1

The Thai Rubber Industry and The Thai Rubber Industry and Its Role in Regional CooperationIts Role in Regional Cooperation

By Sang UdomjarumaniBy Sang Udomjarumani CEO, International Rubber Consortium, LimitedCEO, International Rubber Consortium, Limited

For presentation at the ASEAN RUBBER CONFERENCE 2007For presentation at the ASEAN RUBBER CONFERENCE 2007 The InterContinental Phnom Penh, Cambodia The InterContinental Phnom Penh, Cambodia

14-16 June 200714-16 June 2007

2

FOREWORDFOREWORD

• THIS PAPER WILL FOCUS ON DEVELOPMENT OF THAI RUBBER INDUSTRIES, COVERING THE PERIOD FROM THE YEAR 1996, ONE YEAR BEFORE THE ASIAN FINANCIAL CRISIS UNTIL 2006, 11 YEARS OF RUBBER HISTORY WHEN THAILAND IS RECOVERING FROM THE AFTERMATH OF THE CRISIS.

• THE PRICE OF RUBBER WAS AT ITS HISTORICAL LOW AT THE END OF 2001, PROMPTING THE GOVERNMENTS OF THE THREE MAJOR PRODUCERS TO GET TOGETHER TO INK THE BALI DECLARATION, A TRIPARTITE COOPERATION THAT LED TO THE FORMATION OF THE INTERNATIONAL TRIPARTITE RUBBER COUNCIL AND INTERNATIONAL RUBBER CONSORTIUM.

• SINCE THEN, THE RUBBER INDUSTRY HAS ENJOYED AN UNPRECEDENTED CONTINUOUS LONG PERIOD OF PRICE BOOM, GIVING RISE TO PLENTY OF UNCONTROLLED NEW RUBBER PLANTING, BOTH IN THAILAND AND NEIGHBORING COUNTRIES, WHICH IS SEEN BY MANY AS A POTENTIAL TIME BOMB FOR FUTURE TROUBLE.

• ONLY REGIONAL COOPERATION AND GOVERNMENT FORESIGHT CAN AVERT THE RECURRANCE OF THE PAST CRISIS.

3

OVERVIEWOVERVIEW

• Thailand is presently world’s No.1 NR producer.• Total area under rubber cultivation is 2.29 million

hectares, about 95 percent are small-holdings.• Total income from NR and NR products in 2006 was

8.5 billion US dollars.• 89 percent of the total production were exported in the

form of NR raw materials, only 11 percent were consumed domestically.

• About 1 million families are engaged either directly or indirectly in rubber production.

• Income from NR and NR related industries in 2006 contributed to 4.1 percent of the total GDP.

4

THAILAND’S GDP GROWTHTHAILAND’S GDP GROWTH

FIGURE 1 THAILAND’S GDP GROWTHFIGURE 1 THAILAND’S GDP GROWTH

5

PROJECTION OF RUBBER PRODUCTION PROJECTION OF RUBBER PRODUCTION OF THAILAND UP TO YEAR 2020OF THAILAND UP TO YEAR 2020

01,0002,0003,0004,0005,0006,0007,0008,0009,000

2000 2005 2010 2015 2020

THAILAND

INDONESIA

MALAYSIA

TOTAL

IN T

HO

US

AN

D T

ON

S

FIGURE 2 PROJECTION OF RUBBER PRODUCTION OF THAILAND UP TO YEAR 2020FIGURE 2 PROJECTION OF RUBBER PRODUCTION OF THAILAND UP TO YEAR 2020

6FIGURE 3 THAILAND’S NR PRODUCTION (1983-2006)FIGURE 3 THAILAND’S NR PRODUCTION (1983-2006)

