Vietnam set to grow rubbers on Cambodia, Laos estates

A worker taps a rubber tree for latex at a plantation in the Central Highlands province of Dak Nong.

THANHNIEN

March 23, 2009

Vietnam Rubber Group, the nation’s largest producer and exporter, plans to plant 200,000 hectares of trees in neighboring Laos and Cambodia, betting on a rebound in global demand in the next decade.

“Our plan is to plant 100,000 hectares of trees in each country,” Dinh Van Tien, director of the import-export department at the state-owned company, said in an interview. Around 10,000 hectares have been planted in Laos and between 3,000 and 4,000 in Cambodia, Tien said last week in Guangzhou, China.

Rubber producers across Asia, including Thailand, the biggest producer, are battling slumping demand and prices amid the global recession. Vietnam Rubber Group’s new overseas estates, with trees taking six to seven years to start yielding latex, may become productive after a recovery has restored sales.

“The news about Vietnam is adding to the cloudy long-term outlook,” said Navarat Kaewpratarn, a senior marketing official at Bangkok-based Future Agri Trade Ltd. Demand “has been thin because of concerns about car sales and the global recession.”

Vietnam, the world’s fourth-largest rubber exporter, plans to plant 30,000 hectares of trees this year, the Vietnam Rubber Association said.

“Rubber demand will rise since world economies must have recovered by the time these new trees can make latex,” general secretary Tran Thi Thuy Hoa said Monday.

Natural rubber futures on Friday gained for a fifth day as rising oil prices increased costs of producing rival synthetic products. Hangzhou Zhongce Rubber Co. Ltd., China’s second-biggest tire maker, said Thursday the nation has revved up tire production to full capacity.

Rubber futures on the Tokyo Commodity Exchange, the regional benchmark, have slumped 51 percent in the past year following the recessions in Japan, the US and Europe, and slowing growth in China.

Lower output

Natural rubber output in Vietnam may decline to 630,000 tons this year from 660,000 tons in 2008, said Tien, whose company accounts for about half of the nation’s output. Still, Vietnam Rubber Group is “optimistic” about demand in China, which accounted for 200,000 tons of exports last year from the nation’s total shipments of 650,000 tons, he said.

Shipments from Vietnam, which sells about 60 percent of its rubber to China each year, were worth US$101 million in the first two months of this year, about 51 percent less than a year ago, according to figures from the General Statistic in Hanoi.

Commodity producers and importers have begun developing plantations and farms, especially for food products, in overseas nations to take advantage of idle or underused land, secure supplies and boost output.

Vietnam may lease Cambodian land to grow rice, Tuoi Tre reported on February 23, while Kuwait was last year also assessing large-scale investments in rice in the country, a government official said in August. South Korea’s Daewoo Logistics Corp. has leased land in Madagascar to produce corn and palm oil.

Vietnam is encouraging overseas investment in industries that use natural rubber as a raw material, Tien said. Investors may receive lower taxes and other preferential policies, he said.

Source: Bloomberg