Assignment 3

Analysis Country Risk

IBU5IBE - International Business Evironment

By: Do Thi Khanh Huyen - 19539687

Nguyen Thi Ha Phuong - 19539670

Nguyen Thuy Linh - 19266901

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 September 03, 2017

Table of Contents
I. Introduction.....................................................................................................................4
1. About Vietnam National Textile..................................................................................................4

2. About Rwanda.................................................................................................................................5

3. About Rwandan Special Economic Zone.................................................................................6

4. About our partners - Utexrwa......................................................................................................7

II. Statement of the scope and opportunities and threats to investment...............................7

1. Statement of the scope...................................................................................................................7

2. Reason out Vinatex should choose Rwanda to invest...........................................................8

3. Opportunity and threats to Vinatex when investing in Rwanda SEZ..............................10

4. Competitor analysis.....................................................................................................................12

III. Examines country risk in relation to the Rwandan Special Economic Zone...............13
1. What is country risk?...................................................................................................................13

2. Analysing the country risks for Vinatex when investing in Rwanda Special Economic
Zone......................................................................................................................................................14

IV. Recommendations.......................................................................................................19
1. Suggested mode of entry and an assessment of its appropriateness for entering the
market..................................................................................................................................................19

2. Risk management considerations.............................................................................................20

IV. Conclusion..................................................................................................................21
REFERENCES:................................................................................................................22

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Vinatex is the largest apparel company in Vietnam. At present, the company is
looking for new markets in Africa to carry out foreign investment, exploiting the
benefits that foreign investment brings. Good risk control. Therefore, the company
has assigned a team of staff to do market research to produce a comprehensive
assessment report on the selection of investment country, investment partner and
country risk analysis when foreign direct investment company. After researching
the market, the team selected Rwanda as a country for investment, specific is the
Rwandan Special Economic Zone, investment partner is Utexrwd. This report with
the purpose is to assess the country risk of this project. This report is divided into
five parts. Part 1 presents the introduction of our company - Vinatex, the Rwanda,
the Rwandan Special Economic Zone and partner - Utexrwd. Part 2 giving
statement of the scope and opportunities and threats to investment. Part 3 is
Examine country risk when Vinatex investing in Rwanda. Part 4 is giving
recommendations and part 5 is conclusion.

I. Introduction
1. About Vietnam National Textile

Vietnam National Textile (Vinatex) and Garment Group was established in

April 29, 1995, based on the reorganization of enterprise subordinated to the
Vietnam Textile Corporation and the Union of Garment, which makes it become
one of the leading enterprises in the restructuring and equalization Stated-owned
enterprise. The completion of equalization is an motivation of Vinatexs developing
strategy.

Entering foreign market through an project interests in a company that is

C&H Garments LTD Rwanda because of advantages of investing in foreign
markets. Making a foreign direct investment is a popular option in the market,

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which its advantages come from a long-term relationship between two countries.
By transferring technology, expertise or others fields relating to economy, two
countries set involving relationship between two countries, which can boost the
growth of those countrys economy and foundation of multinational corporations.
FDI is Foreign direct investment playing an important role in maintaining the
growth of global business. Therefore it can provide cheaper production facilities to
the new markets and bring benefits of the following types of resources for those
countries.

2. About Rwanda

Rwanda is located in Central Africa and east of Democratic Republic of the

Congo. It is landlocked with few natural resources and minimal industry. The
present government is headed by President Paul Kagame with legal system is a
mixture of civil law and common law. As of 2014, the population of Rwanda was
stated to be 11 million with 80% are rural, agriculture accounts for about 33% of
GDP, GDP growth 7.0%, labour force is 6.038 million, unemployment is 2%, main
industries include cigarettes, textiles, plastic good, shoes, furniture, soap, cement,
agricultural products, small-scale beverages, inflation (CPI) 2,4%, corruption
perception index has a rank of 4th in Africa (2015) and 44th globally (2015)
(Republic of Rwanda, 2017). Rwanda is a member of the Common Market for
Eastern and Southern Africa (COMESA) with a population of over 385 million and
is a member of the East African Community (EAC), with a population of about 100
million which is enhanced the market size.

Rwanda provide many opportunities for U.S. and foreign for investing in
some of fields including renewable energy, infrastructure, agriculture, mining,
tourism, and information and communications technology. Following report of the

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National Bank of Rwanda Rwanda attracted USD 379.8 million of FDI inflows in
2015, representing 5 percent of GDP. Rwanda had a total USD 1.4 billion of FDI
stock in 2015. In, Rwanda, there are not any limits on foreign ownership or
control, official policies that discriminates against foreign investor.