7

THAILAND’S NR PRODUCTION BY TYPES

-

0.500

1.000

1.500

2.000

2.500

3.000

3.500

1999 2000 2001 2002 2003 2004 2005 2006

IN M

ILL

ION

TO

NS

RSS STR CONC.LATEX/2 CREPE OTHERS TOTAL

FIGURE 4 THAILAND’S NR PRODUCTION BY TYPESFIGURE 4 THAILAND’S NR PRODUCTION BY TYPES

8

PRODUCTION DISTRIBUTIONPRODUCTION DISTRIBUTIONBY TOTAL PLANTED AREASBY TOTAL PLANTED AREAS

1,931,472

107,163252,1293,442

EAST&CENTRAL NORTH EAST SOUTH NORTH

AREA EAST&CENTRAL NORTH EAST NORTH SOUTH TOTAL

TOTAL 252,000 107,000 4,0001,932,00

02,295,00

0

% 11.01 4.67 0.15 84.17 100(*** IN HECTARES)

FIGURE 5 PRODUCTION DISTRIBUTION BY TOTAL PLANTED AREASFIGURE 5 PRODUCTION DISTRIBUTION BY TOTAL PLANTED AREAS

9

PRODUCTION DISTRIBUTIONPRODUCTION DISTRIBUTIONBY TAPABLE AREASBY TAPABLE AREAS

1,386,146

53,338160,494 6,000

EAST&CENTRAL NORTH EAST SOUTH NORTH

AREA EAST&CENTRAL NORTH EAST NORTH SOUTH TOTAL

TOTAL 174,000 58,000 2,000

1,510,000

1,744,000

% 10.02 3.33 0.10 86.54 100(*** IN HECTARES)

FIGURE 6 PRODUCTION DISTRIBUTION BY TAPABLE AREASFIGURE 6 PRODUCTION DISTRIBUTION BY TAPABLE AREAS

10

REPLANTED AREAS IN RECENT YEARS REPLANTED AREAS IN RECENT YEARS

(*** IN HECTARES)

TABLE 1 REPLANTED AREAS IN RECENT YEARSTABLE 1 REPLANTED AREAS IN RECENT YEARS

11

GOVERNMENT SPONSORED NEW GOVERNMENT SPONSORED NEW RUBBER PLANTING PROJECTS RUBBER PLANTING PROJECTS

YEARYEAR THE NORTHTHE NORTH NORTHEASTNORTHEAST TOTALTOTAL

2004 9,009 15,994 25,003

2005 7,219 45,923 53,142

2006 14,417 36,846 51,263

TOTAL 30,645 98,763 129,408(*** IN HECTARES)

