Blessed with natural and man-made advantages, Thailand has developed into the world’s largest producer and exporter of natural rubber. The country turns out more than 3 million metric tons of natural rubber annually, and progress in the industry remains vigorous.

Perfectly positioned to lead, Thailand rose to prominence because of its abundant resources of natural rubber, cost- effective workforce, and strategic location in the Asia-Pacific region. According to the Thai Rubber Association, the Asia- Pacific currently accounts for 57% of global rubber demand and will remain the world’s strongest growth area through at least 2013. This represents continued lucrative opportunities for Thai rubber businesses.

Besides a prime location, Thailand offers rubber investors an ample water supply, a low incidence of power outages, and a reliable transportation infrastructure for smooth operations.

Moreover, Thai rubber businesses are flourishing because of solid government policies promoting the industry. This includes the lower tariffs resulting from the country’s free trade agreements with trading partners such as China, Australia, New Zealand, and ASEAN states. In addition, Thailand is a member of the Association of Natural Rubber Producing Countries, which also consists of Indonesia, Malaysia, Vietnam, China and Sri Lanka. All of this is conducive to increased business in the region, with Indonesia being the world’s second-biggest rubber producer, followed by Malaysia, India and China.

Many considerable developments enriched the Thai rubber industry in 2010. Of major importance was the Thai government’s announced plans to launch the next phase of its initiative to expand rubber plantations nationwide. An initial budget of 11.42 billion baht will create new plantations of rubber saplings in the northern, eastern and central regions, with the southern area long well-established. More than 100,000 planters are expected to benefit from this expansion, which aims to increase Thailand’s natural rubber supply by an additional 250,000 metric tons per year from 2017.

The first part of 2010 also saw several new projects in the country’s growing tire sector, a vital cog in the Thai rubber machine. Thai Bridgestone Co., Ltd. unveiled plans for a US$25 million retread plant. Goodyear (Thailand) Public Co., Ltd. is also investing in a radialization project for airplane and automobile tires, and Dunlop Tire (Thailand) Co., Ltd. has launched a plant featuring an innovative production system.

In other major industry developments, condom manufacturer Thai Nippon Rubber Co. is spending 600 million baht to build a large production facility in Chonburi Province. The plant will increase the company’s capacity by 75% from the current 800 million pieces. Moreover, the Sri Trang Group said it will double its annual capacity within five years to 20 billion gloves and 160,000 metric tons of other products such as block rubber and technically specified rubber.

As another forward step taken in 2010, the Thailand Board of Investment (BOI) in August organized a mission to Chennai and Mumbai to strengthen investment and business collaboration with India. Rubber products and automotive parts were high on the agenda.

The BOI classifies the manufacture of natural rubber and rubberwood products as a priority activity. Eligible investment projects in the industry can therefore receive benefits such as tax breaks and exemption from duties on imported machinery.

As the world’s leading producer, Thailand attracts substantial investment by foreign, joint venture and domestic manufacturers in the rubber industry and related sectors. The top rubber exporting companies in Thailand are Von Bundit, Sri Trang Agro- Industry, Thai Hua, Thaitech Rubber, Southland, Bridgestone Natural Rubber, B.Right, Teck Bee Hang, Tavorn, Hadsyn, Siam Indo, A One, Numhua, and Thai Rubber Latex.

Major rubber products manufactured in Thailand include gloves at 10.93 billion units in 2009, inner tubes at 58.76 million, motorcycle tires at 19.95 million, passenger car tires at 19.58 million, bicycle tires at 18.29 million and rubber bars at 800,759 units.

Based on statistics from the Rubber Research Institute of Thailand (RRIT), in 2009 the country’s rubber exports reached 2.72 million metric tons and domestic consumption totaled 399,415. By material type that year, standard Thai rubber output was 1.06 million, ribbed smoked sheet was 837,294, concentrated latex was 703,817 and crepe was 487,160 metric tons.

 

 

 

 

 

The country now exports about 90% of production, or US$4.26 billion worth in 2009. The Thai rubber industry is clearly on a growth path, and the Office of Industrial Economics projects export value hitting US$6.6 billion in 2012.

Thailand is also a significant importer. In 2009, inbound shipments of rubber products, scrap, and rubber materials were worth US$1.12 million.

 

Tire and Non-Tire Demand Strong

The heart of Thailand’s rubber production remains the area in the south from Chumpon Province all the way to the border with Malaysia. A monsoon climate helps Thai farmers achieve high yields of about 1.76 tons of rubber per hectare. Small landholders with four hectares or less represent 95% of cultivation in the country. The industry, however, is mainly controlled by large processing plants that purchase the material through local dealers.

With manufacturing sectors such as the all-important automotive industry recovering from the global downturn, rubber output is expected to continue growing steadily in coming years. Demand is also on the upswing in sectors such as rubber gloves and condoms because of greater consumer concerns for good hygiene.

In fact, some industry experts predict that non-tire rubber demand will outpace that for tire rubber due to expanding industrialization in developing countries. This involves products such as moldings, gaskets, cushioning, adhesives, padding, belting, wire and cable sheathing, roofing and adhesives. Thailand rubber is also used to make balloons, rubber bands, pulleys, toys, sports and leisure goods, medical devices and carpet underlay.

Along with being the No. 1 exporter of high-quality rubber, Thailand is also a trendsetter as a leading R&D center for the material. The country’s 100,000 science and engineering graduates annually fuel local innovation. Added product value and greater environmental sensitivity are two trends emerging with the Thai rubber industry seeing steady advancement. Of all rubber produced for domestic consumption in Thailand, 65% is now processed into value-added goods such as better tires, gloves and elastic. Work is also accelerating on popularizing rubberwood as an environment-friendly alternative to hardwood timber.

 

Solid Support Amid Challenges

Thai natural rubber is prized in markets around the world. The top destinations in terms of export value are China, Malaysia, Japan, South Korea, the United States and the European Union. According to the RRIT, China absorbed the lion’s share of exports in 2009 at 42%.

Support of rubber businesses in Thailand is resolute, with policies in place for continued development. Government bodies, trade associations and R&D institutions are all active in promoting the industry’s competitiveness. In addition to the BOI and the RRIT, these include the National Science and Technology Development Agency, Department of Industrial Promotion, National Metal and Materials Research Center (MTEC), National Center for Genetic Engineering and Biotechnology (BIOTEC), Research and Development Institute of Industrial Production Technology at Kasetsart University, Prince of Songkla University, Thai-German Institute, Rubber Estate Organization and Polymer Society.

But the industry still faces growth challenges amid its stable development. For one, the market price of rubber has been in decline, threatening the margins of suppliers. Sales of smoked rubber sheets, a major product line in Thailand, are also falling off. This is putting pressure on some operators to undergo an upmarket shift to higher-quality products such as rubber blocks and concentrated latex. However, such a move will require spending on new advanced technology.

Value-added production will play a key role as companies, institutes and the government look at ways for the Thai rubber industry to evolve while maintaining its leadership position.

Subscribe   Unsubscribe        Send this        BOI: http://www.boi.go.th