Thai rubber company aims to invest in Myanmar

Monday, 21 May 2012 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Thai Hua Rubber Pcl, Thailand’s third-largest rubber producer, plans to invest in Myanmar, aiming to produce rubber and export it following political and economic reforms there, the company’s chief executive said.

“We have already met Myanmar’s agriculture minister and he said our investment is welcomed,” Chief Executive Luckchai Kittipol told Reuters.

The company was ready to start growing rubber immediately it gets permission from the government, he said.

Thai Hua has the capacity to produce 600,000 tonnes of rubber sheets and block rubber in Thailand each year.

It has also invested in growing rubber in neighbouring Laos, producing about 60,000 tonnes a year there.

Luckchai said the company was interested in expanding plantations in two areas of central and southern Myanmar - Karen State and the Tanintharyi region, previously known as Tenasserim – where the weather was best for rubber. “We would have around 10,000 rai (1,600 hectares) in the first phase and we would expand by 10,000 rai annually,” he said, adding that the trees would take 6 to 7 years to mature and start producing latex.

Fertile soil would help the trees grow fast and produce good quality latex, while cheap labour in the labour-intensive plantations would help the company compete in the world market.

Rubber produced in Myanmar would be for export to India due to the proximity of that big market, he said. Myanmar had about 400,000 acres (160,000 hectares) of productive rubber and output of just over 100,000 tonnes last year, according to figures posted by the Myanmar Rubber Planters and Producers Association.

That compares with five million acres (two million hectares) and output of 3.2 million tonnes in Thailand.

Luckchai said a sharp drop in Tokyo rubber futures prices recently was too fast and was due mostly to fear of falling demand because of Europe’s fragile economy.

Tokyo rubber futures have dropped sharply and trade has been volatile because of concern about the financial crisis in Greece.

The benchmark TOCOM rubber contract for October delivery , which fell to a four-month low last week before bouncing back more than 3 per cent.

The benchmark Thai smoked rubber sheet (RSS3), which surged to a record high of $6.40 per kg in February 2011, fell to $3.60 per kg on Thursday.

Luckchai said he expected physical prices to slip further in June, when supplies get back to normal as farmers in Thailand, the world’s biggest rubber exporter, resume tapping.

However, physical prices were unlikely to fall sharply as Thai government intervention should lend support, he added.

Thailand has begun to fully implement an intervention scheme in mid-May, aiming to push the price of unsmoked sheet (USS3), which farmers sell to factories, to 120 baht ($4) per kg.