When it comes to investing in Vietnam, one of the Asia countries, it would be a mistake if we do not analyze the country’s political risk. Beside other exposure, such as the economic exposure, when trading in Vietnam, there are several significant political risks that need to be concerned. First of all, the currency control in Vietnam is very different compared to the U.S. The Vietnamese dong is effectively pegged to the dollar and fluctuates within a very narrow band.

Companies today must thoroughly evaluate several specific items prior to expanding into new countries; the most important of these items being political risk and the risk caused by the country’s government’s actions. More specifically, this is the evaluation of actions which the government could take that could slow, hurt or completely crush an expanding company in that country. The actions which are most risky for an expanding company are expropriation, embargo, confiscation, protective tariffs and currency controls.

Michael Youssef Finance 370 May 5, 2009 Marine Insurance Extra Credit