TABLE 2 GOVERNMENT SPONSORED NEW RUBBER PLANTING PROJECTSTABLE 2 GOVERNMENT SPONSORED NEW RUBBER PLANTING PROJECTS

12

1,7631,837 1,839

1,886

2,166

2,042

2,354

2,5732,637 2,632

2,772

0

500

1,000

1,500

2,000

2,500

3,000

IN T

HO

US

AN

D T

ON

S

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

TOTAL THAILAND NR EXPORTSTOTAL THAILAND NR EXPORTS

FIGURE 7 TOTAL THAILAND NR EXPORTSFIGURE 7 TOTAL THAILAND NR EXPORTS

13

THAILAND’S NR EXPORTS BY TYPES

-

0.50

1.00

1.50

2.00

2.50

3.00

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

IN M

ILL

ION

TO

NS

RSS

STR

CONC.LATEX

OTHERS

TOTAL

FIGURE 8 THAILAND’S NR EXPORTS BY TYPESFIGURE 8 THAILAND’S NR EXPORTS BY TYPES

14

THAILAND’S NR EXPORTS BY COUNTRIES

-

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

IN M

ILL

ION

TO

NS

JAPAN

CHINA

USA

MALAYSIA

S.KOREA

EU

OTHERS

YEAR 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

TOTAL

1.40

1.60

0.64

1.76

1.84

1.84

1.89

2.17

2.04

2.35

2.57

2.64

2.63

2.77

FIGURE 9 THAILAND’S NR EXPORTS BY COUNTRIESFIGURE 9 THAILAND’S NR EXPORTS BY COUNTRIES

15

NR TRADING PARTNERSNR TRADING PARTNERS

• IN 2003 CHINA OVERTOOK JAPAN TO BE THE BIGGEST IMPORTER OF THAI NR

• IN THE SAME YEAR, MALAYSIA AND EU OVERTOOK THE UNITED STATES TO BECOME THE 3RD AND 4TH LARGEST IMPORTERS OF THAI NR

• THE UNITED STATES HOWEVER REMAIN THE BIGGEST IMPORTER OF RUBBER GLOVES FROM THAILAND

• CHINA IS PRESENTLY THE BIGGEST IMPORTER OF RUBBER THREADS FROM THAILAND

• JAPAN HAS BEEN THE LEADING IMPORTER OF THAI NR SINCE THE 1970S AND IS STILL THE BIGGEST IMPORTER OF THAI RSS

16

0

100

200

300

400

500

600

IN T

HO

US

AN

D T

ON

S

BANGKOK

SONGKHLA

L.CHABANG

PENANG

OTHERS

YEAR 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

TOTAL 1,763 1,837 1,839 1,886 2,166 2,042 2,354 2,573 2,637 2,632 2,772

THAILAND’S NR EXPORTS BY PORTS OF LOADINGTHAILAND’S NR EXPORTS BY PORTS OF LOADING

FIGURE 10 THAILAND’S NR EXPORTS BY PORTS OF LOADINGFIGURE 10 THAILAND’S NR EXPORTS BY PORTS OF LOADING

17

INFRASTRUCTURE SHORTCOMINGSINFRASTRUCTURE SHORTCOMINGS

• IT IS INTERESTING TO NOTE THAT IN 2006, ABOUT 53 PERCENT OF THAI NR WERE EXPORTED THROUGH THE MALAYSIAN PORT OF PENANG (37 PERCENT THROUGH THE BORDER TOWN OF PADANG BESAR AND 16 PERCENT THROUGH SADAO, ANOTHER TOWN AT THE THAI MALAYSIAN BORDER)

• ONLY 11.1 PERCENT WAS EXPORTED THROUGH THE DEEP-SEA PORT OF SONGKHLA

• ONLY 12.1 PERCENT WAS HANDLED THROUGH THE PORT OF BANGKOK

• WHILE LAM CHABANG IN THE EASTERN SEABOARD HANDLED ONLY A MEAGRE 5.9 PERCENT.

18

INCOME FROM NR EXPORTS

-

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

INC

OM

E

-

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

(IN MILLION BAHT) (IN MILLION US DOLLARS)

FIGURE 11 INCOME FROM NR EXPORTSFIGURE 11 INCOME FROM NR EXPORTS

19

DOMESTIC CONSUMPTION OF NR BY TYPES

-

30.00

60.00

90.00

120.00

150.00

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

IN T

HO

US

AN

D T

ON

S

RSS STR CONC.LATEX OTHERS

YEAR 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

TOTAL 173.7 182.0 186.4 226.9 242.5 253.1 278.4 298.7 318.7 334.7 320.9

FIGURE 12 DOMESTIC CONSUMPTION OF NR BY TYPESFIGURE 12 DOMESTIC CONSUMPTION OF NR BY TYPES

20

8.80% 9.0

0%9.0

0%10

.50%

10.3

0%

10.9

0% 10.6

0% 10.4

0%10

.70%

11.4

0%10

.20%

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

IN M

ET

RIC

TO

NS

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

DOMESTIC CONSUMPTION IN TERMS OF TOTAL PRODUCTION

CONSUMPTION TOTAL PERCENTAGE

FIGURE 13 DOMESTIC CONSUMPTION IN TERMS OF TOTAL PRODUCTIONFIGURE 13 DOMESTIC CONSUMPTION IN TERMS OF TOTAL PRODUCTION

21

DOMESTIC CONSUMPTION OF NR BY TYPES OF PRODUCT 2006

158.80

52.30

74.20

16.401.20

18.40

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

TYRES GLOVES RUBBERTHREADS

RUBBERBANDS

AUTOMOBILEPARTS

OTHERS

IN T

HO

US

AN

D T

ON

S

FIGURE 14 DOMESTIC CONSUMPTION OF NR BY TYPES OF PRODUCT 2006FIGURE 14 DOMESTIC CONSUMPTION OF NR BY TYPES OF PRODUCT 2006

