Rubber sector looks to surmount challenges with restructuring

Wednesday, Feb 25, 2015 08:00

Viet Nam was ranked third in the world in 2014 for rubber output and fourth for export value. — Photo vietnamexport

HA NOI (Biz Hub) — Viet Nam's rubber industry is expected to encounter prolonged difficulties in the time ahead, said Viet Nam Rubber Association General Secretary Vo Hoang An.

To get it back on track, the rubber association is looking to restructure the sector by increasing the added value of products and reducing raw material exports.

Viet Nam was ranked third in the world in 2014 for rubber output and fourth for export value.

An said Viet Nam produced 953,700 tonnes of rubber last year with 977,799 hectares of rubber trees. The amount produced rose 0.7 per cent over the previous year. It accounts for 8.1 per cent of global output, following Thailand with 34.1 per cent and Indonesia with 26.9 per cent.

The country exported more than 1 million tonnes of natural rubber, valued at $1.78 billion, down 0.7 percent in volume and 28.4 percent in value from 2013, due primarily to plunging prices.

Rubber product exports exceeded US$1.5 billion in 2014, with $551 million coming from tyre shipments. The respective figures rose about 30 per cent and 52 per cent over the previous year, he said.

Viet Nam imported 372,000 tonnes of natural and synthetic rubber worth $639 million in 2014. The country is unable to manufacture synthetic rubber from crude oil, so it must import all its synthetic rubber.

An underlined an array of difficulties the sector ran into last year as natural rubber prices hit a five-year low, attributable to slow global economic recovery and weak demand. A nosedive in oil prices also helped increase synthetic rubber's competitive edge over natural rubber. Fierce competition from other countries has also presented a major challenge, since the quality of Vietnamese natural rubber is often considered inferior.

An cited predictions from international organisations that rubber prices will remain low in the coming years due to backed up inventories.

To cope with the predicted difficulties, An asked producers to reduce the frequency of latex extraction to cut expenses and raise productivity, ultimately improving workers' incomes. He also encouraged replacing ineffective varieties with high-yield alternatives and intercropping rubber trees with others. He also suggested they increase efforts to survey market demand and reform their products accordingly.

Additionally, the industry must intensify processing activities and design a comprehensive development strategy to help link rubber growers and businesses.

An also said state agencies and localities need to support the sector to help it overcome its hardships. — VNS

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