3. About Rwandan Special Economic Zone

Special Economic Zones in Rwanda was planned in 2006 but implementend

in 2008. Design of the Special Economic Zones Program based on target to solve
difficulties of domestic private sector including availability of industrial and
commercial land, availability and the cost of energy, limited transport linkages,
market access and reduced bureaucracy and availability of skills[ CITATION Joh13
\l 1033 ]. The SEZ policy objectives are to ensure successful SEZs that contribute
significantly to the development goals of Rwanda (whilst utilizing public resources
in the most effective way): increase foreign and domestic private sector investment,
export growth and diversification, development of industry/ non agriculture sectors
and creation of off farm employment and income[ CITATION Joh13 \l 1033 ].

For private investments, local and foreign are highly targeted in the SEZs;
creating an ample and attractive business environment. There are many different
advantages of attracting Foreign Direct Investments (FDIs) that can bring more
foreign exchange and encourage exports. All productions which is produced in the
SEZ, is exported even they will be sold in Rwandas market. This is one of way to
attract investment of the companiesin local market. In order to do promise with all
investors, Developers and Operators in Rwandan Special Economic Zone,Rwandan
Special Economic Zone signs a commitment of service level with all institutions of
government including the Rwanda Revenue authority, Rwanda Environment
Management Authority, EWSA, the Ministry of Finance and Economic Planning,

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the Emigration and Emigration Department, Rwanda Housing Authority, which
will allow relevant staffs are supplied by these institutions to raise the SEZ shop
with one stop [ CITATION Joh13 \l 1033 ].

4. About our partners - Utexrwa

Utexrwa is a textile manufacturer founded 1985 in Rwanda, factory of

Utexrwa located in Kigali Special Economic Zone - a special economic zone in
Rwanda. Utexrwa has three major products are institutional uniforms and
Garments, processed fabrics and mosquito nets. Utexrwa is R'wanda's only large-
scale textile mill, plays an important role in establishing a local textile value chain,
developing a highly skilled workforce, contributing to import substitution and
meeting the local needs of the security forces and others. New equity investment of
Utexrwa is 592 million RWF and new debt of 600 million RWF.

The company now employs more than 600 workers. The main focus will be
garment manufacturing. Production in larger quantities allows the company to
maximize profits and avoid competitors. Developing a sales and sales force for the
school market is essential for the fragmented market share of this segment. The
company is currently seeking partners for investment because of growing local
demand for military and other customers, as well as exports to the Republic of
Congo and Burundi (Utexrwa, 2017).

II. Statement of the scope and opportunities and threats to

investment
1. Statement of the scope

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 The textile and garments industry in Rwanda is one of the most attractive
factors. Moreover, this sector is small with only one textile manufacturing
company, knitting cooperatives and silk sector which is still at its infancy stage.

The local textile manufacturing company. The local garments

manufacturing company in Rwanda special economic zone produce textile mill
including of spinning, weaving and others like cotton and synthetic fibers. These
company is currently holding about 40% volumes, and has a turnover of USD $ 2-
3M.

Rwanda knitted clothes. Their products include: Knitted clothes, hand

knitted hood, hand woven cardigan, tailored cloths, kids clothes and shoes, hand
bags and accessories made from cloth, batik fabric, decorated fabric, screen printed
fabrics and so on but the production from the sector is still very small compared to
the existing demand.

2. Reason out Vinatex should choose Rwanda to invest

Rwanda had the past with 18 years history long with an immovable
authorities, peace and safety in its territorial dominion and was denominated as the
worlds top social reformer by the World Bank in 2010. It has also joined heartening
vision of future Vision 2020 that sees the country in middle-income position over
the next eight years and locating itself as a superiority hub for progressively
incorporated region, the East African community (EAC). Rwanda has indicated that it
has the power of determination to achieve this. While still a poor country, it has come
a very long way in just over a decade.

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 Moreover, Vinatex is interesting with a new manufacturing unit like Rwanda
Special Economic Zone (SEZ) and are pleased to support money for Rwanda SEZ. In
addition, Rwanda could tender a strong and trained workforce that will guarantee their
development a successful business and increasing in export garments to both Europe
and the US.

