| Author | Sittichai Kanjanatamrongkul |
| Call Number | AIT RSPR no. SM-95-25 |
| Subject(s) | Investments, Thai--Laos
|
| Note | A research study submitted in pa1tial fulfillment of the requirements for the degree of
Master of Business Administration in Management of Technology, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | Lao PDR's natural resources are still in the p1istine condition waiting for potential
investors to utilize. Labors in Laos are also abundant and ve1y cheap. Moreover, Laos
under new economic policy open its national gate for foreign investors and provide
incentives for these investors. For these reasons, there are a number of investment
oppo1tunities existing in the Lao PDR. While the major disadvantage of Laos is the under
developed physical infrastructure leading to high transpo1tation costs.
Due to the attractively cheap labor costs and unlimited exp01t quota, a Thai
garment company are looking for investment opp01tunity in Laos. Therefore, firstly the
feasibility study has to be carried out to assess the profitability of the investment.
Discounted cash flow technique is utilize in the analysis. The critical factors of the analysis
to yield a subjective result are the realistic discount rates and reasonable assumptions.
Moreover, there are another three critical issues that the managers and decision makers
should consider: the effect of inflation, the different levels of unce1tainty in different
phases of a project, and management's own ability to mitigate operating 1isks including
political risks, currency risks, market 1isks, and risks of access to fund.
In the actual analysis of the Thai ga1ment company, the assumptions are made to
be more conse1vative than the real situation to compensate for unce1tainty of future cash
flows. However, the project is still viable under such the severe assumptions. It is also
found that the project is most sensitive to market 1isks and then currency risks, while
political 1isks and risks of access to fund have slight influences on the project.
Regarding to the 1isk, the ga1ment company is recommended to arrange marketing
contract with its major customers to reduce market risks. And, then financial arrangement
such as transfer pricing and currency swap are suggested for the company to mitigate the
currency risks. |
| Year | 1995 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration in Management of Technology (Publication code = SM) |
| Chairperson(s) | Tang, John C.S.
|
| Examination Committee(s) | Igel, Barbara ;
Pandey, Indra M.
|
| Scholarship Donor(s) | Royal Thai Government |
| Degree | Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 1995 |