Table of Contents

1. Overview of the project.......................................................................................................... 3

1.1. Describe the project ........................................................................................................ 3
a. A description of the project ............................................................................................ 3
b. Information on related parties....................................................................................... 3
c. The reasons to do the project ......................................................................................... 3
1.2. The goal of the project .................................................................................................... 4
1.3. Macro economy ............................................................................................................... 5
1.4. Current status of regional/sector ................................................................................... 5
2. Market Analysis...................................................................................................................... 5
3. Technical analysis................................................................................................................... 7
3.1. Investment cost ................................................................................................................ 7
3.2. Operating cost ................................................................................................................. 8
4. Human Resource Analyse .................................................................................................... 11
4.1. Structure ........................................................................................................................ 11
4.2. Estimating demands of human resource .................................................................... 11
5. Financial analysis ................................................................................................................. 12
5.1. Table of parameters ...................................................................................................... 12
5.2. Cashflow estimation ...................................................................................................... 14
5.3. Cashflow formation ...................................................................................................... 14
5.4. Cost of capital determination....................................................................................... 15
6. Risk analysis ......................................................................................................................... 17
7. Evaluation and conclusion ................................................................................................... 20
References: ................................................................................................................................... 22

1
 Table of Appendix

All financial analysis parameters are taken from the excel file attached

2
 1. Overview of the project
1.1. Describe the project
a. A description of the project
This project is to build a system of wastewater treatment in high-tech zone by Pioneer
Information Technology Corporation (PIT) as an investor and the proposed construction site of
about 03 hectares of high-tech zone on District 9, HCM City. With capacity of 12,000 m3/day.
The total investment of the project at fixed price in 2014 is about 226.74 billion vnd. The project
will be built within 2 years (2014-2015) and will start to run in 2016. The project life cycle is 30
years (2016 - 2045) since starting operations.
Capital: 70% from the Vietnam Development Bank (VDB); 30% of equity.
b. Information on related parties
 Investor: Pioneer Information Technology (PIT)
 Creditor: Vietnam Development Bank (VDB)
 Customers: Companys at Saigon Hi-Tech Park (SHTP)
c. The reasons to do the project
 Social affects environment
Currently, most of the rivers, including the country's main rivers are polluted in varying
degrees. The main reason is because at present, about 70% of industrial waste, activities and a
large volume of hazardous medical waste in our country have not been thoroughly treated,
discharged directly into water sources. The source of water pollution is caused by waste water
contains many toxic ingredients are not thoroughly treated, discharged directly into water
sources. Air pollution due to odors, especially water sources contaminated by germs, bacteria,
heavy metal substances negatively affect human health. Currently, many households in the region
use the water in the rivers, lakes and canals to serve the daily activities, the probability of
suffering from diseases related to water pollution, such as skin cancer, lung cancer, diseases
anemia, hepatitis A, cholera, gastrointestinal diseases,… According to statistics of the Ministry of
natural resources and environment, each year there are about 9,000 deaths and over 200,000 cases
of cancer detected by using water sources pollution.

3
 In addition to affecting human health, water resources and the pollution of the atmosphere
also causes serious impacts on the landscape, the tourist activities and business of the people and
businesses in the area. A unique feature make distinctions for District 9 as canals thick, the Ward
County are closely linked by water, so the waterway is considered as a channel of important
communications in business. The canal water pollution at Cong will affect the network of canals,
rivers and other, should affect travelling, business of people in the area.
Environmental experts believe that it is nescessary that the sewage is treated, because if we
do it well, we not only improve the environment, but also reprocess the water, save water
resources.
 Economic affect the project
To treat wastewater, there are two options that we can chose. Firstly, each enterprise will
build a system of wastewater treatment itself; secondly, all enterprises as investors will build only
one the central system of wastewater treatment in high tech park.
If doing individual system, it would cost a lot more than doing the central system. Because
that system is industrial scale operation and all wastewater must be standard before being
discharged into the environment, so the second way would have effective economic and financial.
With businesses, the system is not profitable, so no company wants to spend money to build.
This leads to the fact that the construction of the system is more formal in many enterprises, and
if enterprises are found, they are more likely to pay a penalty than they spend on the construction
of the wastewater treatment system. However, even if the enterprises are sure to handle the
demand, there are too many discharge units to increase the output of waste, and the state is also
more difficult to check output quality so that it lead to a higher risk of environmental pollution.
When there is a central processing system, all wastewater are collected at a focal point and
treated so the state is more favorable in checking the quality of waste water output, so the risk of
environmental pollution lower than the individual building.
Thus, it is possible to see that the construction of a central wastewater treatment system is
economically feasible, reducing illegal discharge and reducing the environmental impact than the
individual system. So the project should be considered.
1.2. The goal of the project