Rwanda is an investment environment that converges all attractive points for

investors to operate and runa business. There are number of reasons leading to
investment in Rwanda. Firstly, Rwandas high economic growth remained stable in
terms of inflation and exchange rate with 7.1% average per year GDP growth since
2004. Among African economies and neighbouring countries, GDP growth rate of
Rwanda reached highest.

Besides that, Rwandas government has been displayed their role in running
country effectively.Through private investment, President Kagame set up clear vision
for growth. Institutions, rule of law have been functioned well that brings stable
polity for Rwanda. In that polity, there is not any tolerance for corruption. Rwanda
also provides for investor a friendly climate where is evaluated reforming fastest in
business rules in World Bank Doing Business. Also, according to WEF Global
Competitiveness Report, Rwanda is the most competitive place that is chosen to do
business in East Africa and being 6th selection in Africa. Rwanda credit rating rose up
to B after being upgraded by Fitch. Ability of connecting Internet of Rwanda also
ranks in top 3 among African countries.

Moreover, Investment climate of Rwanda is place that can offers open policy
in tax creating more opportunities for developing industrial parks and free trade zone,
creating stock exchange. The increase of FDI USD118 million in 2009 being 14
times higher than 2014, which become increasingly attractive destination. Rwanda is

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also considered as a good selection of accessing to markets since there are over 10
million people of its market growing to the middles class quickly. Being located in the
centre of 3 countriess border in East Africa which combines with Customs Union and
a Common Market in 2010 totally 550 million people. Therefore, Rwanda is
evaluated as a market having many untapped opportunities. In the World Banks
Doing Business Report, it said that Rwandas rating reached higher as business in
Rwanda has been reformed, which helps businesses easier to get credit, pay taxes and
start a business. Over six years, after Georgias reformed country, Rwanda also
impaled reforming country and become the 2nd most reformed country in the world.
In order to reducing national business,Rwanda introduced about reforms with starting
business in 1 day that compared to average of 45 days on the African continent, and
13 days starting business for the rich countries. Rwanda is ranked the 3rd easiest to do
business in Africa after Mauritius, and South Africa in The World Bank Doing
Business report.

3. Opportunity and threats to Vinatex when investing in Rwanda

SEZ

Opportunity

Rwanda is virgin territorial dominion for investors. Although the domestic

market is small, it still has opportunities foreign investors due to there are not
enough local services for demand. The country has substance in trade deficit, which
creates opportunities for import. These characteristics of Rwanda like an
investment placement would be interest to small investors, especially those within
the East African Community (EAC), who would have the advantage of a general
familiarity with business conditions in the region.

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 Rwanda makes distinction itself with the area. The country has a fixed
government with a clear and consistent vision of where it wants to hold Rwanda,
backed by commitment and determination. During 48 hours with two-step
procedure, businesses can be registered and legally established. Moreover, Rwanda
is also seen as a non-corruptible country not only in the suburban area but also in
sub-Saharan Africa. In addition, it has low levels of crime and other perturbation.

Next, Rwanda has the potential to be a service center in the EAC market,
with a population of 138 million and GDP of $ 82.1 billion. Rwanda is a small
country with a good network, unique and special advantages. Rwanda is a member
of the Free Trade Area for East Asia and South Africa (COMESA) and has duty-
free policies to a large number of products from the developed countries or foreign
markets of the European Union and the United States.

Rwanda has a huge niche opportunities. The government is specially

interested in attracting more investors. In addition to these traditional exports, there
are opportunities to be measured in the almost untapped areas of cultivation.
Although, local production is limited, competition is so high. Finally, special
economic zones provide land, facilities and attractive financial incentives.

Threats

The difficulties investors in Rwanda derive primarily from three sources.

Firstly, the landlocked nature of the country. Not only because of higher costs but
also long land transport, this means interdependence on the infrastructure and
administrative procedures of countries such as: Kenya and the United Republic of
Tanzania. Rwanda also has the highest imported cargos service costs, which are
nearly three times the African costs. It means that besides Rwandas market is small
and commensurate, Rwandas opportunities are limited.

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 Another difficulty is the shortage of qualified and skilled labors. While
investment has gone into developing the academic places such as the Kigali zones,
there are not enough vocational training for human resources. In domestic market,
firms never spend time on training for senior positions, subordinators and
employees and have to use expatriate labor from the region. Investors also need to
remember that despite efforts being made by the Government to reform the
investment climate, Rwanda has not had an extensive history of a private sector-led
economy. The Government is still need to build their skills and fully provide and
increase needs to perform economic scales.

