THAILAND: Chinese-Thai tyre venture on hold

Last year, Thai Hua announced the joint venture in tyre production in Rayong with Hangzhou Zhongce Rubber Co. It was to be the first overseas investment by the Chinese partner.

Thai Hua CEO Luckchai Kittipol said the investment had been suspended because the partner wanted to monitor European economic conditions.

The venture has already received incentives from the Board of Investment, and the actual investment was originally planned to begin by December.

Mr Luckchai says Hangzhou Zhongce Rubber is the 10th-largest global tyre producer and No. 1 in China. It informed Thai Hua that it had to wait for approval from China's government.

Once the venture is up and running, Hangzhou Zhongce will become the seventh or eighth largest player in the world. The company gained confidence in Thailand after the July general election.

"The investment will be postponed until next year, possibly the first half, in order to see the European effect, as 80% of the production would be exported to Europe and the US," Mr Luckchai said.

The original plan was to begin production in 2012 with an annual capacity of 3 million tyres, with 20% to be shipped to China, Australia, Japan and Asean.

Of the total investment, 85% will come from China and 15% from Thai Hua.

Last year, Thai Hua recorded combined production of latex, rubber sheets and blocks of 380,000 tonnes, about 300,000 tonnes of which were exported. Its revenue was 32-33 billion baht.

This year, exports are forecast to rise to 420,000 tonnes, in line with increased production of rubber blocks in Buri Ram. Another rubber-block plant in Yasothon will be finished by the end of 2012.

Thailand's rubber export value this year is projected at nearly 400 billion baht from 2.8 million tonnes, up from 2.7 million last year.

The country's total rubber output was 3.3 million tonnes in 2010 and is forecast to increase by 150,000 tonnes this year. But actual growth is likely to be flat because of widespread flooding.

Source: Daily "Bangkok Post", Bangkok; 27 Sept 2011

(Syed Rashid Ali, Karachi, Pakistan)