4
 The goal of the project is to ensure that collects the sewage from all sources of high-tech
park including manufacturing waste water, domestic sewage and sewage from laboratories;
wastewater treatment environmental standards before running into environment. Water after
handling, a part is used for watering plants in high-tech zone, the rest of the waste into the Go
Cong river (Long Thanh My Ward, District 9).
1.3. Macro economy
There are some economics indicators that may take an effect on the project: inflation rate,
industrial growth rate … Each indicator takes a difference impact on the project, which will be
explained more particular below:
Inflation rate (VND-USD): 5%-1,8%, exchange rate between Vietnam and The United States
is 1 US Dollar in Vietnamese Dong is 21,372.00 for. This will makes the exchange rate between
USD and VND become higher due to the large gap, which is an positive impact on the attraction
of FDI to Vietnamese project since the cost to invest in Vietnam is lower.
1.4. Current status of regional/sector
Industrial growth rate in Vietnam is quite high, especially manufacturing industry. Moreover,
the suburban and neighbour areas of Ho Chi Minh city, such as Dong Nai and Cu Chi, have had
many industrial park, export processing zone. This factor shows the high need of industrial waste
disposal solutions.
The actual state of waste disposal projects in Vietnam is positive (constructive) too. Since the
rapid growth of industrial parks, the industrial waste has also increased dramatically. However,
there is still few solution to deal with it, which takes a consequence in environment pollution
cases such as Vedan not to mention, we are in the world in which people are attach much
importance to the environment and they are willingly accused those who do against this. To
support this, Vietnamese government has a preferential treatment on income tax for waste
disposal projects (according to 15th and 16th articles, The Income Tax Law).
Interest rate of the Central Bank is quite high (about 8.5% for commercial loans) and the
taxes (includes VAT and Net income tax) is 10% for each.
2. Market Analysis
With the aim of boosting domestic industry and attracting foreign investment to develop the
country in the direction of industrialization and modernization, since 1991, the Government of

5
Vietnam has advocated the establishment and development of Industrial Zone. According to
statistics, up to June 2012, there are 334 approved industrial zones with a total natural land area
of 90,900 hectares, of which 232 industrial zones have been put into operation and 102 industrial
zones are undergoing compensation. ground clearance and construction. The southern key
economic zone has 159 industrial zones, accounting for nearly 50% of the total industrial zones
in the country. The socio-economic benefits brought about by the industrial zones have made up
40% of the industrial production value, more than 60% of the country's export value and created
jobs for over 1.6 million workers, directly and indirectly 1.8 million indirect employees (Ministry
of Science and Investment, 2012). However, besides the positive contributions, the industrial
development process in general and the industrial zone system in particular in Vietnam are
creating great challenges in terms of environmental pollution caused by industrial waste water.
According to the World Bank, Vietnam could suffer from environmental pollution up to 5.5% of
GDP annually. Each year Vietnam also loses $ 780 million in public health due to environmental
pollution.
As of June 2012, about 62% of the industrial parks have built a centralized waste water
treatment system. However, according to the General Department of Prevention and Control of
Environmental Crimes PC49, these works have come into operation. However, the efficiency is
not high, leading to the fact that 75% of wastewater discharged from the industrial zone is
polluted with high pollution. Typically, the southern key economic area is HCMC. Ho Chi Minh
City (HCMC), Dong Nai and Binh Duong are considered to be the largest concentration of and
FDI projects in the country, although the rate of construction of wastewater treatment systems in
this area is quite high , violations of environmental regulations are frequent. Therefore, it is not
strange that many canals in HCM City such as Tham Luong, Ba Bo, Thay Cai, An Ha ... are
considered dead canals with black eyes and strong odors due to flowing volume huge waste water
and waste of all kinds from industrial production as well as living. Most of enterprises now use
the same tricks, building underground systems permanently discharge into rivers and canals, such
as Hao Duong, Pham Thu, Tuong Trung, Tan Nhat Dung in Ho Chi Minh City, or take advantage
of the tide to dilute untreated wastewater to the environment that was recently the event of
Sonadezi Joint Stock Company Long Thanh - Dong Nai.