Rwanda has had a noticeable recuperation in the past 18 years. Security,

stability and clear governance are affecting achievement. To gain this goal, the
transformation of a self-sufficient economy into an industry and service sector -
FDI can play a momentous function. In addition, capital can bring expertness,
technology and help improve and develop local skills, which is a very crucial
requirement for economic transformation. Some of the difficulties in doing
business in Rwanda are not only the risks of long-term cure such as the extension
of a highly educated and skilled human resources but also the control of Rwanda
alone such as improving the administrative procedures and regulations.

4. Competitor analysis

The most direct competitors in the garment sector in Rwanda comes from
outside Africa, although there are foreign investors in this market, such as C&H
Garments LTD Rwanda. However, the partner we will cooperate with is

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UTEXRWA, a company that has the advantage of meeting the needs of the local
market for customization, timely delivery and service. With the required investment
to start a textile factory in Rwanda, local competition for garment production in
large volumes will not be possible in the near future.

III. Examines country risk in relation to the Rwandan Special

Economic Zone
1. What is country risk?

Each country is characterized by a variety of political and legal systems that

make it a significant challenge to the effectiveness and strategy of investors. When
conducted foreign direct investment, investors must adhere law and political on
business transactions. Country ricks is potential loss or adversely effects on
operations and profitability of foreign company caused by host country's political,
economic environments and legal (Cavusgil el at. 2014) such as the host
government can imposed many check international activities, including the
restriction go to restore yield and profit, check price, limit of the own foreign,
import working regulator, especially aggravating trade protectionism will bring
adverse impacts on the worldwide trade environment while exchange rate risks and
other financial risks cannot be ignored.

According to Cavusgil el at. (2014), types of country risk prevalent are

political system is unstable and harmful, regulatory adverse on foreign investors,
the legal system is incomplete or underdeveloped, trade remedies and tariff barriers
of the government, national economy being mismanaged or failed, bureaucracy and
red tape, corruption and other unethical.

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 2. Analysing the country risks for Vinatex when investing in Rwanda
Special Economic Zone

To assess the country risk when investing in Rwanda should consider the
following factors:

Political

A political system is a set of institutions that form a government that includes

legislatures, political parties, advocacy groups, and trade unions, which determine
how these groups interact with each other (Cavusgil el at. 2014). Rwanda is a
relatively stable country in politics, but in recent years there have been some minor
violent incidents such as Grenade attacks on the local populace happened on
between 2008 and 2014, four attacks took place in Kigali in 2013 and early 2014,
killing 5 and wounding 48 persons, three cross-border attacks in 2016, frequent
violence has occurred along Rwanda's border with East DRC and the ongoing
political crisis in neighbouring Burundi (U.S. Department of State, 2017) are
political issues that the company should take note when conducting direct
investment in Rwanda.

Economic

Over the past decade, Rwanda's economy off foreign assistance and high
economic growth, averaged 7 percent per year from 2010 to 2016, ranked second in
Africa and 59th out of 190 economies as the World Bank report, Rwanda is also a
country with low corruption (The World Bank, 2017). However, Rwanda is a
landlocked country leading to high freight costs, a small domestic market with
limited purchasing power, limited access to affordable finance and delays payments
with government contracts. (U.S. Department of State, 2017). In addition, economy

15
of Rwanda is not yet well integrated to regional and global markets, has favoured
imports and discouraged exports (UNDP, 2017). Rwanda is now a member of many
Taxation Treaties such as the World Trade Organization (WTO), East African
Community (EAC), the Common Market for Eastern and Southern Africa
(COMESA)... but slow pace of reform, lack of harmonization, non-tariff barriers,
and procedural inefficiencies hamper the freedom, travel of goods, capital and
people. Despite Rwanda has a plentiful workforce but lack of skilled employees,
especially accountants, lawyers and technicians.

Social

The genocide in the 1994 and the armed conflict that had previously left
severe in Rwandan, poor people and increased their vulnerability, especially among
widows and orphanage of genocide, recently returned to refugees, displaced
internally displaced persons and families of persons suspected of genocide related
crimes. These problems, combined with very high rural population density and
small farm size, have left the Rwanda community unable to adequately supply the
poor and the most vulnerable. Vulnerable people such as women and children
headed households are at a higher risk of poverty than other groups. Most 25
percent of Rwandan households were headed by women in 2006 and 0.7 percent
were headed by children (UNDP, 2017).