22

THAILAND’S EXPORTS OF RUBBER PRODUCTS 2006

752.73719.24

47.35134.87180.97

65.05

1,198.83

-

200

400

600

800

1,000

1,200

1,400

TYRES GLOVES RUBBERTHREADS

HOSES CONDOMS RUBBERBANDS

OTHERS

IN M

ILL

ION

US

DO

LL

AR

S

FIGURE 15 THAILAND’S EXPORTS OF RUBBER PRODUCTS 2006FIGURE 15 THAILAND’S EXPORTS OF RUBBER PRODUCTS 2006

23

IMPORT VALUE OF RUBBER PRODUCTSIMPORT VALUE OF RUBBER PRODUCTSINTO THAILAND 2006INTO THAILAND 2006

5,864.97

671.2665.30

4,427.92

2.98 26.14

12,844.97

888.01

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

TYRES GLOVES RUBBERTHREADS

HOSES CONDOMS RUBBERBANDS

COMPOUNDRUBBER

OTHERS

IN T

HO

US

AN

D U

S D

OL

LA

RS

FIGURE 16 IMPORT VALUE OF RUBBER PRODUCTS INTO THAILAND 2006FIGURE 16 IMPORT VALUE OF RUBBER PRODUCTS INTO THAILAND 2006

24

THAILAND’S SYNTHETIC RUBBER PRODUCTION, THAILAND’S SYNTHETIC RUBBER PRODUCTION, EXPORTS, IMPORTS AND CONSUMPTIONEXPORTS, IMPORTS AND CONSUMPTION

YEARYEAR 20032003 20042004 20052005 20062006

PRODUCTION 125,000 130,000 140,000 143,000

EXPORTS 102,000 117,000 126,300 132,000

IMPORTS 149,000 171,000 190,890 186,000

CONSUMPTION 163,000 166,000 170,000 180,000(*** IN MILLION TONS)

TABLE 3 THAILAND’S SYNTHETIC RUBBER PRODUCTION, TABLE 3 THAILAND’S SYNTHETIC RUBBER PRODUCTION, EXPORTS, IMPORTS AND CONSUMPTIONEXPORTS, IMPORTS AND CONSUMPTION

25

PRESENT SITUATIONPRESENT SITUATION

THE PLANTATION SECTORTHE PLANTATION SECTOR• THE PLANTATION SECTOR HAS NEVER HAD IT SO GOOD BEFORE,

ENJOYING A CONTINUOUS FIVE-YEAR BOOM IN RUBBER PRICES.• DAY-TO-DAY FARM GATE PRICES RECEIVED BY FARMERS ARE THE

HIGHEST AMONG THE PRODUCING COUNTRIES.• BESIDES THE GOVERNMENT SPONSORED RUBBER PROJECT IN

THE NORTH AND NORTHEAST, GOOD RUBBER PRICES HAVE INDUCED UNCONTROLLED NEW PLANTING, WHICH IS SAID TO BE MUCH HIGHER THAN THOSE SPONSORED BY THE GOVERNMENT.

• DOUBLE TAPPING, PREMATURE TAPPING, PLANT SLAUGHTERING AND UNCONTROLLED USE OF STIMULANTS BY FARMERS DUE TO LACK OF PROPER GUIDANCE ARE RAMPANT AND WILL HAVE SERIOUS REPERCUSSION IN THE LONG RUN.

• GOOD RUBBER PRICES HAD ALSO CAUSED A DRASTIC REDUCTION IN THE APPLICATION FOR REPLANTING.

• THE PUBLIC SECTOR HAS BECOME COMPLACENT BECAUSE OF THE HIGH RUBBER PRICES.

• TERRORISM IN THE 3 SOUTHERNMOST PROVINCES THREATENS TO DISRUPT PRODUCTION.

