Northeast rubber trade set to boom - 1m rai ready to be tapped in two years

The rubber boom in Thailand's northeastern provinces has drawn significant new investments and helped drive the region closer to its objective of becoming the rubber trading centre of Indochina.

Investors are betting on the Northeastern market, attracted by the 600,000-tonne output projected for 2012.

Local and foreign companies have made substantial investments in the region, with one million rai of state-promoted plantations expected to be ready for tapping in two years.

The Agriculture Ministry last year opened a new rubber trading market in Buri Ram province to absorb production from the lower Northeast. Another market in Nong Khai will absorb production from the upper Northeast.

Chuwit Jungtanasomboon, an executive of North East Rubber Co, said big names from the South including Sri Trang, Southland Rubber Co and Thai Hua Rubber have expanded to the Northeast and the development would promote the region in the future.

"There are about 2 million rai of rubber fields that could be tapped today for about 400,000 tonnes of rubber. We expect an additional 200,000 tonnes of output from the one-million-rai project sometime in 2012," said Mr Chuwit.

The state plantation project started in 2006 to expand the rubber crop in the region.

The Office of Agricultural Economics reports rubber fields took up 16.7 million rai in Thailand in 2008, of which 12 million rai could be harvested for 3 million tonnes of rubber.

Of the area, 2.8 million rai are in the Northeast, 9.5 million in the South and 600,000 in the North.

North East Rubber set up a manufacturing plant in Buri Ram three years ago to make 20,000 tonnes of smoked rubber sheets for export to China. It plans to invest 70 million baht to expand to compound rubber products, which are widely used in automobile tyres, for export to Japan and China.

He said activity at the rubber trading market in Buri Ram remains sluggish with only 100 tonnes in trade volume conducted once a week. Prices are still based on the main markets in the South: Hat Yai, Nakhon Si Thammarat and Surat Thani.

The market in Nong Khai has not yet opened officially.

"We expect the rubber industry to really boom here in the next few years and that will attract more players," said Mr Chuwit.

Last year, the Board of Investment in the Northeast approved investment incentives for four new rubber plants that would add about 130,000 tonnes of block rubber, ribbed smoked rubber sheet, compound rubber, and latex per year.

The investment includes a joint venture between Thai Hua with partners from China, Singapore, and Malaysia to make block rubber or technically specified rubber at 60,000 tonnes a year.

China's Guangzhou State Farm informed the Agriculture Department this month about its plan to build rubber processing plants in Nong Khai, with possibly two or three more in the region.

The company uses 800,000 tonnes of natural rubber a year to produce auto tyres, and of that volume, 200,000 tonnes are imported from Thailand.

The BoI unit in Nakhon Ratchasima expects rubber investment in the Northeast this year should continue to expand because the economic recovery is increasing demand in the automobile industry. Domestic prices in the Hat Yai market have moved up sharply since late 2009 to 100.50 baht per kilogramme this week for raw rubber sheets, up from 47.50 baht the same period last year and 82 baht in 2008 during the oil price crisis.

This year, Thailand expects to export about 2.6 million tonnes from 3 million tonnes of total output.

(bangkokpost.com)