Vietnam Rubber Set to Develop Cambodia, Laos Estates

Viet Nam Rubber Group, the nation’s largest producer and exporter, plans to plant 200,000 hectares (494,000 acres) of trees in neighboring Laos and Cambodia, betting on a rebound in global demand in the next decade.

“Our plan is to plant 100,000 hectares of trees in each country,” Dinh Van Tien, director of the import-export department at state-owned company, said in an interview. About 10,000 hectares had been planted in Laos and between 3,000 and 4,000 in Cambodia, Tien said late yesterday in Guangzhou, China.

Rubber producers across Asia including Thailand, the biggest producer, are battling slumping demand and prices amid the global recession. Vietnam Rubber Group’s new overseas estates, with trees taking six to seven years to start yielding latex, may become productive after a recovery has restored sales.

“The news about Viet Nam is adding to the cloudy long-term outlook,” said Navarat Kaewpratarn, a senior marketing official at Bangkok-based Future Agri Trade Ltd. Demand “has been thin because of concerns about car sales and the global recession.”

Rubber futures on the Tokyo Commodity Exchange, the regional benchmark, have slumped 51 percent in the past year on the recessions in Japan, the U.S. and Europe, and slowing growth in China. The most-active contract, for August delivery, dropped as much as 1.4 percent to 139.1 yen a kilogram ($1,448 a metric ton) today in Tokyo.

Lower Output

Natural rubber output in Viet Nam may decline to 630,000 tons this year from 660,000 tons in 2008, said Tien, whose company accounts for about half of the nation’s output. Still, Vietnam Rubber Group is “optimistic” about demand in China, which accounted for 200,000 tons of exports last year from the nation’s total shipments of 650,000 tons, he said.

Commodity producers and importers have begun developing plantations and farms, especially for food products, in overseas nations to take advantage of idle or underused land, secure supplies and boost output.

Viet Nam may lease Cambodian land to grow rice, Tuoi Tre reported on Feb. 23, while Kuwait was last year also assessing large-scale investments in rice in the country, a government official said in August. South Korea’s Daewoo Logistics Corp. has leased land in Madagascar to produce corn and palm oil.

Viet Nam is encouraging overseas investment in industries that use natural rubber as a raw material, Tien said. Investors may receive lower taxes and other preferential policies, he said.

Source: Bloomberg

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