26

PRESENT SITUATION (PRESENT SITUATION (CONTINUEDCONTINUED))

THE MIDSTREAM INDUSTRIESTHE MIDSTREAM INDUSTRIES• MAJOR FUNCTION – FINANCING, PROCESSING, MARKETING,

QUALITY ASSURANCE, BEARING RISKS OF MARKET VOLATILITY AND PROVIDING EMPLOYMENT TO LOCAL COMMUNITY.

• OVER CAPACITY – A TOTAL PRODUCTION CAPACITY OF 5.5 MILLION TONS COMPETING FOR 3.0 MILLION TONS OF RAW MATERIALS.

• RISING RUBBER PRICES CAUSING CASH-FLOW PROBLEMS.• STRENGTHENING THAI BAHT - A SERIOUS CONCERN FOR THE

EXPORT SECTOR.• HIGH VOLATILITY INFLUENCED BY HEDGE-FUNDS AND

SPECULATORS – PRODUCERS HAVE NO CONTROL OVER RUBBER PRICES.

• HIGH RISKS CAUSED BY VOLATILITY IN THE MARKET.• SHORTAGE OF LABOR.• INCREASING PRODUCTION COSTS.

27

NUMBER OF RUBBER LICENSED DEALERS, NUMBER OF RUBBER LICENSED DEALERS, PROCESSING FACTORIES, NURSERIES PROCESSING FACTORIES, NURSERIES

AND LICENSED LABORATORIES (CONTINUED)AND LICENSED LABORATORIES (CONTINUED)

LICENSED DEALERS 1,953

EXPORTERS 337

PROCESSING FACTORIES 330

RUBBER NURSERIES 4,077

LICENSED LABORATORIES 35

TABLE 4 NUMBER OF RUBBER LICENSED DEALERS, TABLE 4 NUMBER OF RUBBER LICENSED DEALERS, PROCESSING FACTORIES, NURSERIES PROCESSING FACTORIES, NURSERIES

AND AND LICENSED LABORATORIES LICENSED LABORATORIES (CONTINUED)(CONTINUED)

28

PRESENT SITUATION (PRESENT SITUATION (CONTINUEDCONTINUED))

THE DOWNSTREAM INDUSTRIESTHE DOWNSTREAM INDUSTRIES• MANUFACTURERS OF A VARIETY OF RUBBER-BASED PRODUCTS

FROM AUTOMOBILE TIRES TO CONDOMS.• RISING COST OF PRODUCTION DUE TO SOARING RAW MATERIAL

PRICES.• STRONG FOREIGN COMPETITION HAS GIVEN RISE TO PRICE CUTTING.• WEAK FOREIGN MARKET – FOREIGN MARKET PRICES FOR RUBBER

PRODUCTS CANNOT KEEP PACE WITH HIGHER RAW MATERIAL PRICES.

• EXCEPT THE TIRE SECTOR AND A FEW LARGE GLOVE AND THREAD MANUFACTURERS, MANY OF THE DOWNSTREAM INDUSTRIES ARE NOW FACING PROBLEMS OF OUT-DATED MACHINERIES AND RUN-DOWN FACTORIES.

• LACK OF INNOVATION AND NEW DEVELOPMENT IN TECHNOLOGY.• DOMESTIC RUBBER INDUSTRIES HAVE NOT BEEN ABLE TO TAKE OFF

AS CAN BE SEEN FROM THE LOW RATIO OF DOMESTIC CONSUMPTION.

• THE PUBLIC SECTOR HAS YET TO COME UP WITH A COMPREHENSIVE LONG-TERM MASTER PLAN FOR THE INDUSTRIES.