Technological

Information and communication technology (ITC) is a key tool for

promoting Rwanda's transition to a knowledge-based economy, Rwanda has
acknowledged by allocating budgets to ICT - as a percentage of GDP - with the
OECD countries. Rwanda continues to be one of the fastest-growing ICT-based
countries in Africa and has many pathways for ICT development - from e-

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commerce and e-services, mobile technology, application development, and
Automation to become the regional center for training leading IT professionals and
researchers.

Legal

The legal system includes regulations interpreting and enforcing laws that
combine institutions and procedures for secure order and resolve disputes in trade
as well as taxing economic output and protecting intellectual property rights and
other assets of the company (Cavusgil el at. 2014). The Rwanda legal system is a
mixture of civil law and common law, laws on foreign direct investment include
regulations governing corporate establishments, investment, commercial, land,
protection of the environment, insolvency and arbitration. Commercial disputes are
settled in commercial court, however, Rwanda's judicial system lack of resources
and capacity, sometime, court judgments fails to enforce by the government.

Although Rwanda government has undertaken investment policies to

improve the investment climate, attract and create favourable conditions for foreign
investors, but in fact, foreign investors face many risks relate to the legal system of
Rwanda such as they also often complain that they had not received the tax
incentives in the contract signed with Rwanda Development Board, inconsistent
application of import duties, long VAT tax refund procedures, the government
imposes severe penalties for errors in tax payments whether intentional or not.
Provisions on the protection of intellectual property rights are not strong enough,
some investors complain about difficulties in patent filing and there are rules
against infringement of their intellectual property rights on time. Investors also
have difficulty obtaining or re-working work permit because of government
preferences for hiring local residents or EACs than third-country nationals, under

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the 2015 Investment Code, investors who invest a minimum $250,000 to use up to
three foreign staffs, if investors want to hire more than three foreign staffs, they
must check labor market. Rwanda's immigration authorities do not always respect
their commitment to employment and immigration under investment certificates
and agreements (U.S. Department of State, 2017). In addition, although there are no
restrictions on foreign ownership or control or any policy that discriminates against
foreign investors, however, investors continue to complain about competition from
state-owned enterprises and rulers, the bidding process for regional projects under
the Central Corridor and Corridor Center is not transparent (U.S. Department of
State, 2017).

Inflation

Although macroeconomic stability in terms of inflation and exchange rates

maintained by the Rwandan National Bank (BNR), there are still difficulties in
foreign exchange and some temporary foreign exchange deficits. In 2016, the
exchange rate of the Rwandan franc fell against the US dollar, reaching nearly 10%
(U.S. Department of State, 2017).

Environmental

Land scarcity degrades the environment while environmental degradation

exacerbates the effects of land scarcity: high population density with nearly 350
people per square kilometre, the highest in Africa and among the tallest people in
the world. Rwanda's population of about 83% in rural populations is heavily
dependent on subsistence agriculture. Almost all rural people use befouls, mainly
firewood, as the main source of energy. The high demand for wood (and charcoal)
for domestic fuel, industry and construction remains constrained on the country's
limited forest resources, reducing the area of natural forest. It is estimated that

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50.2% of Rwanda's forest area was lost between 1990 and 2005. Low rural incomes
limited the capacity of the community to improve water and sanitation services,
while poverty and densely populated rural populations put pressure on land and
water resources. The level of fertilizers used and production of crops is very low.
Rough terrain is mainly mountainous which significantly increases the risk of soil
erosion, it is estimated that half of the agricultural land area is seriously eroded
(UNDP, 2017). Urban environmental issues in Rwanda are less serious but
increasing. Urban population only accounts for 17% of the total population, but it is
growing rapidly,

The urban population is expected to increase from 1.4 million in 2002 to 3.8
million in 2022. This will increase waste management capacity, particularly in the
capital Kigali where half the population the number of cities in the country. The
government response to the challenges of the environment is limited. Budget
support for environmental management is estimated to be less than 1% of the
government budget. The challenges of environmental management combined with
Rwanda's lack of interest in environmental challenges make Rwandan a
"promising" country for environmental sustainability (MDG Status Report, 2013).

