[06 Feb] Lower Import Tariff, China Auto Demand to Boost Malaysia Rubber Exports

Malaysian exports of rubber products including compound rubber to China may rise further in 2010 due to lower import tariffs under a free trade agreement and the country's insatiable appetite for cars, an industry executive said Friday.

Exports of rubber products to China increased by 18% in 2009, tracking the astonishing growth in the country's vehicle market, which has overtaken the U.S.'s to become the world's largest with sales up 50% last year to 13.6 million units.

"With China's economy expected to grow around 7%-8% in 2010, exports of rubber products may continue to improve," and growth may rise above 18% this year, said Teo Suat Cheng, chief executive of the government-linked Malaysian Rubber Export Promotion Council.

Exports of compound rubber into China rose 47% in 2008 to 256,122 tons, data from Malaysia's Statistics Department showed.

While the full-year data on 2009 compound rubber exports isn't available yet, sales in the January-October period hit 342,492 tons, reflecting a surge in China's vehicle sales.

Compound rubber generally contains as much as 99% natural rubber, but China imposes s lower import duty on the former than on the latter.

Malaysia

's rubber products exports may hit MYR11.1 billion this year, of which exports of rubber gloves are expected to generate MYR7.8 billion, Teo said.

She said Malaysian rubber products manufacturers may also be able to take advantage of a lower import tariff under a free-trade agreement between China and the six more economically-developed members of the Association of Southeast Asian Nations, under which customs tariffs will be scrapped on about 90% of products, including rubber products.

The deal came into force Jan 1. The six members of Asean in the trade agreement are Brunei,Indonesia, Malaysia, the Philippines, Singapore and Thailand.

The free-trade deal may also boost dry rubber imports from China, Teo said, favoring Malaysian car makers, as they would be able to lower production costs with cheaper spare parts fromChina.