Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Financial AnalFinancial Analysis forysis for
DevelopmentDevelopment ProjectProject
by ARIFIN ABDUL LATIFARIFIN ABDUL LATIF...
Part 1:Part 1:
Development viaDevelopment via
Transformation?Transformation?An Intro…An Intro…
the case for Kampuchea (Cam...
q CAMBODIA: A
country's
comeback -
actively seeking
investments from
SMEs - the next
big ASEAN growth
story?
Are there any...
The Star’s Cover Story:
‘Cambodia calling’ -
undergoing a quiet
transformation?
q From killing fields
to economic
transformation
Are there any
difference in
Laos?
Part 2:Part 2:
Transformation - Some definitions,Transformation - Some definitions,
directions...?directions...?
q Transfo...
q Transformation with
political
will/agenda
Ø Government Transformation
Program (GTP) 
Najibnomics
Ø Economic Transformat...
Part 3: Biz Talk Live! (Bernama TV) ~Part 3: Biz Talk Live! (Bernama TV) ~
“ETP – Is it on Track?”“ETP – Is it on Track?”
Live! interview invited at short notice,
off-the-cuff interactions with audiences
on-the-air/ online (on twitter), etc.
Li...
Part 4:Part 4:
A Brief IntroA Brief Intro
on Projectson Projects……
ProjectsProjects are building blocks
for growth. They n...
What are ProjectsWhat are Projects,, in the first place??
Timeline exist – a beginning & an ending
Collectively forms pa...
Feasibility Analyses of ProjectsFeasibility Analyses of Projects
Technical Analysis
Market Analysis
Social/Sociological...
While ….....
VIABILITY ANALYSIS includes
 FINANCIAL analysis  focus
on the financial implication of the
project
 ECONOM...
PROJECTS should be ......PROJECTS should be ......
Technically feasible;
Financially viable;
Economically viable;
Soci...
FINANCIALFINANCIAL
ANALYSIS forANALYSIS for
DEVELOPMENTDEVELOPMENT
PROJECTPROJECT
Financial & EconomicFinancial & Economic
Analysis ofAnalysis of
ProjectsProjects Capital InvestmentCapital Investment Ana...
Capital Investment Analysis:Capital Investment Analysis:
involves these concepts
Time Value of MoneyTime Value of Money
...
Capital Investment Analysis: The ProcessCapital Investment Analysis: The Process
INFO/DATA
FINANCIALFINANCIAL
ANALYSISANAL...
PROJECTS arePROJECTS are viableviable iff.....iff.....
Net Present Value (NPV) is positive
(NPV > 0);
Internal Rate of R...
Graphically, a viable project is...
Net Present Value (NPV)
-200,000,000
-150,000,000
-100,000,000
-50,000,000
0
50,000,00...
Part 5:Part 5:
How to select a FINANCIALLY viableHow to select a FINANCIALLY viable
project? A Case Studyproject? A Case S...
…and was among the earliest
Facebook member too!
I was a pioneeringI was a pioneering FaceBook addictFaceBook addict
CASE STUDY
In a Developing/
Transition Economy
New Ammonia-Urea Plant
Project (Turkmenistan)
Location: Free Economic
Zone ...
New Ammonia-Urea Plant ProjectNew Ammonia-Urea Plant Project
(Chardzhou, Turkmenistan)(Chardzhou, Turkmenistan)
Checklist: ViableChecklist: Viable ProjectProject FinancingFinancing
Checklist: ViableChecklist: Viable ProjectProject FinancingFinancing
NH3-Urea Project:NH3-Urea Project: Financial AnalysisFinancial Analysis
NH3-Urea Project:NH3-Urea Project: Financial AnalysisFinancial Analysis
NH3-Urea Project:NH3-Urea Project: Information + DataInformation + Data
NH3-Urea Project:NH3-Urea Project: Information + DataInformation + Data
NH3-Urea ProjecNH3-Urea Project: SWOT Analysist: SWOT Analysis
NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
NH3-Urea Project: Market Analysis/Study
NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
Way back in 1959-61, YB Aziz Ishak* propose...
NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
Chardzhou plant Main ports
Export routesby railroads
Export routesby sea/ inland waterways
Export routesby highways/ roads...
NH3-UreaNH3-Urea
Project:Project:
FinancialFinancial
AnalysisAnalysis
NH3-Urea Project:NH3-Urea Project:
Economic AnalysisEconomic Analysis
NH3-Urea: ProjectNH3-Urea: Project viability, CBA-FEZviability, CBA-FEZ
NH3-Urea: Project viNH3-Urea: Project viability, CBA-25% taability, CBA-25% taxx
NH3-Urea: ProjectNH3-Urea: Project viviability, CBA-tax freability, CBA-tax freee
NH3-Urea: Break-NH3-Urea: Break-even Point Analysiseven Point Analysis
NH3-Urea: SensitivitNH3-Urea: Sensitivityy Analysis (graphsAnalysis (graphs))
Postcript:
Thanks for lending
your ears ~ hope you
have learned some
beneficial knowledge
along the way… use
them to assis...
I was among the earliest Malaysia’s
LinkedIn member…
I’m an active nerd on LinkedIn……..!!
My Professional & Online Referrrals
My Professional & Online Referrrals
My CV (top
page)
My Curriculum Vitae (top page)
Upcoming SlideShare
Loading in …5
×

