Viet Nam is the world's third-largest natural rubber producer after Thailand and Indonesia.— Photo ttgroup

HA NOI (Biz Hub) — The Viet Nam Rubber Association asked the concerned ministries this week to exempt the rubber industry from paying the 3 per cent export tax.

According to the association, it made the request because of the difficulties the industry is facing due to a sharp drop in prices and demand in the world market.

According to the Ministry of Agriculture and Rural Development, the rubber industry saw a year-on-year decline of 23.1 per cent in export volume to 144,000 tonnes, and a fall of 42 per cent in the export value to US$292 million in the first quarter of this year.

Over the last few months, the export price of local rubber dropped several times to reach as low as VND40 million, or $1,900, per tonne recently, which was half the 2011 price, because of oversupply in the world market.

Farmers and enterprises producing rubber have faced major difficulties in production and business due to the decline in exports. There are no signs of the industry making a rebound yet.

Banh Manh Duc from the Hoa Binh Rubber Company told Dau tu chung khoan (Securities Investment) newspaper that with falling rubber prices, most of the rubber companies have reduced their targets this year to lower than the 2013 target.

The Hoa Binh Rubber Company's net revenue in Q1 this year declined by 45.7 per cent to only VND46 billion ($2.19 million), Duc said.

The Phuoc Hoa Rubber Company also expects to gain a profit of only VND211.27 billion ( $10.06 million) this year, which is down 43.14 per cent from last year, according to the newspaper.

Although the global demand for natural rubber is forecast to grow by 4 per cent in 2014, the market expects to see a surplus of 373,000 tonnes this year, a fourth year of oversupply.

Worries over the economic growth and the demand from China, which buys 60 per cent of Viet Nam's rubber, have sent the global rubber price benchmark on the Tokyo Commodity Exchange to near 18-month lows.

The country can export only roughly 1 million tonnes of rubber in 2014, down 7 to 10 per cent against last year, but the export value can drop sharply by 25 to 30 per cent to total between $1.8billion to $2 billion, as the prices could fall by 16.3 per cent from 2013, according to the association.

Viet Nam is the world's third-largest natural rubber producer after Thailand and Indonesia. — VNS