly, there has existed the problem of the degradation in social ethics of many students, due to lack of paying attention on humanity teaching, which can be proved by many cases of students committed violent guilty or crime. 3.2 Human Resource The national average population in 2011 estimated 87.84 million, up by 1.04% compared to 2010, including male population 43.47 million, (49.5%), and female population 44.37 million, (50.5%). Urban population is 26.88 million,  (30.6%); rural population is 60.96 million (69.4 %). According to the official report, the population structure by age in Vietnam is in a positive change. The population in the working age is 46,48 million, increased 0,12% compared to 2010. The proportion of workers in the agriculture, forestry and fisheries declined from 48.7% in 2010 to 48.0% in 2011; in industry and construction rose from 21.7% to 22.4%; and in the services maintained at 29.6%. The unemployment rate in the working age was 2.27% in 2011, of which the urban areas account for 3.6%, the rural areas 1.71%. This is the period of the country with advantages in labor force, also known as the â€Å"demographic window period†, which began in 2003 and may last from 30 to 50 years. This is cons idered as a big advantage for the industrialization and modernization of the country, if it takes advantage of the superiority Vietnamese on the labor force. 3.3 Traffic: Conditions And Problems Highway system The road system consists of over 200,000 km network including over 10,000 bridges. However road conditions are not ideal, less than half of the national highways have two lanes or more. In addition, road congestion is increasing in major cities. In recent years, the Government has mobilized a significantly large amount of capital to upgrade the highway system with financial support from international lending agencies. Railway The rail network consists of about 2,600 km of single–track line covering several routes. There are about 260 stations in the network. The longest and most important route is the Hanoi – Ho Chi Minh City line, which stretches for 1,730 km. This line is now serviced by an express train, which makes the journey in approximately 29.5 hours. The lines connecting Vietnam to China were re-opened a few years ago. Inland Waterways Often overlooked by foreign investors, the inland waterway system offers a cheap and flexible mode of transport. Vietnam has more than 2,300 rivers and canals with total length of 198.000 km. Currently, the inland waterway has a system of over 61,000 km. The two major inland waterway systems serve as major transportation outlets. The first major inland waterway system is in  the Red River area in the north which stretches for approximately 2,500 km. Along this system there are five main ports, of which Hanoi is the largest. The second major inland waterway extends 4,500 km along the Mekong River and its tributaries in the South and boasts about 30 ports, including Ho Chi Minh City. The larger river vessels are tug-drawn barges. Official estimates put the fleet capacity at about 420,000 tons with speeds ranging from 2 to over 20 km an hour. Smaller, wooden barges are mostly privately owned. Ports Vietnam has eleven major seaports. Ho Chi Minh City serves most of the South and now boasts modern container loading facilities. Just a few hours’ drive from Hanoi, Hai Phong serves much of the North. Given the rapid rise in trade volume, increasing port capacity is a national priority. Airports and Civil Aviation There are three international airports: Ho Chi Minh City, Hanoi and Da Nang. Currently, the Government has significantly upgraded international airports to handle the increase in the volume of traffic associated with Vietnam’s invigorated economy. A new international terminal of the Tan Son Nhat airport in Ho Chi Minh City, capable of handling up to 10 million passengers a year was opened in December 2007. Noi Bai airport in Hanoi was upgraded, enlarged and completed for operation in 2002, construction of a second terminal is expected to start in October 2008 and completed in two years. Four new international airports are planned to be constructed in Phu Quoc, Dong Nai, Lao Cai and Quang Ninh provinces. Preparations for the new Long Thanh International Airport, 40 kilometers from Ho Chi Minh City in Dong Nai province is underway. The airport is scheduled to open in 2010 and by 2015 it will be further expanded to reach an annual transportation capacity of 80 to 100 million pass engers, becoming one of the biggest airports in the region. In addition, there are 16 other domestic airports around the country. Culture and Social Vietnam is a country located in Southeast Asia, Vietnam is a culturally rich country whose distinct history played a role in the development of the modern day state. Vietnamese practices of Confucianism and showing reverence towards ancestors are evidence of China’s historical influence on Vietnamese  society. Vietnam became an independent state in the tenth century but was colonized by the French in the mid 1800s. Vietnam gained independence in the mid twentieth century but still retains traces of French culture which are visible in the way people communicate verbally and nonverbally. Though Vietnam has struggled over the past century through colonial rule, the Vietnam War and recent economic upheavals, it is now rebuilding itself to be able to compete on a global scale. Having a comprehensive understanding of Vietnam’s unique cultural values and traditions can allow the company to develop strong and successful business relationships with Vietnamese counterparts. Language Vietnamese is the official language, although there are distinct northern, central and southern dialects and accents. It is a tonal language, with each syllable; there are six different tones that can be used, which change the definition and it often makes it difficult for foreigners to pick up the language. There are other languages spoken as well such as Chinese, Khmer, Cham and other languages