Financial analysis for development project

1,331 views

Published on

2014-06-09 TCTP - Development Planning & Project Management for Cambodia & Laos (JICA, MOFA, INTAN). My input was as a seasoned lecturer/consultant in "Financial analysis for development project" ~ using real life first hand experiences during my 6-months stint as an IDB Project Expert in 'Project Financing' to Turkmenistan's State Bank for Foreign Economic Affairs (TFEB) at Ashgabat during the height of the 1998 Asian Financial Crisis -- using a case study: a new Ammonia/Urea Plant in Chardhow.

Published in: Economy & Finance
  • Be the first to comment

Financial analysis for development project

  1. 1. Financial AnalFinancial Analysis forysis for DevelopmentDevelopment ProjectProject by ARIFIN ABDUL LATIFARIFIN ABDUL LATIF Founder & Senior Consultant/Economist ArifinLatif ConsultingArifinLatif Consulting THIRD COUNTRY TRAININGTHIRD COUNTRY TRAINING PROGRAMMES (TCTP) 2014PROGRAMMES (TCTP) 2014 [(TCTP) JICA/MOFA/INTAN][(TCTP) JICA/MOFA/INTAN] COURSE ONCOURSE ON DEVELOPMENTDEVELOPMENT PLANNINGPLANNING ANDAND PROJECTPROJECT MANAGMANAGEMENT FOREMENT FOR CAMBODCAMBODIAIA AND LAOSAND LAOS 9-20 June 20149-20 June 2014 INTAN Kiara, Kuala Lumpur, MalaysiaINTAN Kiara, Kuala Lumpur, Malaysia
  2. 2. Part 1:Part 1: Development viaDevelopment via Transformation?Transformation?An Intro…An Intro… the case for Kampuchea (Cambodia) ~ some current projects and challenging issues in developmentthe case for Kampuchea (Cambodia) ~ some current projects and challenging issues in development
  3. 3. q CAMBODIA: A country's comeback - actively seeking investments from SMEs - the next big ASEAN growth story? Are there any difference in Laos?
  4. 4. The Star’s Cover Story: ‘Cambodia calling’ - undergoing a quiet transformation?
  5. 5. q From killing fields to economic transformation Are there any difference in Laos?
  6. 6. Part 2:Part 2: Transformation - Some definitions,Transformation - Some definitions, directions...?directions...? q Transformation towards what end? Ø Transforming Traditional/ Agrarian Societies  e.g. Cambodia - From killing fields to economic transformation. Ø Transformation to Transition Economies  e.g. Turkmenistan – From USSR republic to CIS nation. Ø Transformation to NICs ~ Tigers/Lions?  e.g. Malaysia/ Nigeria. Ø Transformation to High Income Nation ~ 1Malaysia  towards Realising Vision 2020. Ø Ø Ø Capacity building training in Ashgabad (1998) & Lagos (2000). q Transformation is the fashionable, buzzword today in national development process…
  7. 7. q Transformation with political will/agenda Ø Government Transformation Program (GTP)  Najibnomics Ø Economic Transformation Program (ETP)  NKEAs; 10th Malaysia Plan; Economic Corridors (NCER, ECER, Iskandar, SCORE) Ø Budget 2013 & 2014  “Najib: nobody is left out!” Ø Ø Ø Ø Ø
  8. 8. Part 3: Biz Talk Live! (Bernama TV) ~Part 3: Biz Talk Live! (Bernama TV) ~ “ETP – Is it on Track?”“ETP – Is it on Track?”
  9. 9. Live! interview invited at short notice, off-the-cuff interactions with audiences on-the-air/ online (on twitter), etc. Live! interview on BERNAMA TV (15 Dec 2012 @9.30pm – 1 hour)
  10. 10. Part 4:Part 4: A Brief IntroA Brief Intro on Projectson Projects…… ProjectsProjects are building blocks for growth. They need to grow consistently and if sustained well enough then only we’ll be able to reap the success and achieve DEVELOPMENTDEVELOPMENT!