29

THE DOWNSTREAM RUBBER INDUSTRIESTHE DOWNSTREAM RUBBER INDUSTRIES (CONTINUED) (CONTINUED)

TYPE OF PRODUCTSTYPE OF PRODUCTS 20032003 20042004 20052005 20062006• RETREADING 9 10 10 8• TYRES 12 10 11 13• MOTORCYCLE TIRES 15 15 15 10• RUBBER BAND 13 13 12 10• GLOVES 19 19 19 18• CONDOMS 1 - - 1• SHOE LAYER 19 19 19 21• SHOES, CANVAS AND FOAM 51 47 47 44• RUBBER THREADS 6 6 6 8• AUTOMOBILE PARTS 39 35 29 25• BALLOONS 4 4 6 2• GLUE, ADHESIVES, WIRES 5 5 5 5• FOAM PRODUCTS 9 9 9 6• HOSES 5 5 5 8• BELTINGS 8 7 9 11• HUSK CRACKER FOR RICEMILLS 6 5 5 6• SPORTING GOODS 8 8 9 7• SCIENTIFIC INSTRUMENTS 8 6 7 7• OTHERS 27 30 31 26

• TOTAL 264 253 254 236

TABLE 5 THE DOWNSTREAM RUBBER INDUSTRIES (CONTINUED)TABLE 5 THE DOWNSTREAM RUBBER INDUSTRIES (CONTINUED)

30

PROSPECT OF DOMESTIC CONSUMPTIONPROSPECT OF DOMESTIC CONSUMPTION

• DOMESTIC CONSUMPTION HAS REMAINED STAGNANT AT BELOW 11 PERCENT DURING THE PAST FEW YEARS.

• ACCORDING TO THE GOVERNMENT ROADMAP, DOMESTIC CONSUMPTION WILL INCREASE TO 16 PERCENT OF PRODUCTION IN 2007.

• UNDER THE PRESENT ECONOMIC CONDITION, THE GROWTH TARGET MAY BE DIFFICULT TO ACHIEVE AS ANTICIPATED.

• GIVEN A FAVORABLE ECONOMIC ENVIRONMENT, INVESTMENT IN TIRE AND AUTOMOBILE PRODUCTION WILL INCREASE, FUELING RAPID GROWTH IN DOMESTIC CONSUMPTION.

• GOVERNMENT’S PLAN TO BOOST DOMESTIC CONSUMPTION TO 30-70 PERCENT OF PRODUCTION IN THE NEXT DECADE MAY SOUND TOO AMBITIOUS FOR THE MOMENT.

31

THE PUBLIC SECTORTHE PUBLIC SECTOR

• THE GOVERNMENT SHOULD COME UP WITH SOME FEASIBLE POLICY GUIDELINES FOR RUBBER.

• THE LONG AWAITED THAI RUBBER BOARD SHOULD BE SET UP AS SOON AS POSSIBLE.

• THE PUBLIC SECTOR NEEDS MORE PROFESSIONALISM IN HANDLING RUBBER ISSUES.

• GOOD RUBBER PRICES SHOULD NOT GIVE RISE TO COMPLACENCY.

• THE GOVERNMENT SHOULD QUICKLY COME UP WITH A LONG-TERM PRODUCTION MASTER PLAN.

• THE LEADERSHIP SHOULD POSSESS VISION AND A CLEAR DIRECTION FOR THE FUTURE.

32

REGIONAL COOPERATIONREGIONAL COOPERATION

• THAILAND IS ACTIVELY PARTICIPATING AS A KEY PLAYER IN VARIOUS REGIONAL FORUMS AMONG THE ASEAN COUNTRIES. FOLLOWING ARE SOME OF THE REGIONAL ORGANIZATIONS THAT THAILAND PLAYS AN IMPORTANT ROLE:

• IRCO – THE INTERNATIONAL RUBBER CONSORTIUM, LIMITED.

• IRCO WAS ESTABLISHED IN THE YEAR 2005. A JOINT VENTURE COMPANY ESTABLISHED BY THE THREE MAJOR RUBBER PRODUCING COUNTRIES OF THE WORLD, THAILAND, INDONESIA AND MALAYSIA, IT IS CHARGED WITH THE MANDATE TO IMPLEMENT STRATEGIC MARKET OPERATION TO SUSTAIN RUBBER PRICES REMUNERATIVE TO THE FARMERS AND AT THE SAME TIME FAIR TO THE COMSUMERS.