6
 Environmental and air pollutants are mostly concentrated in old industrial zones because
these industrial parks are using outdated production technologies or have not yet invested in
waste treatment systems before being discharged into the environment. Meanwhile, in the new
industrial zones, due to the investment in modern technology, the system of treatment of exhaust
gas before discharging into the environment leads to the pollution of the air environment in these
industrial zones has been improved distinctly.
In the 2013 – 2015 period, SHTP has been attracting many investors, researchers estimated
that the demand for wastewater treatment of the whole industrial zone is 17,000 m 3 per day.
Therefore, the current capacity of the old waste water treatment system of 5,000 m3/day can not
be met. On the other hand, for businesses, the wastewater treatment system is not profitable, so
there isn’t any company wants to spend money to build. This leads to the fact that the
construction of the system is more formal in many enterprises, and if enterprises are found, they
are more likely to pay a penalty than they spend on the construction of the wastewater treatment
system. However, even if the enterprises are sure to handle the demand, there are too many
discharge units to increase the output of waste, and the state is also more difficult to check output
quality. should lead to a higher risk of environmental pollution. When there is central processing
system, all wastewater is collected at a focal point and treated so the state is more favorable in
checking the quality of waste water output, so the risk of environmental pollution lower than the
individual building.
Thus, it is possible to see that the construction of a central wastewater treatment system is
economically feasible, reducing illegal discharge and reducing the environmental impact than the
individual system, so the project is considered implementation.
3. Technical analysis
3.1. Investment cost
To build this project in Ho Chi Minh city, the total investment is about 233,778 million VND
with the fixed price in 2014. There are eight item the investors have to invest:
 Construction: including facitilities cost such as filter, tanks, control station, calculated
based on data from the design of engineer.
 Machinery: including physical equipment according to the design, electronic systems. The
price based on the report from the material suppliers.

7
  Construction and installation labor costs: including the wage in the basic construction,
equipment installation, transfer system, technology. The wage of staff is based on the
salary level in 2014.
 Project management costs and Construction consultant cost: are determined based on the
Decision of the Ministry of Construction in 2014.
 Other expenses: such as transportation costs, transfer system…
 Provision is calculated by nearly 10% of the initial invesment cost, it is pursuant to
Circular No. 04/2010/TT-BXD.
Investment cost('000.000 VND) 2014 2015
Construction 22,642 0
Machinery 0 160,067
Construction and installation labor costs 15,604 0
Project management costs 2,402 0
Construction consultant cost 2,342 0
Other 9,496 0
Provision 21,225 0
Total 73,711 160,067

3.2. Operating cost

Operating cost include electricity cost, chemistry cost and the wage of staff, the maintenance
& others cost to maintance this project effectively.
 The maintenance cost is the highest cost in process, the cost associated with keeping
building, vehicle, or machine in good condition by regularly checking it and repairing it
when necessary. This cost is assumed at 2% of the cost of machinery items (2014 - in
USD converted into VND in the base year and then be adjusted annually by VND
inflation).
 Management and labor costs: is the wage paid to labors working in this project. This
expenses are calculated based on the current salary of the operating plant SHTP (2014) be
adjusted to attract qualified personnel. Including management staff, electrical engineers,

8
 environmental engineers, general laborers. Wages are assumed to increase at an annual
rate of 7.21%. Each employee will receive 13 months of salary per year as required.

