Nghe an Tate & Lyle Sugar Co

I find it interesting that Nghe an Tate & Lyle Sugar Co. wanted to invest over 90 million dollars in a communist governed country that had already invested over 1 billion dollars for the previous three years (since 1995) on milling capacity on the still unstable sugar cane industry in 1998. The risk exposure of investing to the magnitude of 10% capacity on an unstable industry in a communist country (Vietnam) is absurd.

The fact that Nghe an Tate & Lyle Sugar Co. wanted to commit to a 90 million dollar mill with a 50% loan start up capital from international finance corporation in agriculture branch, at a time when already a majority of existing mills in Vietnam started by government backed credit terms, infrastructure subsidies and other easy credit facilities and were still unable to meet the interest payments with others unable to remain financially solvent and had to offer lower prices for cane. A majority of mills were unable to attract enough cane to be viable. It is unfathomable that, Nghe an Tate & Lyle Sugar Co. wanted to follow the same failed concept.

The market environment was unsuitable for business at the period of Nghe an Tate & Lyle Sugar Co. Investment interests, because the imports were 50% to 70% cheaper than locally produced sugar, making Vietnam an almost insufficient sugar production country. Smuggling of imports was also at its height making the investment environment tremendously unattractive.

Social returns differ from private returns in that social returns is the social impact of the private investment on the community at a social level, for example, creation of jobs, infrastructure development, social amenities and other general impacts. Private returns are the advantages acquired by the investor, for example, wider markets, efficient and effective production and better profits to the investment company. (Esty B.C, 2004)

Social returns and private returns are essential to assess by private companies aspiring to invest in a region so as to weigh the viability of investing in that area. Commonly assessed by all organization’ involved in the investment so as to ensure the investment is fair to all parties. i.e. The company investing, and the region of interest, for example, in this scenario Nghe an Tate & Lyle Sugar Co. had requested a loan from international finance corporation, and before international finance corporation could grant the loan they had to assess (both Social returns and private returns) the impact of the investment by Nghe an Tate & Lyle Sugar Co. on the region.

The main stake holders were Henry Tate, Abram Lyle and International Finance Corporation. (Publishing, W. S, 2008)