33

REGIONAL COOPERATION (CONTINUED)REGIONAL COOPERATION (CONTINUED)

• ITRC – THE INTERNATIONAL TRIPARTITE RUBBER COUNCIL. A REGIONAL INTER-GOVERNMENT BODY ESTABLISHED UNDER THE BALI DECLARATION IN DECEMBER, 2001 BY THE THREE MAJOR RUBBER PRODUCING COUNTRIES OF THE WORLD, NAMELY, THAILAND, INDONSIA AND MALAYSIA,

• IT IS CHARGED WITH THE RESPONSIBILITY TO LOOK AFTER THE SMS (SUPPLY MANAGEMENT SCHEME) AND THE AETS (AGREED EXPORT TONNAGE SCHEME). BOTH SCHEMES ARE LONG-TERM PLANS BY THE THREE LARGEST NR PRODUCING COUNTRIES TO MONITOR CLOSELY THE SUPPLY DEMAND BALANCE OF NR AND ITS PRICE TRENDS AND TO ENSURE ADEQUATE SUPPLY TO MEET THE DEMAND OF THE WORLD WITHOUT SACRIFICING THE INTEREST OF THE FARMERS.

• VIETNAM WILL SOON BECOME THE 4TH MEMBER OF THIS ORGANIZATION.

34

REGIONAL COOPERATION (CONTINUED)REGIONAL COOPERATION (CONTINUED)

• ANRPC – ASSOCIATION OF NATURAL RUBBER PRODUCING COUNTRIES.

• A REGIONAL ORGANIZATION COMPRISING MEMBERS FROM 8 MAJOR NR PRODUCING AND TRADING COUNTRIES, NAMELY, THAILAND, INDONESIA, MALAYSIA, VIETNAM, INDIA, SRI LANKA, PAPUA NEW GUINEA AND SINGAPORE.

• THE ORGANIZATION HAS THE OBJECTIVE TO BRING ABOUT CO-ORDINATION IN THE PRODUCTION AND MARKETING OF NATURAL RUBBER; TO PROMOTE TECHNICAL COOPERATION AMONG MEMBER COUNTRIES, AND TO BRING ABOUT REMUNERATIVE AND STABLE PRICES FOR NATURAL RUBBER.

• THE ORGANIZATION HAS ITS HEAD OFFICE IN KUALA LUMPUR, MALAYSIA.

35

REGIONAL COOPERATION (CONTINUED)REGIONAL COOPERATION (CONTINUED)

• ARBC – ASEAN RUBBER BUSINESS COUNCIL.• THAILAND IS AN ACTIVE AND FOUNDING MEMBER OF THIS

ORGANIZATION. THE COUNCIL (FORMERLY KNOWN AS THE ASEAN RUBBER BUSINESS CLUB) PRESENTLY HAS SIX MEMBERS, COMPRISING TRADE ASSOCIATIONS OF THE MEMBER COUNTRIES, VIZ., THAILAND, INDONESIA, MALAYSIA, SINGAPORE, CAMBODIA AND VIETNAM.

• THE OBJECTIVE OF THE COUNCIL IS TO COLLECT, ANALYZE AND DISSEMINATE MARKET INFORMATION AND STATISTICS AND TO CONSIDER TRADE-RELATED ISSUES AFFECTING MEMBER COUNTRIES AND MAKE RECOMMENDATIONS TO THE MEMBERS FOR CONSIDERATION.

• THE COUNCIL RECENTLY INITIATED THE ‘ARBC + 1’ DIALAGUE WITH CHINA.

• THE COUNCIL MEETS TWO TO THREE TIMES A YEAR.

36

REGIONAL COOPERATION (CONTINUED)REGIONAL COOPERATION (CONTINUED)

• ANNUAL RUBBER DINNERS• THESE ARE ANNUAL EVENTS ORGANIZED BY THE TRADE

ASSOCIATIONS OF THE VARIOUS PRODUCING COUNTRIES.• THESE ANNUAL DINNERS ARE HOSTED IN THE FOLLOWING

SEQUENCE:SINGAPORE IN FEBRUARY OF EACH YEAR

THAILAND IN APRIL/MAY OF EACH YEAR

INDONESIA IN JULY/AUGUST OF EACH YEAR

MALAYSIA IN OCTOBER/NOVEMBER OF EACH YEAR

VIETNAM IN DECEMBER OF EACH YEAR

• A FRIENGLY GOLF TOURNAMENT IS USUALLY ORGANIZED AS A COMPLEMENTARY EVENT.

