JRSSEM 2022, Vol. 01, No. 7, 891 – 901
E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494
DOI : 10.36418/jrssem.v1i7.96
FEASIBILITY ANALYSIS OF INVESTMENT FACILITIES OF
SLIP FISH PROCESSING FACTORY, SORONG DISTRICT
Sri Sundari*
Indonesia Defense University
e-mail: sri.sundari@idu.ac.id
*Correspondence: sri.su[email protected].id
Submitted: 27 January 2022, Revised: 07 February 2022, Accepted: 18 February 2022
Abstract. The potential of marine resources in Sorong Regency, West Papua is very abundant,
especially in the fisheries sector. The abundant potential of tuna makes it an attractive commodity.
Fishery products are foodstuffs that are susceptible to post-catching spoilage so that they can last
a long time, a canning process is needed. This study aims to analyze income, costs and investment
decisions at a fish canning factory in Sorong Regency to obtain the feasibility of a project with
quantitative research methods, because this study seeks to determine the value of the feasibility
indicators of an investment project. The result of the investment criteria is an NPV of Rp.
7,841,604,054.00 is greater than zero, the IRR value is 97.84% greater than the 14% interest rate
and the Net B/C value is 2.44 greater than one. The payback period is achieved within 2 years 7
months 6 days, meaning this business can cover the initial investment costs before the end of the
business life. The sensitivity analysis carried out shows that the canned fish canning factory is
feasible to run as long as the project runs according to the assumptions and technical parameters
specified.
Keywords: fish canning; Investment Eligibility; NPV; IRR; PBP.
Sri Sundari | 892
DOI : 10.36418/jrssem.v1i7.96
INTRODUCTION
In general, the grouping of fishery and
marine resources is divided into groups of
pelagic fish whose habitat is around the
surface such as skipjack, tuna, anchovies,
mackerel, selar, layur and mackerel, groups
of demersal fish such as snapper, yellow
tail, baronang fish, samandar fish. , bubara,
shrimp group which is a mainstay
commodity from Sorong Regency which is
mostly caught by traditional fishermen with
a partnership system with collector
entrepreneurs. Geoeconomically, Sorong
Regency is one of the areas in West Papua
Province that has very potential marine
resources from a variety of species ranging
from marine animals, marine plants to
complete ecosystems. The potential of
renewable marine resources in Sorong. In
addition, there is still potential for
renewable energy from the sea, namely
deep sea water which is still a challenge to
be developed and utilized in the future. The
maritime industry, biotechnology, marine
services, production of salt and its
derivatives, marine biopharmacology,
utilization of sea water other than energy,
installation of underwater pipes and cables,
and/or lifting of sunken objects and ship
cargo are marine sub-sectors that have not
been optimally exploited. By looking at the
huge potential of marine resources in
Sorong Regency, West Papua, the Sorong
Regency Government should make policies
that can make marine and fishery resources
a new driver of the economy in the future
so that they can be released from the
poverty of the shackled population.
Sorong Regency is one of the regions of
eastern Indonesia which has very potential
marine resources from a variety of species
ranging from marine animals, marine plants
to complete ecosystems. The various
potentials of marine natural resources are
used by the community continuously to
meet their daily consumptive needs and
also for commercial purposes starting with
the traditional way to the modern way.
Fish is one of the sources of food that is
needed by humans because it contains
protein, essential amino acids and has high
biological value and the price is cheap
compared to other animal protein sources
(Tangke, Bafagih, & Daeng, 2018).
According to (Damongilala, 2008), fish and
other fishery products are foodstuffs that
are easily subject to a post-morten process
of high perishable food. Therefore, it is
necessary to have good handling and reach
the level of processing and diversification
of fishery products. The principle of fish
processing and product diversification
basically aims to protect fish from spoilage
or damage as well as increase shelf life and
processing and diversification aims also to
increase the shelf life of fish (Adawyah,
2007).
The design of a fish cannery requires an
appropriate investment decision. There are
a variety of different evaluation procedures
that managers can use to analyze potential
projects, namely net present value and
internal rate of return (Shapiro, Astin,
Bishop, & Cordova, 2005). In addition there
are other calculations that must be
analyzed such as Break event point and Pay
Out Time to determine an investment
decision (Gill et al., 2004).