Position Employee‘s wage (price in 2014) Amount of staff

(million VND/month)
Manager 8 1
Electrical engineer 6 1
Environmental engineer 6 3
Labor 3.6 5
Total 23.6 10

 The electricity cost: Directly provided for the project under the general electricity price
mechanism applying for industrial zones (Pursuant to the Decision No. 4887/QĐ-BCT
dated May 30th ,2014). So that, electricity price will be different in different time frames
of the day. However, for simplicity, the input electricity price in this case is VND 1,313 /
kwh (weighted average of the day) calculated in 2014.
Time of using electricity and electricity tariff are pursuant to Circular No. 16/2014/TT-BCT
and The Decision 4887/QĐ-BCT
Time Hour Price (VNĐ)
Peak hours 5 2.213
(9:30-11:30, 17:00-20:00)
Low hours 6 763
(22:00-4:00)
Normal hours 13 1.218
(4:00-9:30,11:30-17:00, 20:00-22:00)
The average electricity price weighted 1.313

From 2010 to 2014, the electric price are changed 6 times, thus the report determined the
increasing annual electricity price is the average electricity price growth from 2010 to 2014 is
8.42%. Pursuant to the Decision No. 69/2013 / QD-TTg, each time of adjustment, electricity

9
prices are adjusted up to 7% or more, and the adjustment of electricity prices between
consecutive two consecutive minimum of 6 months. 8.42% per year is appropriate.
The electric increase from 2010-2014 and The average increase per year

Year Growth rate (%)

2010 6,8%
1/3/2011 15.28%
20/12/2011 5%
1/7/2012 5%
22/12/2012 5%
1/8/2013 5%
2014 0%
The average annual growth 8.42%

Price per kwh is calculateed: Pt = Pt-1 (1+r)

Pt : electricity price in year t
Pt-1 : electricity price in year t-1
r: the percent of increasing electricity price per year.
The annual electricity cost is equal to the electricity consumption multiplied by the electricity
price. The power consumption is 0.55kwh / m3 wastewater treatment.
 Chemistry cost: The amount of chemical is determined based on the plant's operating
capacity. It’s calculated based on the real market price in 2014. The next year, price will
be adjusted by the VND inflation, the consumption which is calculated based on the
technology of the plant, is suggested by PIT. A summary of chemical cost is presented
below:
Chemical Price in 2014 The consumption Number of day using chemical in a year
VND/Kg Kg/1.200m3/day
NaOH 10.300 30 180
H2SO4 4.100 32 180

10
 NaOCl 2.500 240 24
PAC 7.000 260 24
Polymer 80.000 90 24

4. Human Resource Analyse

4.1. Structure
To operate a project, human resource is one of the most important thing. Consequently,
chosing the most effective structure should be considered as a priority in order to effectively
operate the project.

For this project, functional structure is chosen due to its specific traits. Accordingly, project’s
director is at the highest position in this hierarchy; following is project’s manager and engineers;
finally, workers stand the lowest in this structure. The project is an technical one which
employees are all specialized in their job skill. Therefore, this structure will fit the project
because of high-skilled employees and its effiency. In particular, some of this structure’s
advantages are (1) reduce cost for training, (2) tasks among workers are defined clearly, (3)
taking full advantage of employees’ specific skills. However, this structure might face some
difficulties such as (1) limit in engineers’ point of view, (2) hinder workers’ career path.
4.2. Estimating demands of human resource

11
 Recently, industrial growth rate of Vietnam has increased dramatically. Nonetheless, in the
first few years, the demand for waterwaste treatment is not high because the environmental issue
is not people’s consideration at that time. Thus, the need of employees is still not high. As
estimated, there would be 10 employees work for this project in 2014: 1 as a manager, 1 as an
electrical engineer, 3 as environmental engineers and 5 as workers.