Development

Official Development Assistance continues to play a major socio-economic

role in Rwanda. Official Development Assistance for Rwanda in 2005 was just
under $ 500 million, equivalent to 23 percent of GDP. Annual Official
Development Assistance in 2006 and 2007 will be between $ 500 million and $ 600
million per year. Most of this comes from the development partners. In 2005, the
seven largest donors were the World Bank, the European Union, the United
Kingdom, the African Development Bank, the United States, the UN system and

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Sweden. Over the past 12 years, the strategy and focus of Rwanda's development
assistance has changed, focusing more on longer-term development programs, and
in the past few years aid policy has increased in convergence. Around the principles
of ownership, coordination, alignment and harmony.

IV. Recommendations
1. Suggested mode of entry and an assessment of its appropriateness
for entering the market

For any businesses, a constant goal is the potential to grow in new markets .
With larger markets come larger profits, and before long your small business is not
so small anymore. Having a clear understanding and recognizing the available
mode of entry can help the companies enter Special Economic Zone as Rwanda
more easily with a higher success percentage. With the actual situation of Vinatex,
after analyzing the market and partners, the joint venture between Vinatex and
Utexrwa was proposed to Vinatex to invest directly in Rwanda special economic
zone because joint venture is normally formed when no one owns the entire
property needed to exploit the opportunity available. In this cooperation, Vinatex
contribute capital, technology, professional management, training or some types of
products. Utexrwa contribute to the use of the plant or other facilities, knowledge
of local staff and knowledge of transportation, street management, and useful links
with the host government. home or lower cost manufacturing factors such as labor
or materials.

With this mode of entry, Vinatex will share the costs and operating burdens
as joining an international joint venture for their equal profit ofmarket share.
Thanks to partnership, Vinatex can sell their products and service in partner's home
country and vice versa. As a result, it brings double of finance, marketing ability

20
and sales. Entry into a market is not only opened more easily but also let Vinatex's
brand is sold in a location by another company having control over the state.

2. Risk management considerations

Because risks cannot be avoided, so Vinatex must be anticipated and

managed, accordingly the company needs to manage the risks with the following
content:

Risk Probability: Risk is assessed for abilities of itsoccurrence by using a

scale following very likely to occur, some chance of occurrence, small chance
of occurrence, very little chance of occurrence. Its important to evaluate the
potential financial damage that could result from each risk in order to respond
appropriately. If a risk is very likely to occur, but not cause serious impacts, it
could be less threatening than a risk that has very little chance of occurring, but
could have strong impact to the company.

Legal Risks: Legal risks are considered asbig threat to the company in a
many ways. Following regulations is one of burden businesses and challenges for
almost business owners. A business can bear serious financial penalties if being in
noncompliance. Other legal risks can be happened if lack of contractual agreements
such as labor contracts. It is really significant risk especially for companies entering
in a Special Economic Zone as Rwanda with new policies and regulations. It is
important to have legal contracts for protection

Physical risks: physical risk can be fire, explosions and floods that
happened out of exception. In Rwanda, drought happened almost every year, which
can affect to supply of material resources for companies and leading to import
material resources from outside with high cost for companies.

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 Financial Risks: Almost financial risk occurring in a business can be
reduced before owners starting business. Bubala said You see in a lot of
businesses that people think they can do and dont know anything about it. I see
this happening in bankruptcies all the time. Everybody thinks they can run a
restaurant, for example. Our company comes from Vietnam, C&H Garments LTD
Rwanda comes from China, it can cause inequality of foreign currency.

Affects of Economy: Rwanda is evaluated if a country with the poor

economy, which is more difficult for companies to afford paying risk management.
Risk management has become more prevalent in the past four or five years
because there are so many avenues where business is vulnerable, Pike says.

IV. Conclusion
In conclusion, the Rwanda Special Economic Zone brings many advantages
of foreign market for with sustained high growth, strict management, a clear vision
for growth through private investment set out by President Kagame, friendly
investment climate, easy access to markets, untapped investment opportunities,
potential for growth through productivity and value addition. All of these create
more benefits to attract investment of international company in their market.
However, as evaluating market to invest, the company also need to consider risks
that can threat entering the market. And in the concrete of this circumstance, as
entering the Rwanda Special Economic Zone, Vinatex can face with risks such as
cross-cultural risk, country risk, currency risk and commercial risk, where national
risk should be carefully considered and evaluated. With the analysis and evaluation
stated in this report, Vinatex can invest in Utexrwa through joint venture.

In addition, to take advantage of the opportunities and minimise the risks, out
company must develop an understanding of the government sector, the political and

22
the legal of Rwanda in general and Rwanda special economic zone in particular and
develop skills to interact effectively with local institutions (Cavusgil el at. 2014)

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