  11. 11. What are ProjectsWhat are Projects,, in the first place?? Timeline exist – a beginning & an ending Collectively forms part of a bigger subset in a program Building blocks of development efforts Development projects should benefit the people Should be feasible in the first place and meet criteria in selection – in relation to a host of developmental jargons…
  12. 12. Feasibility Analyses of ProjectsFeasibility Analyses of Projects Technical Analysis Market Analysis Social/Sociological Analysis Environmental Impact Assessment (EIA) Political Analysis
  13. 13. While …..... VIABILITY ANALYSIS includes  FINANCIAL analysis  focus on the financial implication of the project  ECONOMIC analysis  also impute its impact to the overall economy, include ‘shadow pricing’ of factors of production 
  14. 14. PROJECTS should be ......PROJECTS should be ...... Technically feasible; Financially viable; Economically viable; Socially (or culturally) acceptable; Environmentally sustainable (or sound); and Politically desireable
  15. 15. FINANCIALFINANCIAL ANALYSIS forANALYSIS for DEVELOPMENTDEVELOPMENT PROJECTPROJECT
  16. 16. Financial & EconomicFinancial & Economic Analysis ofAnalysis of ProjectsProjects Capital InvestmentCapital Investment AnalysisAnalysis  Financial & Economic AnalysesFinancial & Economic Analyses  can be aided/speeded up by computer softwares, e.g.  COMFAR Expert III (UNIDO),  WinDASI (FAO), and/or  Spreadsheet Applications (e.g. MS EXCEL)  Project PresentationProject Presentation & Reporting/ Documentation - for Project Financing
  17. 17. Capital Investment Analysis:Capital Investment Analysis: involves these concepts Time Value of MoneyTime Value of Money Concept of Discounting & Compounding Financial & Economic AnalysesFinancial & Economic Analyses Preparing Cash Flows Decision Rule: Criteria for Viable Projects/Enterprise Sensitivity Analysis 
  18. 18. Capital Investment Analysis: The ProcessCapital Investment Analysis: The Process INFO/DATA FINANCIALFINANCIAL ANALYSISANALYSIS ECONOMICECONOMIC ANALYSISANALYSIS Cost-BenefitCost-Benefit ANALYSIS (CBA)ANALYSIS (CBA) Break-even PointBreak-even Point ANALYSIS (BEP)ANALYSIS (BEP) SENSITIVITYSENSITIVITY ANALYSISANALYSIS + ASSUMPTIONS? + TECHNICAL FEASIBILITY? + MARKET ANALYSIS/STUDY? Exports?? + SOURCES ? CASH OUTFLOWS 1 - Production; Capacity; Inventories; 2 - Sales Volume; Sales Revenues A) Capital Investment B) Production Costs - Variable & Direct Fixed Costs - Factory, Operating & Transportation Costs C) Income Statement - Operating Income; Sales; Profits (Losses); - Taxes; Dividends; Retained Earnings CASH INFLOWS - Feasibility Reports, Company Reports - Industry/World Markets, Internet, Reuters
  19. 19. PROJECTS arePROJECTS are viableviable iff.....iff..... Net Present Value (NPV) is positive (NPV > 0); Internal Rate of Return (IRR) exceeds the opportunity cost of capital (IRR > base lending rate); Cost-Benefit Ratio (BCR) is greater than 1 (BCR > 1); and/or “Quick” Payback Period
  20. 20. Graphically, a viable project is... Net Present Value (NPV) -200,000,000 -150,000,000 -100,000,000 -50,000,000 0 50,000,000 100,000,000 -4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Years of operation NPV(US$) Ammonia-Urea Plant Project in Chardzhou, Turkmenistan NPV @12% = US$44.84 million IRR= 15.77%; BCR= 1.26 Payback period 9.5 years
  21. 21. Part 5:Part 5: How to select a FINANCIALLY viableHow to select a FINANCIALLY viable project? A Case Studyproject? A Case Study Relating SWOT/PEST Analysis, project financing, scheduling, market analyses/forecasting, etc. to ensure successful implementation of project selections for development… Ø Using an actual Case Study performed during my IDB Consulting Assignment way back in 1998. Ø “A New Ammonia & Urea Plant in Charzew, Turkmenistan” – i.e. related to oil & gas sector, energy, fertilizer (urea) & agriculture – in a CIS nation. Ø From a former Soviet Union republic has embraced free market dogma - and is now a transition economy.