spoken by tribes inhabiting the mountainous regions. Although there are some similarities to Southeast Asian languages, such as Chinese, Vietnamese is thought to be a separate language group, although a member of the Austro-Asiatic language family. In written form, Vietnamese uses the Roman alphabet and accent marks to show tones. This system of writing called â€Å"quoc ngu†, was created by Catholic missionaries in the 17th century to translate the scriptures. Eventually this system, particularly after World War I, replaced one using Chinese characters (chu nom), which had been the u nofficial written form used for centuries. Non-verbal communication For certain feelings, Vietnamese people favor non-verbal communication. Vietnamese do not express feeling of thankfulness of apology in verbal communication, but non-verbal through silence or a smile. The proper respectful behavior is to avoid eye contact when talking to person who is not equal status or of the same gender. The smile is another non-verbal symbol conveying the feeling of respect in Vietnamese culture. It is used as an expression of apology, or as expression of embarrassment. For the Vietnamese a smile is a proper response in most situation in which verbal expression is not necessary, or appropriate. Confucianism The teachings of Confucius influence the Vietnamese describe the position of the individual in Vietnamese society. Confucian teachings emphasize the importance of relationships, responsibility and obligation. This philosophy is still a vital component of Vietnamese society and is prevalent in Vietnamese business culture in conserving the harmony of the collective good. The basic tenets are based upon five different relationships: Ruler and subject Husband and wife Parents and children Brothers and sisters Friends Hierarchy As like other group-oriented societies, Vietnam hierarchical structures are very much based upon age and status. This derives from Confucianism, which emphasizes social order. Everyone is seen as having a distinct place and role within the hierarchical structure, be it the family or workplace. An obvious example is seen in social situations where the oldest person in a group is greeted or served first. Within the family the head would be responsible for making decisions and approving marriages. Therefore companies that want to invest in Vietnam are made sense to give more authority to local managers to control the subordinates. The organization structure can be designed as hierarchical, with power derived from prestige, force, and inheritance. Collectivism Vietnam is a collectivist society in which the needs of the group are often placed over the individual. Family and community concerns will almost always come before business or individual needs. Family in particular plays an important role in Vietnamese society. You will notice that close ties between extended families and communities can have a major influence on individual behavior and oftentimes there are multiple generations living under one roof. For this reason, the company of the investor can pay more attention to their employees’ family members for example provide free medical treatment, childcare leave, family trips, etc. This can increase the employees’ loyalty to the company. Besides, in order to increase efficiency of Vietnamese employees, the company should assign tasks to them by group rather than individual. Religion Religion in Vietnam is closely related to the history of Vietnam and most importantly the culture of Vietnam. The earliest established religions in Vietnam were Mahayana Buddhism, Confucianism and Daoism (called the ‘triple religion’). These religions have been co-existing in the country for centuries and mixed well with the Vietnamese tradition of ancestor worship. This special mix explains why the Vietnamese people find it hard to say exactly which religion the belong to. They usually classify themselves as non-religious, despite visiting religious temples several times every year. At the year 2006, the major religious affiliations amongst Vietnam born people were Buddhism (58.6%), Catholics (22.1%), other (4.6%), and no religion (11.03%). From the data, we were found that Buddhism, Confucianism and Daoism have greatly affected the Vietnamese’s behavior. The foreign investors should take note there are quite a large number of vegetarian in Vietnam, because of th e Buddhism religion. Food of Vietnamese Food is a very important part of Vietnamese culture. The Vietnamese not only enjoy eating but believe eating good food can bring harmony and closeness to the family and relationships. The types of foods are chosen to bring luck and these vary from province to province. Buying daily for fresh food is essential for all Vietnamese cooking. In general, Vietnamese people are not as concerned about nutrition as Westerner. They are more concerned with the quality of the foods. Concepts of Time Like most Asians, the Vietnamese have a more extended concept of time than that of most Americans. The agrarian nature of their traditional society focuses on seasons rather than days or weeks. And this tradition is reinforced by the Confucian tradition of respect for earlier generations. Americans measure time by the clock, Vietnamese by the monsoon. Although this is changing somewhat, Vietnamese can still be expected to take a longer view of time and be suspicious of the need for urgency in making decisions  or culminating a business deal. Patience remains the ultimate Confucian virtue in personal life as well as in business. Personal Relationships In Vietnam, propriety and courtesy play a major role in personal relationships. Vietnamese are generally more interpersonally formal than are Americans. This formality decreases the uncertainty surrounding interpersonal contacts in Vietnamese society and is carried over into the business realm for the same reasons. During initial meetings with Vietnamese officials, you can expect little real business to be accomplished. The Vietnamese will concentrate on getting to know you–your background, your expertise, your character. In their high-context communication culture, they will depend heavily on non-verbal clues to assess meaning. By becoming acquainted and establishing a personal relationship with you, they are merely trying to understand you better. Vietnamese society is comprised of an interconnected network of personal relationships, all of which carry obligations on both sides. These mutual obligations are the underpinnings of social order in Vietnam, so they are taken very seriously. Americans need to understand and be sensitive to the serious nature of what may seem to them to be casual business relations. Failure to do so could easily result in a loss of trust or credibility, with obvious implications for longer-term relationships. 