Number of employee
Manager 1
Electrical engineer 1
Environmental engineer 3
Worker 5

In the first few years, the size of this project is small. Accordingly, only 1 manager is needed.
He will manage all the project and make sure the project operate correctly. The demand for
electrical engineer is the same. However, this number increases for environmental engineers and
workers due to their task’s traits. The total number of employees is 10 for this period.
By 2021, the size of this project will have be largen, which leads to the increase of
employees recruited. Thus the number of new employees would be about 107 from 2014 to 2021
and in 2021, new managers would be recruited. In consequence, the cost for employees is
approximately 650 millions VND for the first year. With the increase in wages of staffs about
7.21% per year, in the 2045, the total cost for staffing is 3.162 billions VND.
5. Financial analysis
5.1. Table of parameters
 Inflation rate: The inflation rate is determined based on IMF forecasting. According to the
IMF, the VND inflation rate is 5% in 2015, the essay assuming that VND inflation from
2015 will be stable around 5%. The inflation rate of USD 1.8% in 2015, the essay also
assuming USD inflation from 2015 onwards is 1.8%.
 The exchange rate in 2014 is determined based on the exchange rate of US dollar in the
last three months of the year by the Bank for Foreign Trade of Vietnam.

12
 Month Exchange Rate
31/10/2014 21.305
30/11/2014 21.405
31/12/2014 21.405
Average Exchange Rate 21.372

In the following year, the exchange rate is adjusted by the inflation rate between USD and
VND
 Project lifetime: In this paper, the projectlifetime is assumed to be 30 years and lasts from
2016 to 2045, not including 2 years in contruction time
 Treated wastewater price: The treated wastewater price is 0.34 . The price used is based
on the current fee for wastewater treatment (2014) applied to businesses in SHTP is 0.34
USD / m3 treated wastewaterusd and will be adjusted according to the annual USD
devaluation.
In fact, the waste water treatment cost of this project is 20-30% lower than other industrial
parks, according to the statistics table below:
Table of comparing with wastewater treatment components in some industrial parks
(data are from Sonadezi Long Binh (2015) and Binh Dinh Economic Zone Management
Board (2014)).

Industrial zone Fee per 1m3 Fee per 1m3 Over percentages
(USD) (VND) than SHTP

SHTP 0.34 7266.48

Go Dau Industrial zone 0.45 9617.4 32%

Phu Tan Industrial zone, Long 9500 30%

My

Nhon Hoa Industrial zone 10100 39%

13
 Industrial zone in economic area 8923,19 23%
in Nhon Hoi

 Tax: Coporate income tax of this project is 10% and VAT is the same.
5.2. Cashflow estimation
All of the investement cost table, depreciation, payment schedule, turnover, operating cost,
income statement is mentioned in Excel file attached.
5.3. Cashflow formation
 Cashflow formation
 Cash inflow of the project is the revenue from wastewater treatment
 Cash outflow of the project includes: initial investment costs, operating costs, CIT, VAT
 Net cash flow of the project by cash inflow minus cash outflow.
 To determine the internal rate of return, we set the equation:

 B/C ratio = PV(Benefit)PV(Cost)

The analysis results are as follows:
 Cashflow analysis in total investement viewpoint and equity viewpoint

IRR of project 7%
NPV of project (28,922)
IRR of creditor 6.58%
NPV of creditor 0
IRR of owner 7.36%
NPV of owner (42,408)
DSCR 1.27
B/C of project 0.95