893 | Feasibility Analysis of Investment Facilities Of Slip Fish Processing Factory, Sorong District
1. Net Present Value (NPV)
Net Present Value (NPV) can be
defined as the present value of cash
flows in the future, discounted with cost
of capital the appropriate, then
deducting the initial outlay of the
project. Projects with positive NPV will
be accepted, and projects with negative
NPV will be rejected. This method
performs calculations of cash flows and
time value of money. The NPV formula
is as follows (Shapiro, 2005; 14):
Where:
= cash flow per year in
period t
= Interest Rate (Cost of Capital)
= initial investment in year 0
= period
= number of periods
2. Internal Rate of Return (IRR)
IRR is the discount rate which is a
set of present value of a the project is
equal to the investment value. In other
words, the IRR is the discount rate that
results in the NPV being zero. The NPV
and IRR methods are similar in that they
have a decision to accept or reject. The
IRR formula is as follows (Kelly et al.,
2005).
Where:
= cash flow per year in
period t
= Discount rate
= initial investment in year 0
= period
= number of periods
3. Payback Period
Payback Period is a method used to
calculate the length of the period
required to return the money that has
been invested from the cash flow
netproceeds annualgenerated from the
investment project. The PP formula is as
follows:
Innovations in the field of fishery
processing need to be carried out by
taking into account the feasibility of an
investment. Investment is a strategic
way in the process of economic
development based on fishery
commodities. Investment activities also
create opportunities for the availability
of competitive assets and the
implementation of competitiveness
creation processes. Fishery
commodities are export commodities if
they can be processed properly, such as
through the fish canning process. Being
an export commodity causes a product
to have a higher price than not being an
export commodity.
A business feasibility study is a
research that aims to decide whether a
business idea is feasible or not
(Suliyanto, Wulandari, & Novandari,
2010). Several methods can be used to
determine the viability of a business. In
the research of fish canning with
pontoons, 4 methods are used in
investment feasibility studies.
Sri Sundari | 894
METHODS
This research will use quantitative
research techniques, because this study
looks for the value of the feasibility
indicators of an investment project based
on the calculation formulas to analyze the
investment in the fish canning project in
Sorong Regency, West Papua Province.
Stages of Analysis In conducting data
analysis with the following stages:
1. Performing an average cost calculation
based on the costs incurred and
production capability to obtain unit
2. Costs The average cost as unit cost will
be added to the estimated income and
take into account cost fluctuations in
price escalation based on the formula in
literature review which is compared
with the owner's estimate to obtain the
highest income, where the results of the
calculation will be the unit price used as
the basis for calculating income.
3. Conduct a feasibility analysis based on
the formulation that has been
determined in the literature review and
previous research to obtain the NPV
value, B/C Ratio , Profitability Index, IRR
and Payback Periods and testing
investment criteria using sensitivity
analysis by considering investment
parameters that may change during the
investment period.
RESULTS AND DISCUSSION
Fisheries potential in Sorong Regency
consists of capture fisheries and
aquaculture potentials. The capture
fisheries commodities include skipjack
tuna, tuna, anchovies, mackerel, mackerel,
snapper, yellow tail, samandar, shrimp, sea
cucumbers and others. It is hoped that in
the future development of aquaculture,
both traditional, medium and industrial
scale, this is possible considering that some
water areas are suitable for the intended
cultivation.
In general, fishery and marine resource
groups are divided into groups of pelagic
fish whose habitat is around the surface
such as skipjack, tuna, anchovies, bloated,
selar, layur and mackerel, groups of
demersal fish such as snapper, yellow tail,
baronang fish, samandar fish, bubara ,
group of shrimp which is the mainstay
commodity of Sorong Regency
Table 1 . Potential of Pelagic Fish Production in the Natuna Sea
Types of
Fish
Fishery Production
by Fish Type (Tons)
2016
2017
2018
2019
Selar
Capture
d469.51
1309.5
579.02
1191.79
Source: information public fishery service system in Sorong Regency, 2020
The value of fishery production in
table 1 is expressed in live weight of fish
when they are just caught. Commonly
referred to as "round fresh", "round
whole" or ex water weight equivalent of
the quantities recorded at the time of
895 | Feasibility Analysis of Investment Facilities Of Slip Fish Processing Factory, Sorong District
landing. Based on Table 1, the potential
for the production of yellow trout in
Sorong district for a period of 4 years,
namely 2016-2019, it is stated that in
2017 the highest production of trout
with a total catch of 1309.5 tonnes,
while in 2018 it was stated that the
number of trevally fish catches
experienced a decline. decline. For raw
materials, the average production
amount is 887,455 tons.
