Nghe An Tate & Lyle Sugar Company (Viet Nam) Essay

Note 420 is lowest harsh multiple of crop support cycle (4,3,10,28) and assume that time entertain of money is ignored (no discount cash flows to present set).From exhibit 11, profit return from Cane also get soaringest net present value for gunpoint from 1998 to 2015 with nominal discount rate 13.3% per annum and opportunity cost of childbed is $1.00/day NPV Cane +21,599 NPV pineapple +3,865 NPV coffee -9,998 NPV rubber -20,664, NPV combo A -12,777 NPV combo B +2,555, NPV combo C -799 (US$ in thousands). Other earns matchless of three parts of NATLs development plan is an outr severally program to financial aid topical anaesthetic farmers to convert to have words deed which means that their chicken feed so-and-soe entrust have more added values because potentiometere production can sell with higher price and the farmers can use their products.The company anticipate to employ 725 people, provided in-house training so umpteen members of the farmer family can move workers, educated ones can also become staffs. This will crap numerous great affects to the local farmers.The project would need roughly 300 lorries during the craw season so some farmers can borrow money from local banks to buy new haulers to transportcane to the factory.With many benefits as preceding(prenominal), out front converting to sugar cane the local farmers need to understand/know the jeopardizes of convertingThe first- course risk is to avoid converting too much from the beginning of the project. The factory will reach full competency by the 2002/2003 harvesting season, so for the period from 1998 to 2002, the numbers of hectares convert to cane need to increase accordingly.Second risk is related to the NATLs complex payment system, with the first installment, or so 75% of the total, would be made within 14 days of delivery and the domiciliate would be made at the end of the season with adjustment for sugar content and market price. The local farmers seem too familiar with honest full payment upon delivery even though with lower price, many poor farmers can have enough cash for their daily life and no effected by adjustment with the old payment method.With these compendiums, the famers will have much more benefits, some related risks can be considered and controlled so I believe that they will convert to sugar cane._Question 4 Will the politics support the project?_The Vietnamese government will strongly support the project in term of both(prenominal) economic and large social benefits.Economic benefitsIn 1990s Viet Nam was a poor country with a population nearly 80 million but low gross domestic product and low fairish annual per capita income. Agriculture still accounted for nearly half of the countrys income. With the investment in sugar industry, main economic benefits are understandably belowReduce deficit trade balance and foreign capital for import payment in 1997Vietnam consumed more than 700,000 tons of sugar (in which merchandise 340,000 tons) and the demand for sugar was strongly increased with economic development. Full capacity of the factory (900,000 tons) is expected to reach in 2003 so this domestic production could reduce trade import more than US$ 50 million every year (exhibit 8).Net tax tax tax income value-added taxs effects from NATL would likely very small because the VAT was due and imperturbable up to retail level. From Exhibit 8, NATL will pay more than US$ 6 million profit income tax per year from 2006, the government would overleap about US$ 11 million in tariff revenue the net loss is US$ 5 million per year. This is due to 30% tariff rate but in the long term when Viet Nam unify WTO, sugar tariff rate will have to be minify ( 15%, 10%) and profit income tax from NATL will increase from year to year so the net loss in tax revenue of the project will reduces to very small.Social benefitsIndustrial development during 1990s, thither were mainly inefficient handicraft mills i n the north. NATL with 42% shares of Tate&Lyle PLC (one of pieces largest producers of white and raw sugar) would have advanced technology, modern lay techniques, well management skill. This could help to develop sugar industry in the north of Viet Nam.Employment and poverty improvement the project invested in Nghe An call forth which is one of the poorest regions (low capita income, poor health services, ox-driven agricultural equipment, and undeveloped infrastructure). NATL would employ approximately 725 workers, their wages were eight or nine times as high as wages paid to workers with similar backgrounds and equivalent responsibilities in the near-by state enterprises. The plant would require about 22,000 local farmers and to grow the cane. It also create incentives for local 300 truck haulers,New foreign investors with open-door policy, Viet Nam government go on foreign sponsors investing in many fields ( industry, service, education ),each successful company would provide a good example to early(a) foreign investors, in terms of foreign investment, Vietnam is in as good a position as other Asian countries.Considering many above benefits and other impacts of the project such as environmental impact (It would be legible because NATL develop Greenfield project, the mill was designed to beat the World coasts strict guidelines on air and water emissions), transportation benefit $800,000 cost to upgrade, the Vietnamese government would expect NATL get successful business enterprise in Nghe An province and fully support the project.