[06 Feb] The Rubber Wood Industry Sees India as Export Market

The rubber wood industry is eyeing India as an alternative export market to diversify risk away from heavy reliance on China and ease a surplus of the material, says Sutin Pornchaisuree, chairman of the Federation of Thai Industries' wood processing industry club, the Bangkok Post reports.

"Within five years the surplus should be more severe, as there will be a 20% increase in supply because Thai furniture exports are slowing down since we cannot compete with Malaysia," said Mr Sutin.

He said that in 2009 Thailand exported 11 billion baht worth or 1 million cubic metres of rubber wood, with domestic use at 2 million cubic metres worth 22 billion baht. With only 30% used for furniture, the rest is used for construction materials, flooring and toys.

Mr Sutin said that Thailand needed to find new markets in India and China where labour is cheap. He said that the local rubberwood industry lacks 50,000 to 60,000 lower-scale labourers, in a sector where around 300 people are used per factory.

China is the top importer of Thai rubber wood, with an 80% share of exports, while India imports 300 million baht worth of rubberwood from Thailand per year.

"If China is unstable, that will hurt us, so we need to find an alternative market. In 2008 China stopped buying from us for only two months, but that caused our factories to close down," said Mr Sutin.

In another development, chairman of the natural rubber and rubber wood cluster, Prayong Hirunyawanich, said he hoped exports of rubber products could double within five years.

In 2008, Thailand's natural rubber exports totalled 88% of total rubber exports, while 12% or 160 billion baht were rubber products, said Mr Prayong. Of the latter, about 60% were tyres, 15% gloves and 25% automotive and engineering parts.

"Moving from 12% to 30% can be done two ways. The fast way is to invite foreigners to invest. The second is for the government to promote Thailand to be strong in this business," said Mr Prayong.

Rubber, when processed, adds value by four to five times, he said.

Mr Prayong said 60% of para rubber produced worldwide is used to make tyres.

Thailand serves only 2% of the worldwide tyre market estimated at 1.1 billion pieces.

Thailand is the largest rubber producer in the world at 3.09 million tonnes, followed by Indonesia at 2.75 million tonnes. China is the largest consumer at 2.56 million tonnes.