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 NPV of the project = -28.922 < 0. The project is not financially feasible because the NPV is
lower than zero so the income from the project will not cover the cost and can not bring
additional profit to the investor.
NPV of creditor = -42.408 < 0. Owner is not ready to invest in project because they require a
high rate of return
Calculated results show that the IRR calculated on the total investment of the project reached
7%. With the discount factor IRR = 7%, the NPV of the project is zero, because the IRR of the
project is lower than the project's WACC, so the project is not effective under the IRR.
The debt security ratio (DSCR) reflects the ability of a business to pay its debts to the credit
institution: throughout the repayment period, the debt security ratio of the project is greater than 1
because the project's revenue is sufficient to cover loan and principal interest, so the bank lends
to the project.
B/C of project = 0.95> 1 . It can be concluded the project is not financially feasible. Benefits
from the project can not cover the cost.
5.4.Cost of capital determination
 Calculating cost of equity through indirect CAPM method:
Re = rf + βL (rm - rf) + foreign exchange risk premium + national risk premium.
rf: The project has a 30-year life cycle, so the risk-free rate is 30-year US government bond
interest rate, according to the US Treasury Department, at the start of 2015 is 2.25%
βL: beta of leveraged enterprises in Vietnam.
βLVN = βU US [ 1+ (1- tC VN ) (D/E)VN ]
(rm - rf): market risk premium, in which:
 rm: the average return on the US stock market, measured by the average return on equity
from 1928-2014, rm = 11.53%
 rf: United States risk-free rate, measured by the 10-year US average interest rate, from
1928-2014, rf = 5.28%.
National risk premium: is the difference between the interest rate the Government of Vietnam
pays when borrowing USD on the international market and the interest rate the US government
pays.

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 According to Moody's, in early 2015, Moody's ranked Vietnam as B1 with a risk premium of
4.5%.
Foreign exchange risk premium: This is reflected by the difference between the yield of an
investment in a local currency and the yield of an investment in dollars. At the Bank for Foreign
Trade of Vietnam, the one-year deposit rate in VND is 6%, the one-year deposit rate in USD is
0.25%. The foreign exchange risk premium is 5.75%.
The calculation table is as follows: Re = rf + βL (rm - rf) + foreign exchange risk premium +
national risk premium.
Source

Levered Beta index in US water treatment industry 0.75 Damodaran

CIT rate in the US 14.52% Damodaran

Debt to Equity Ratio in US (D / E) 57.90% Damodaran

Unlevered Beta index in US water treatment

0.5
industry

Project's CIT rate 10%

Project's Debt to Equity Ratio (D / E)(D/E) 2.17

Levered Beta index in Vietnam water treatment

1.47
industry (βL)

The average return on the S & P 500 stocks from

11.53% Damodaran
1928 to 2014 (rm)

The average interest rate US bonds 10-year term

5.28% Damodaran
from 1928 to 2014 (rf)
Market risk premium 6.25%
United States Treasury
30-year risk-free rate (rf) 2.25%
Department

16
National risk premium 4.50% Moody
Foreign exchange risk premium 5.75%
Cost of equity 21.69%
 Caculating nominal WACC through calculate weighted average cost between the cost of
equity and the cost of debt (interest rate)
 Real WACC is adjusted according to VND inflation in 2014
Nominal cost of equity 21.69% Real cost of equity 15.89%
Nominal cost of debt 8.50% Real cost of debt 6.58%
Nominal WACC 12.08% Real WACC 9.07%

The weighted average WACC of 9.07% is used to assess the feasibility of the project from
the point of view of total investment.
6. Risk analysis
Sensitive analysis
Sensitivity analysis aims at identifying factors that influence the feasibility of the project.
Based on the proportion of factors in the cash inflows and cash outflows of the project, the inputs
likely to affect the feasibility of the project are: total initial investment, product price , annual
maintenance levels.
 Feasibility analysis for inflation VND
Inflation in 2014 at 4.09% is considered the lowest inflation rate in ten years because a sharp
drop in petrol prices. Forecast of Finance Forecast Center (USA) The oil price is only a short-
term trend, which will end in early 2015 and rise again, so the possibility of inflation from 2015
onwards will tend to increase. to 2014. Currently, the policy pursued by the State Bank is to keep
inflation at a reasonable level, so the hypothesis assuming inflation from 2015 will be controlled
within the range of 4-7%.