4. Technology In terms of technology, Viet Nam is a rapidly developing country. The year 2011 was the beginning of the strategic plan of economic and social development, period 2011-2020, in which infrastructural building is considered as one of main targets. With this plan, the country has been building many expressways and will let the local transport network be eventually upgraded to meet the requirements of rural industrialization and modernization, and connect itself with the national system. In addition, the above plan also includes a project which will work to narrow its scientific and technological gap with the world in some key fields by 2020. To launch this project, the Government will give top priority to enhancing the competence of scientists and related managers while encouraging the organization of training courses partnered with foreign competent partners. According to the project, the Government will focus on scientific and technological renovation to sharpen the competitive edge of local products and assisting businesses to purchase patents in some prioritized areas: biotechnology, information technology, new materials technology – Nano technology , manufacturing technology and automation. 5. Legislation The communist party-controlled government of Vietnam has ruled under four state constitutions. The first was promulgated in 1946, the second in 1959, the third in 1980, and the current in 1992 (amended in 2001). Significantly, each bore the mark of its time. On paper, all these constitutions seem to establish a solid democracy. In fact, the purpose of the 1946 constitution was essentially to provide the communist regime with freedom of speech, the press, and assembly. The second constitution was explicitly communist in character. Its preamble described the Democratic Republic of Vietnam as a â€Å"people’s democratic state led by the working class,† and the document provided for a nominal separation of powers among legislative, executive, and judicial branches of government. The 1980 Constitution concentrates power in a newly established Council of State much like the Presidium of the Supreme Soviet, endowing it nominally with both legislative and executive powers. Many functions of the legislature remain the same as under the 1959 document, but others have been transferred to the executive branch or assigned to both branches concurrently. The executive branch appears strengthened overall, having gained a second major executive body, the Council of State, and the importance of the National Assembly appears to have been reduced accordingly. The role of the Council of Ministers, while appearing on paper to have been subordinated to the new Council of State, in practice retained its former primacy. Having inherited the previous constitutions with substantial and basic changes, on the one hand, the 1992 Constitution continues reaffirming the basic principles in the constitutional history of Vietnam. First, it reiterates the target of socialist construction in Vietnam and the popular nature of the State. Second, the 1992 Constitution continues affirming the Communist Party of Vietnam’s leadership over the State and the society.  Third, it continues affirming the mechanism of State powers performed by the people through the National Assembly and the People’s Councils, the organization and operation of the State under the principle of concentrated powers; the concentration of State powers uniformly into the National Assembly with the division of responsibility among State bodies for the exercise of the legislative power, executive power and judicial power. On the other hand, the 1992 Constitution sees big changes: Vietnam decided to take economic renewal as the cent ral task, First, building the multi-sector and multi-ownership market economy along the socialist orientation. open-door policy and international economic integration. In reality, however, final authority on all matters rested with the Political Bureau; especially, the guarantees provided by the constitutions for freedom of speech, the press, and assembly has been never intended to be carried out. The constitutions eventually show its limitations since Vietnam has joined the stream of globalization, especially in the field of human rights and land-ownership law. In a report made public at the Conference on the Rule of law for human rights in the ASEAN region held by the Human Rights Resource Centre for ASEAN (HRRCA) in Jakarta, Indonesia on 30 April 2011, Mr. Vo Van Ai, President of Que Me: Action for Democracy in Vietnam and the Vietnam Committee for Human Rights called on Vietnam to urgently reform its legal system and bring domestic legislation into line with international human rights laws. Mr. Vo Van Ai declared: ―36 years after the end of the Vietnam War, the rule of law exists only in theory in Vietnam. The government has incorporated human rights into its 1992 Constitution. Yet it has also adopted a whole arsenal of Laws, Decrees, Ordinances and Decisions which restrict or even nullify the exercise of these rights, in total violation of the UN Covenant on Civil and Political Rights (ICCPR) to which Vietnam adhered in 1982â€â€". At the beginning of the New Year 