Capital Source
The average source of capital used by
the selar fish canning factory in Sorong
Regency uses a source of capital that
comes from own capital of 30% and some
others start a business with a source of
capital that comes from a banking
institution loan of 70% with a commercial
interest rate of scale credit. micro by
14.00% (Atikah, 2020).
Production Process.
The production process is a zone that
functions as a place to produce canned
yellow tilapia. The production flow carried
out in this zone is receiving raw materials,
cutting, washing, steaming, filling in cans,
weighing, filling media, closing cans,
sterilizing processes, and packing.
Figure 1. Fish Canning Flow
The related description of the yellow
selar fish canning factory is in Figure 4. 10
where the capacity of tuna that can be
processed is 2 tons of raw fish in 8 hours.
The overall yield from raw material
processing to canned fish reaches 50-55%
of the raw material (FAO,).
Investment Feasibility Analysis
Investment feasibility
Analysis The selar fish canning factory is
carried out by setting 2021 as the initial
year or year 1 so that the costs used are the
costs that apply in that year. All costs
incurred are divided into two parts, namely
fixed costs and variable costs. The cost of
the selar fish canning factory in 2021 which
can be seen in Table 3.
Sri Sundari | 896
Table 2. Investment costs of the Selar fish canning factory in 2021
Source: Processed by Researchers 2021
Table 2 shows that the largest cost
incurred in the selar fish canning factory
comes from variable investment costs of Rp
5,429,306,600.00 in the first year, all
procurement costs were invested to
support business needs. The following are
theprocurement costsincurred by the selar
fish canning factory from the beginning of
the development of the sales system.
Thesecosts procurement are incurred in the
first year of the company's establishment.
Table 3. Production Costs for the fish canning industry in 2021
Source: Processed by Researchers 2021
Production Cost (Production Cost) is
the amount of funds that must be spent to
finance all mining production activities until
they are ready for sale. These production
costs include direct production costs and
indirect production costs. In order to
897 | Feasibility Analysis of Investment Facilities Of Slip Fish Processing Factory, Sorong District
calculate the cost of mining operations in
one production period, several aspects to
be considered are: Planned production
targets, Operated equipment, Supporting
equipment, Human Resources to carry out
Operations. the biggest costs incurred in
the fish canning factory came from variable
costs of Rp. 3,758,482,513.00 per month
and Rp. 45,101,790,150.00 per year.
Revenue is obtained from the number of
sales units of canned selar fish multiplied
by the selling price per kg. The amount of
output produced is 73,206 kg per month
with a set average selling price of Rp.
60,000.00 per kg, so that the average
revenue is Rp. 4,392,333,000.00 per month.
The investment feasibility analysis is
carried out using an analysis period of 3
years for business development based on
the longest economic life of the equipment
used, so that it can carry out business
planning in the future. Financial analysis is
carried out with the aim of determining
investment plans through the calculation of
expected costs and benefits by comparing
expenses and income through calculation
assumptions (Hidayati, Tan, & Yamu, 2020).
The calculation of business feasibility is
carried out through investment criteria,
including: Net Present Value (NPV), Internal
Rate of Return (IRR), Net Benefit Ratio (Net
B/C), Break Even Point (BEP) and Pay Back
Period (PBP) (Schlotterer et al., 2009). The
interest rate applied to the calculation
results of the investment feasibility analysis
follows the commercial micro-credit
interest rate of 14% (Rachim et al., 2021). In
more detail, the results of the analysis of
the feasibility of investing in the fish
canning plant can be seen in Table 4.
Sri Sundari | 898
Table 4. Cash flow (investment feasibility analysis)
Source: Processed by Researchers 2021
Table 4 shows the cash flow (net
cashflow) of the fish canning factory in
Sorong Regency, West Papua Province in
normal state. Cash flow (net cashflow)
consists of cash inflows (inflows) and
cash(outflowsoutflows). Cash inflows are
obtained from the number of units sold for
marning corn multiplied by the selling price
per kg. The amount of output produced at
the beginning of the production
preparation year is 73,206 kg per year with
a set average selling price of Rp. 60,000.00
per kg.
The value of profit (net benefit) in the
1st year has a negative value of –Rp
5,429,306,600.00. This happens because
that year is a year of preparation for
business development, so that profit gains
are still in the stage of returning the
investment capital that was issued at the
beginning of production preparation. The
profit received by business actors is
influenced by the difference in the amount
of marning corn produced and the costs
incurred. In the years of business
development, the profits obtained by
business actors continue to increase.
