The Vietnamese rubber industry has a glorious tradition and a long-standing history tied to the cause of fighting for, protecting and building the country. That tradition was created and nurtured by the energy, sweat, life and wisdom of thousands of people across generations. On the 85th founding anniversary of the Vietnam rubber industry (October 28, 1929 - 2014) and the 10th anniversary of the Vietnam Rubber Association (November 2004 - 2014), Vietnam Business Forum interviewed Mr Tran Ngoc Thuan, Chairman of the Vietnam Rubber Association, on this issue. Nguyen Mai reports.
Could you please tell us about the remarkable milestones in the 85-year history of the Vietnamese rubber industry?
The establishment of the first cell of Indochinese Communist Party at Village 3 of Phu Rieng Rubber Plantation in Thuan Loi commune (present-day Thuan Phu commune, Dong Phu district, Binh Phuoc province) on October 28, 1929 was the premise for the formation of the traditional day of the Vietnamese rubber industry. During the two great modern wars of the nation, rubber plantations were both the frontiers and the rears. Supplies and manpower for the wars were concealed there.
During the cause of renovation, the rubber industry was determined to expand rubber growing in the Central Highlands. With this right policy, the potential was awakened on the vast and beautiful basalt soil. Rubber trees were continuously planted and expanded in all strategic areas, not only presenting in traditional areas like Southeast and Central Highlands provinces but also reaching out many provinces in the Central Coast and northern mountainous region of Vietnam, Laos and Cambodia.
In 10 years (2003-2013), Vietnam's rubber industry made great progress in performance, acreage and productivity. In 2003, the rubber productivity was 1,363 kg per ha but it reached 1,740 kg/ha in 2013, ranking second after Thailand (1,808 kg/ha) but ahead of India (1,639 kg/ha) and Malaysia (1,400 kg/ha). In just 10 years, the rubber area was expanded by 514,900 ha to reach 955,700 ha 2013. Also during this period of time, smallholding and private rubber farms were rapidly expanded to reach 456,700 ha in 2013, which turned out 500,800 tonnes of dry rubber, which accounted 47.6 percent of acreage and 52.8 percent of latex output.
As of 2014, Vietnam has nearly 1 million ha of rubber trees. Domestic rubber companies also planted about 157,700 ha in foreign countries, including approximately 94,600 ha in Cambodia and about 63,100 ha in Laos.
Would you briefly the introduce potential and strengths of the Vietnam rubber industry?
In 2013, Vietnam was ranked second in the world in productivity (1,740 kg per hectare, third in natural rubber output (949,100 tonnes) and fourth in exports (1,076,279 tonnes). Rubber is always present in the Top 10 most valuable exports of the country. In 2013, natural rubber exports fetched US$2.492 billion, ranked third among agricultural products after rice and coffee.
Besides, Vietnam’s rubber manufacturing industry is expanding almost 30 percent a year. In 2013, manufactured rubber products like tyres, spare parts and shoe soles brought in US$1.1 billion of export turnover. Notably, leading tyre makers in the world like Bridgestone, Yokohama and Kumho also realised the pluses of Vietnam’s rubber supply, labour costs and tax policies. They opened export tyre factories in Vietnam.
SVR 3L has been a major product of Vietnam for years because of large-scaled plantations and processing factories. But, the world demand for this item is low, resulting in massive shipments to China. To cope with the possibility that China cuts SVR 3L import, Vietnam should actively enlarge its SVR 3L markets and restrict new SVR 3L plants. The demand for SVR 10 and SVR 20 graded rubber is high and the competition among natural rubber exporters like Indonesia, Thailand and Malaysia is stiff. Besides, the demand for SVR 10 and SVR 20 rubber in Vietnam will increase when more foreign tyre manufacturers like Kumho, Yokohama, Sailun, Bridgestone and Cheng Shin as well as Vietnamese tyre makers like Casumina, Da Nang and Sao Vang are doing business well. Vietnam needs to increase SVR 10 and SVR 20 categories to balance its natural rubber structure and better meet domestic and foreign markets.
How will the rubber industry focus on export and int’l cooperation in the coming time?
China, Malaysia, the United States and Japan are the four biggest importers of natural rubber, holding 65.5 percent of total world imports in 2013. According to some international rubber organisations, the oversupply of natural rubber may be extended to 2020 if the economy continues to recover slowly. The competition among natural rubber producers is not only limited to price and quality, but also to categories. Accordingly, Vietnam needs to take advantage of large-scale production to increase the rate of SVR CV 50/60, SVR 10, Latex and RSS 3 but it must pay attention to consumer and market demands because the global demand will hardly surpass 10 percent of latex and RSS and 1 percent of SVR CV 50/60.
Currently, Vietnam exports rubber to 70 markets around the world. China is the largest importer of Vietnamese rubber, but it is quite volatile. According to the Department of Crop Production, rubber import reduction from China owing to slow economic recovery is causing negative impacts on the Vietnam rubber industry. Therefore, in the long run, while maintaining normal economic relations with China, Vietnam must seek new markets and expand other ones like Malaysia, India, the US and Japan.
The Vietnam Rubber Association was established in 2002 to meet the practical needs of the industry and the business community. After nearly two years of intense canvassing, the association attracted 55 companies to register for founding membership. On June 24, 2004, the association gathered in Ho Chi Minh City and elected a 17-member Executive Committee (2004 - 2005 term). In November 2004, the association officially went into operation with the key tasks of providing market information and rubber prices for its members to set up production and business plans, strengthening international ties, protecting the interests of members and supporting members to expand international trade ties on global markets. In addition, it boosts trade promotion and coordination with ministries and central agencies to devise sustainable development strategies. The association’s members accounted for 40 percent of acreage and 70 percent of natural rubber export turnover 2013.
In the coming time, the association will further promote international cooperation in an attempt to restructure products to meet market demands and serve as a bridge for natural rubber producers and rubber manufacturers. It will boost trade promotion and market expansion for rubber export in many countries, especially potential destinations with stable demand for natural rubber; coordinate with relevant units to build system of natural rubber quality management and create collective Vietnam Rubber brand; protect members, rubber companies and consumers; contact more professional buyers in the world; and update information about realities, trends and demands of consumers worldwide.
In addition, annually, the association works with the Ministry of Industry and Trade to honour well performing rubber exporters.
Source: VCCI