Thailand is currently urging Chinese investors to build rubber processing plants within the country in light of China’s recent rubber import decline. Areas in Thailand such as the Hat Yai District, Chalung Industrial Estate in Chalung Subdistrict and the Songkhla Province are being eyed by the country’s government as potential sites to house the rubber factories.
4 million tonnes of rubber is produced in Thailand each year, 500,000 of which are apportioned for domestic use while the other 3.5 million tonnes are allotted for exports. Out of the 3.5 million tonnes of the exported rubber, 2 million tonnes are being sent to the Chinese market. Over the past two years, China has reduced their processed rubber orders from Thailand to pursue contract rubber farming in Cambodia. The decreased orders have led to an increase in unsold rubber stocks in Thailand and a sudden decrease in rubber prices.
As a solution, the Thai government is deploring efforts to increase domestic rubber demand and avoid the rise of stocked rubber along with declining rubber sales. By supporting the rise of Chinese rubber plants in the country, the Thailand government will be assured that China will export Thai rubber to their manufacturing plants and to various countries as well.
Among the many investment incentives for China would be additional tax deduction through the investment promotional privileges as suggested by Thailand’s Board of Investment (BOI).
Thailand expects both foreign and local investors to establish rubber processing plants in the country to produce 0.5 to 1 milion tonnes of rubber per year. French tire manufacturer, Michelin has already built a manufacturing plant in the Chalung Industrial Estate while local rubber glove manufacturer, Sri-Trang Agro-Industry Public Company has already put up an investment for the soon-to-be-established 277-acre land Rubber City.
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