2012 (Jan 1, 2012), there happened The Tien Lang land withdrawal case: in Tien Lang district (on the outskirts of Haiphong, a port city east of Hanoi) a fish farmer, Doan Van Vuong, and his family had resisted a large force moving in to enforce an eviction order. With an improvised mine and muskets bought on the black market, they’d wounded two soldiers and four policemen, including the local police chief. Prime  Minister Nguyen Tan Dung himself had to meet the Haiphong City authorities to resolve the case; and finally came to the conclusion on Feb 2 that the Haiphong government was absolutely wrong in the case; and he ordered the Haiphong City authorities to review their wrong works as and repair the situation. This case is just one among so many cases that show matters association with the land law. And this shocked case has raised the question of reforming the land law, which has been ambiguously claimed by the constitution as ―land is possessed by the whole peopleâ€â€". Mr. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, comments that ―it’s possible to see the recent incident at Tien Lang as a climactic demonstration of the faults in our Land Law and how it is implemented at the local level. A good farmer, pure, simple and hardworking, who’s driven to defend his right to his land with home-made weapons – what misery! Everybody believes that there’s such a thing as justice and that the law ensures it. Certainly that’s what the farmers who built the fish ponds at Tien Lang believed. They went to the court expecting fair play, but the simple truths they understood proved elusive. The hopelessness of their situati on drove them to take desperate measures. As mentioned above, the 11th Congress of Vietnam Communist Party held in 2011 issued four degrees; and one of them is beginning the study of the amendments and supplements of the 1992 Constitution and establishing the revised draft of the 1992 Constitution. This is urgent and necessary for the development of the country. 6. Environment Viet Nam is blessed by the nature, with a great ecological and hydrological diversity. The country is made up of equatorial lowlands, high, temperate plateaus and cooler mountainous areas. It lies in the inter-tropical zone and local conditions vary from frosty winters in the far northern hills to the year-round subequatorial warmth of the Mekong Delta. At sea level, the mean annual temperature is about 27 °C in the south, falling to about 21 °C in the far north. Geographically, it stretches over 1600km (1000mi) along the eastern coast of the Indochinese Peninsula; and has two main cultivated areas, that are the Red River Delta (15,000 sq km/5400 sq mi) in the north  and the Mekong Delta (60,000 sq km/23,400 sq mi) in the south. Vietnam also has diverse wildlife, with rare and precious fauna such as elephants, rhinoceros, tiger, leopard, black bear, snub-nosed monkey, crocodile and turtle. Forest area accounts for 2% of total forests in East Asia and Pacific. Fish catch is amon g the 10 highest countries in the world, with 1,451,800 tons per year. However, as the report of the World Bank on the environment in Viet Nam, ―Rapid economic growth in Vietnam over the last ten years, and its associated industrialization, urbanization, as well as increased exploitation of natural resources, has created significant pressures for the environment.â€â€"35 For example, the diverse wildlife is in precipitous decline because of the destruction of habitats, illegal hunting and pollution. In fact, Viet Nam Rhino was officially extinct in 2011. One of the most obvious examples for illustrating the environmental pollution is the phenomenon of getting narrowed of the lakes in Ha Noi. According to the Hanoi Construction Department, there are 111 ponds and lakes in Hanoi which cover a total area of 1165 hectares. The total area of lakes has decreased sharply during the urbanization, while a lot of them have disappeared. It is estimated that 80% of the lakesides have got polluted, 71% of lakes have suffered from pollution, 26% of the lakes still do not have embankments, while 8% of lakes have partial embankments. Environmentalists have called on to take urgent actions to protect the remaining lakes, or they would also disappear one day. Vietnam is among the countries that can be seriously affected by climate change. And the fact shows that the increasing deterioration of environmental conditions is emerging as a barrier to growth and development in recent years. In fact, according to the General Statistics Office, domestic natur al disasters occurred in 2011 has made 257 people dead and missing, 267 wounded; nearly 1.2 thousand houses collapsed and swept away; 391.8 thousand houses were submerged or damaged; more than 760 km of dykes, and the 680 km road motorized traffic bursts, landslides; 867 power poles broken or poured; nearly 54,000 hectares of rice and vegetables has been lost; more than 330,000 hectares of rice crops were flooded or damaged. Total value of damage caused by natural disasters in 2011 was estimated at over 10 trillion VND. Thus, this is really a big challenge of the country; and it needs a national and urgent action to prevent an ecological and hydrological catastrophe. C. BRIEF CONCLUSION With the aforementioned analysis of ―P.E.S.T.L.Eâ€â€", we see that in 2011, on the one hand, Viet Nam constantly attempted to keep its strategic plan of development, and also has obtained some important goals; on the other hand, the country had to face many difficulties and challenges which came both from outside and from inside. In my opinion, there are some main issues that the government should pay great attention in the coming years: reforming the education system, fighting against corruption (especially, promoting fiscal transparency and the public availability of economic data and information), reforming the state-owned sectors, amending laws, narrowing the gap between the Kinh, the Hoa and the ethnic minority groups, and improving environmental conditions.