Nghe An Tate & Lyle Sugar Company (Viet Nam)

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From display 11, Net return from Walking stick likewise get highest net present value for duration from 1998 to 2015 with small discount rate 13.3% per year and opportunity cost of labor is $1.00/ day: NPV Walking stick +21,599; NPV pineapple +3,865; NPV coffee -9,998; NPV rubber -20,664, NPV combo A -12,777; NPV combo B +2,555, NPV combination C -799 (US$ in thousands).

– Other advantages: Among three parts of NATL’s development plan is an outreach program to help regional farmers to transform to cane production which indicates that their sugar walking cane will have more added worths since walking cane production can sell with higher cost and the farmers can utilize their items.

The business expected to employ 725 individuals, supplied in-house training a lot of members of the farmer household can become workers, informed ones can also become personnels. This will produce numerous great affects to the regional farmers.

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The task would require roughly 300 trucks during the harvest season so some farmers can borrow cash from regional banks to purchase new haulers to transport walking cane to the factory.

With numerous benefits as above, before converting to sugar walking stick the local farmers require to understand/know the dangers of converting:

The very first risk is to avoid converting excessive from the start of the job. The factory will reach full capability by the 2002/2003 harvesting season, so for the duration from 1998 to 2002, the numbers of hectares transform to walking cane requirement to increase accordingly.

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2nd danger is connected to the NATL’s intricate payment system, with the very first installation, roughly 75% of the total, would be made within 14 days of shipment and the rest would be made at the end of the season with modification for sugar content and market rate. The local farmers seem too acquainted with easy complete payment upon shipment even though with lower price, numerous poor farmers can have enough cash for their daily life and no effected by change with the old payment approach.

With these analysis’s, the famers will have a lot more advantages, some related risks can be considered and controlled so I believe that they will transform to sugar walking stick.

_Question 4: Will the government support the project?_

The Vietnamese government will strongly support the project in term of both economic and large social benefits.

Economic benefits:

In 1990s Viet Nam was a poor country with a population nearly 80 million but low gross domestic product and low average annual per capita income. Agriculture still accounted for nearly half of the country’s income. With the investment in sugar industry, main economic benefits are clearly below:

Reduce deficit trade balance and foreign currency for import payment: in 1997 Vietnam consumed more than 700,000 tons of sugar (in which imported 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 revenue: value-added tax’s effects from NATL would likely very small because the VAT was due and collected 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 lose 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 integrate WTO, sugar tariff rate will have to be reduced ( 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 benefits:

Industrial development: during 1990s, there were mainly inefficient “handicraft” mills in the north. NATL with 42% shares of Tate&Lyle PLC (one of world’s largest producers of white and raw sugar) would have advanced technology, modern planting 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 province 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 encourage foreign sponsors investing in many fields ( industry, service, education …), each successful company would provide a good example to other 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 Bank’s strict guidelines on air and water emissions), transportation benefit – $800,000 cost to upgrade, the Vietnamese government would expect NATL get successful business in Nghe An province and fully support the project.

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Nghe An Tate & Lyle Sugar Company (Viet Nam). (2016, Aug 12). Retrieved from https://studymoose.com/nghe-an-tate-lyle-sugar-company-viet-nam-essay

Nghe An Tate & Lyle Sugar Company (Viet Nam)

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