THAILAND: Rubber R&D to push demand

Experts are urging Thailand to accelerate research and development (R&D) of rubber products and promote local rubber consumption to reduce dependence on exports.

Both the government and the private sector see the proposal as one solution to help the country maintain its status as the world's biggest supplier of natural rubber and become an Asean rubber trading centre.

Thailand's rubber industry now relies too much on exports, as only 10% of production is consumed locally.

Luckchai Kittipol, president of the Thai Rubber Association (TRA), said the government should focus on R&D to develop local mid- and downstream production, adding value to natural rubber.

"Thailand should institute a policy of turning the country into a regional rubber centre in terms of trading or product development," he said.

Mr Luckchai's comments were in response to a recent announcement by the coastal Chinese city of Qingdao that it intended to achieve global "rubber city" status similar to Akron, Ohio.

He said China wanted a rubber city because it is the world's largest user of natural rubber at 3.4 million tonnes a year.

Qingdao is the highest user of natural rubber in China, more than one million tonnes annually, as a large number of manufacturers in the city use it to produce items such as automobile tyres, shoes and rubber gloves.

China has only about two million rai (one rai=1,400 sq m) in Yunnan and Hainan provinces that are suitable for growing rubber trees, so it has developed plantations in Laos and Burma.

Meanwhile, this year the TRA is targeting natural rubber exports of 2.8-2.9 million tonnes worth more than 300 billion baht, up from 2.7 million tonnes worth 250 billion baht last year.

The expected increase in value is due partly to the commodity's rising price, which looks set to become at least 50% higher than last year's average of 106 baht a kilogramme.

Apichart Jongskul, secretary-general of the Office of Agricultural Economics, said Thailand could not compete with China in developing mid- and downstream industries, but it can maintain its upstream leadership.

The Agriculture Ministry has proposed establishment of a Rubber Authority of Thailand to integrate the three rubber organisations - the Rubber Estate Organisation, the Office of the Rubber Replanting Aid Fund and the Rubber Research Institute of Thailand.

This single authority would foster greater efficiency in developing an integrated rubber industry, particularly in terms of R&D for product development, adding value and raising domestic consumption.

The government plans to use the current levy on rubber sales for this purpose. Called the "cess rate", it now stands at a ceiling of five baht a kilogramme charged once the export price per kilo reaches 100 baht or more.

Mr Luckchai, who is also the chief executive of Thai Hua Rubber Co, plans to develop a rubber industry estate on 2,000 rai in Rayong province as a production site for manufacturers.(Syed Rashid Ali, Karachi, Pakistan)