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iconEnhancement of Thai Rubber Industry’s Competitive Advantage [   August  2019 ]


Production and exports of Thai rubber is currently signaling a slowdown. Export of Thai primary-processed rubber in the first half of this year reached 2.31 million tons, down 9.18 % yoy. The year-to-date export value touched US$ 3.12 billion, down 14.46 % yoy (Custom Department). This downward trend is due to the slowing economy affected by Us-China trade war, which resulted in slowing global rubber consumption demand, especially in Chinese market, the world’s largest.

Thai rubber export sector is facing various challenges which impede competitive advantage of Thailand as compared to other rubber producing countries. Among those challenges are loan, currency exchange, cost of production and trade benefits. Financial institutes exercise more caution in granting loans to rubber entrepreneurs due to rubber business risks. Certain entrepreneurs ceased their operation due to insufficient financial support.

Chinese investors run joint venture with Thai rubber processers while big entrepreneurs expedite the listing of their companies into security exchange of Thailand for fund raising. Secondly, due to the continued appreciation of Thai baht to its 6-year high, Thai rubber prices are relatively more expensive than those of Malaysia and Indonesia. Thirdly, tyre manufacturers imported rubber from alternative markets like Africa and Latin America as well as newcomer like Myanmar due to lower cost of production and lack of cess. Fourthly, Thailand’s international trade negotiation were stagnant before the new government being elected. Meanwhile, Vietnam was successful in negotiating FTA with the EU. Malaysia, which is already a member of CPTPP enjoys tariff-free trade, which is a competitive advantage.

Thai government is expediting its schemes to enhance Thailand’s competitive advantage. Ministry of Agriculture and Cooperatives announced a policy “Marketing-led agriculture” to stay in tune with current global situations, maintain existing markets and find new markets. In addition, Ministry of Commerce is expediting the negotiation for FTA with the EU and pushing forward Thailand as the production and distribution base for the EU market. Furthermore, RCEP and CPTPP will also be put into negotiation.

The Thai Rubber Association is of the view that enhancement of competitive advantage is highly important in maintaining Thailand’s position as the largest rubber exporter and an important production base of rubber-finished products. It plays a big part in the further growth of Thai rubber industry.

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