17
 Inflation covariates with the project NPV,as the higher the inflation rate, the higher the NPV
of the project is due to higher revenue growth than the reduction in costs. At all levels of
inflation, the NPV of the project is negative, the project is not financially feasible. Therefore it
can be concluded inflation does not affect the feasibility of the project
 Feasibility analysis at wastewater treatment fee
Currently, the cost of wastewater is high due to the high cost of electricity and chemicals and
the earning of early profits for the owner. At present, the fee for wastewater treatment in other
industrial parks is lower than that of the SHTP from 20% to 30%. Thus, the essay assumes that
wastewater treatment costs fluctuate around 20%.

18
 Wastewater treatment charges and the NPV projects covariates relationship, when
wastewater charge increases, the NPV increases. As the wastewater treatment cost increases to $
0.38, the NPV of investment higher than zero, above this level, NPV> 0, so the project is
financially feasible. Charge is the factor that affects the feasibility of the project.
Initial investment costs fluctuate around 5-10%.
Investement Investement cost in year 0
cosi in year (28,922) 73,711 70,025 69,288 68,551 67,814 67,077 66,340
1 160,067 (28,922) (23,865) (18,028) (11,534) (4,517) 2,882 10,517
152,064 16,604 20,124 24,185 28,697 33,565 38,687 43,958
150,463 51,122 53,566 56,379 59,498 62,855 66,376 69,987
148,862 78,075 79,760 81,696 83,837 86,136 88,540 90,997
147,262 99,827 100,982 102,307 103,770 105,337 106,971 108,637
145,661 117,988 118,778 119,683 120,681 121,747 122,857 123,986
144,060 133,611 134,152 134,770 135,451 136,178 136,934 137,701

The initial investment cost was inverted with project financial NPV, when the initial
investment cost reduces, the NPV increase, the project financially feasible.If the investement cost
in year 1 reduce 1%, NPV of the project positive. Therefore, the initial investment cost can affect
the feasibility of the project. Therefore, the initial investment cost does not affect the feasibility
of the project.
 Feasibility analysis under regular annual maintenance fees
Regular annual maintenance fees are assumed to vary from 5-10%

19
 We see maintenance fees vary negatively with financial NPV, while reducing maintenance,
the NPV increases. At all maintenance rates, the NPV is positive, the project is financially
feasible,so regular maintenance fees do not affect project feasibility.

7. Evaluation and conclusion

Financial analysis shows that the project is not financially feasible from the perspective of
total investment and the investor. The reason is that low turnover from wastewater is not enough
to cover initial investment, operating and maintenance costs, so no private investor will be
motivated to participate in project. However, the project is completely feasible in terms of
economics and is important in creating a starting point for attracting private sector waste water
treatment in state-owned industrial parks. Therefore, the state should encourage the
implementation of the project.
On the other hand, based on the sensitivity analysis data, the essay determines the treated
wastewater fee and initial investement are the factors affecting to the feasibility of the project.
Thus, the thesis put forward recommendations aimed at making the project’s NPV > 0 to
attract private sector participation as follows:
 Increased wastewater treatment fee. Sensitivity analysis shows that at the wastewater
treatment fee of $ 0.38 / m3, the NPV of the investor is higher than 0, at which project
profitability is exactly equal to the expected return of the investors, thus the project could
attract private sector involvement.

20
  Decreased investement cost in year 1. At the 1% reduction of the investment cost in year
1 and keeping the investment cost in year 0, the project's NPV is zero. So project
managers should reconsider the purchase of machinery in year 1 by finding suppliers of
machines at preferential prices.That will cause the initial investment costs to decrease,
leading to an increase in NPV which makes the project more feasible.
This alternative proposal makes the project feasible and has many other socio-economic
implications such as:
 This option satisfies the principle of "polluter pays", in the context of increasingly serious
environmental concerns and concerns, businesses must increasingly have higher
responsibilities. In the discharge of pollutants, so there is a higher charge.
 Successful projects will serve as a good example to encourage private sector participation
in the field of wastewater treatment, especially in IPs under state management.

21
References:
1. Thu Vien Phap Luat. (2014). [online] Available at: https://thuvienphapluat.vn/van-
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