Based on the cash flow (net cashflow)
the results of the analysis of investment
criteria on the final balance sheet of the
Selar Fish Canning Factory Kab. Sorong,
West Papua, can be seen in Table 5.
899 | Feasibility Analysis of Investment Facilities Of Slip Fish Processing Factory, Sorong District
Table 5. Results of analysis ofcriteria cashflow for the selar fish canning factory
Source: Processed by Researchers 2021
Table 5 describes the results of the
analysis ofcriteria cashflow for the selar fish
canning factory based on the value of NPV,
IRR, Net B/C, Break Even Point, and Payback
Period.
Net Present Value (NPV)
The Net Present Value (NPV) in Table 5
shows that the NPV has a positive value of
IDR 7,841,604,054.00 during the 3-year
project life. This shows that the net benefits
received by the selar fish canning factory
are profitable during the 3 year project life
according to thetime value of money,
namely net profit more than zero (NPV > 0)
with a prevailing interest rate of 16.75%. so
it can be said that it is worth working on. In
addition, there is a negative NPV
calculation to show the limits on the
interest rate that can be met by business
actors until they reach the lowest loss limit.
Based on the method,trial and error the
factor discount rate on a negative NPV is
97.84% with a negative profit of – Rp.
5,429,306,600.00, meaning that 97.84% is
the maximum interest rate limit that can be
met by the perpetrators. business in
canning fish selar so as not to suffer losses.
The results of this study are in line with
research (Dewi, Kaniawati, & Suwarma,
2018) that the Net Present Value value
greater than 0 indicates a feasible business
to run.
Internal Rate of Return (IRR)
The value of the Internal Rate of Return
(IRR) is obtained through thecalculation
method trial and error. Based on the results
of the calculation of the IRR value of the
selar fish canning factory is 97.84%. This
shows that the selar fish canning factory is
able to achieve profits with an IRR value
greater than the prevailing interest rate of
14%, meaning that the maximum level of
ability that can be paid by the corn marning
business actor due to the use of production
factors is 61%. The capital invested in the
business has a favorable rate of return
compared to investing in a bank (Nurainy,
Nawansih, & Sitanggang, 2015). The
results of this study are in line with research
(Dewi et al., 2018) that the IRR value is
greater than the prevailing interest rate (DF
= 16.75%) then the business is feasible to
run.
Net B/C
Net B/C is a comparison between the
present value of cash in and the present
value of cash out. Table 5 shows the value
of Net B/C obtained from the corn marning
business in Karang Anyar Village is 2.44,
meaning that the output produced is 2.44
times greater than the costs or inputs
Sri Sundari | 900
incurred. When the business spends Rp.
1.00, it will earn a profit of Rp. 2.44. The fish
canning business in Sorong Regency can be
said to be financially feasible to operate
because the Net B/C value is greater than 1
(Net B/C>1). The results of this study are in
line with research (Dewi et al., 2018) that
the Net B/C Ratio value is greater than 1
which indicates the business is feasible to
run.
Payback Period (PBP)
Payback Period measures how quickly
the invested investment can return. Based
on the calculation results, the PBP value is
2.769, which means that the selar fish
canning factory shows that the revenue
obtained is the same as the investment
value spent at the project age for 2 years 7
months 6 days. A short and relatively good
time to make a capital turnover in order to
increase investment in the selar fish
canning factory. The results of this study
are in line with research (Dewi et al., 2018)
that the Payback Period is smaller than the
economic life of the business for 3 years, so
the business is feasible to run.
CONCLUSIONS
The results of the calculation of the
investment feasibility analysis with a
commercial interest rate of 14.00% in a 3-
year business period, indicate that the
canning plant for lard is feasible to run and
develop. The results of the investment
criteria are the NPV of Rp. 7,841,604,054.00
greater than zero, the IRR value of 97.84%
greater than the interest rate of 14% and
the Net B/C value of 2.44 greater than one.
The payback period is reached in a period
of 2 years 7 months 6 days, meaning that
this business can cover the initial
investment costs before the end of the
business life. The sensitivity analysis carried
out shows that the canned fish canning
factory is feasible to run as long as the
project is running according to the
assumptions and technical parameters
specified.
Based on the investment feasibility
analysis, the fish canning factory in Sorong
Regency, West Papua is economically
feasible, it is recommended that fish
processing industry business actors can
improve the quality and selling price,
including expanding the market network so
as to make better business prospects.
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