  22. 22. …and was among the earliest Facebook member too! I was a pioneeringI was a pioneering FaceBook addictFaceBook addict
  23. 23. CASE STUDY In a Developing/ Transition Economy New Ammonia-Urea Plant Project (Turkmenistan) Location: Free Economic Zone (FEZ), Chardzhou Financing: Project Financing
  24. 24. New Ammonia-Urea Plant ProjectNew Ammonia-Urea Plant Project (Chardzhou, Turkmenistan)(Chardzhou, Turkmenistan)
  25. 25. Checklist: ViableChecklist: Viable ProjectProject FinancingFinancing
  26. 26. Checklist: ViableChecklist: Viable ProjectProject FinancingFinancing
  27. 27. NH3-Urea Project:NH3-Urea Project: Financial AnalysisFinancial Analysis
  28. 28. NH3-Urea Project:NH3-Urea Project: Financial AnalysisFinancial Analysis
  29. 29. NH3-Urea Project:NH3-Urea Project: Information + DataInformation + Data
  30. 30. NH3-Urea Project:NH3-Urea Project: Information + DataInformation + Data
  31. 31. NH3-Urea ProjecNH3-Urea Project: SWOT Analysist: SWOT Analysis
  32. 32. NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
  33. 33. NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
  34. 34. NH3-Urea Project: Market Analysis/Study
  35. 35. NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
  36. 36. NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
  37. 37. NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy Way back in 1959-61, YB Aziz Ishak* proposed the setting up aWay back in 1959-61, YB Aziz Ishak* proposed the setting up a urea factory!urea factory! [* Malaysia’s first Minister of Agriculture!] Ø M$25mil considered too high then!? Ø Planned capacity 100 tons of urea/day and 60 tons of liquid ammonia. Ø Fertilizer Society Board to award contract to Friedrich Uhde for M$26mil. Ø It took Malaysia over 2-3 decades to finally have our own urea fertilizerown urea fertilizer plantplant at very much higher cost!.. and we were a vital agriculture-basedvital agriculture-based economyeconomy!!
  38. 38. NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
  39. 39. NH3-Urea Project: MNH3-Urea Project: Market Analysis/Studarket Analysis/Studyy
  40. 40. Chardzhou plant Main ports Export routesby railroads Export routesby sea/ inland waterways Export routesby highways/ roads POTENTIALEXPORTROUTES
  41. 41. NH3-UreaNH3-Urea Project:Project: FinancialFinancial AnalysisAnalysis
  42. 42. NH3-Urea Project:NH3-Urea Project: Economic AnalysisEconomic Analysis
  43. 43. NH3-Urea: ProjectNH3-Urea: Project viability, CBA-FEZviability, CBA-FEZ
  44. 44. NH3-Urea: Project viNH3-Urea: Project viability, CBA-25% taability, CBA-25% taxx
  45. 45. NH3-Urea: ProjectNH3-Urea: Project viviability, CBA-tax freability, CBA-tax freee
  46. 46. NH3-Urea: Break-NH3-Urea: Break-even Point Analysiseven Point Analysis
  47. 47. NH3-Urea: SensitivitNH3-Urea: Sensitivityy Analysis (graphsAnalysis (graphs))
  48. 48. Postcript: Thanks for lending your ears ~ hope you have learned some beneficial knowledge along the way… use them to assist your nation’s efforts in the development. All d best! Keep in touch. Thank you…Thank you… Spasibo…Spasibo… Terima kasih…Terima kasih…
  49. 49. I was among the earliest Malaysia’s LinkedIn member… I’m an active nerd on LinkedIn……..!!
  50. 50. My Professional & Online Referrrals My Professional & Online Referrrals
  51. 51. My CV (top page) My Curriculum Vitae (top page)

×