• CAMBODIA AS WELL AS INDIA ARE CONSIDERING TO HOST THEIR OWN ANNUAL DINNERS.

37

FUTURE CHALLENGESFUTURE CHALLENGES

• GOOD RUBBER PRICES HAVE GIVEN BIRTH TO MANY NEW CONTENDERS AND COMPETITORS.

• INDONESIA, THE PRESENT NO.2 LARGEST PRODUCER, IS ACCELARATING ITS RUBBER PRODUCTION AND IS EXPECTED TO OVERTAKE THAILAND AS THE WORLD’S NO.1 PRODUCER IN 2020.

• VIETNAM, ANOTHER CONTENDER, IS STEPPING UP ITS NR PRODUCTION, NOT ONLY WITHIN ITS OWN TERRITORY, BUT ALSO AT THE NEIGHBORING LAOS AND CAMBODIA.

• TO MAINTAIN ITS POSITION AS THE LEADING PRODUCER OF NR, A COMPREHENSIVE LONG-TERM MASTER-PLAN HAS TO BE DRAWN UP AS SOON AS POSSIBLE.

• A STIMULUS PLAN FOR DOWNSTREAM INDUSTRIES IS URGENTLY NEEDED.

• WITHOUT PROPER CONTROL ON PRODUCTION, NR PRICES MAY BE DEPRESSED IN THE NEXT FIVE TO TEN YEARS.

• STRONGER REGIONAL COOPERATION IS ESSENTIAL TO SUSTAIN NR PRICES AT REMUNERATIVE LEVELS.

• FREQUENT DIALOGUE WITH CONSUMERS WILL CREATE BETTER UNDERSTANDING AND STRONGER PRODUCER/CONSUMER RELATIONSHIP.

38

CONCLUSIONCONCLUSION

A FEW WORDS OF CAUTIONA FEW WORDS OF CAUTION• HISTORY HAS TAUGHT US THAT WHAT GOES UP MUST COME DOWN, SO WITH HISTORY HAS TAUGHT US THAT WHAT GOES UP MUST COME DOWN, SO WITH

PRICE OF NRPRICE OF NR• LOOKING AROUND THAILAND AND ACROSS THE BORDERS, THINGS DO NOT LOOKING AROUND THAILAND AND ACROSS THE BORDERS, THINGS DO NOT

LOOK OPTIMISTIC LOOK OPTIMISTIC • ALL THE PAST WILL BE IRRELEVANT IF THINGS STILL CONTINUE THE WAY IT IS ALL THE PAST WILL BE IRRELEVANT IF THINGS STILL CONTINUE THE WAY IT IS

TODAYTODAY

LOOKING AHEAD, I THINKLOOKING AHEAD, I THINK……• LONG TERM PLANNING TO ACHIEVE AN ORDERLY GROWTH OF NR PRODUCTION LONG TERM PLANNING TO ACHIEVE AN ORDERLY GROWTH OF NR PRODUCTION

IS URGENTLY NEEDED TO AVERT A POSSIBLE RECURRANCE OF A 2001-LIKE IS URGENTLY NEEDED TO AVERT A POSSIBLE RECURRANCE OF A 2001-LIKE CRISISCRISIS

• REGIONAL COOPERATION TO ALERT THE NEW EMERGING RUBBER COUNTRIES REGIONAL COOPERATION TO ALERT THE NEW EMERGING RUBBER COUNTRIES TO BE AWARE OF THE THREATS OF A OVER-SUPPLY SITUATION IS ESSENTIALTO BE AWARE OF THE THREATS OF A OVER-SUPPLY SITUATION IS ESSENTIAL

• THE OVER ZEALOUS SENTIMENT PRESENTLY PREVAILING AMONG THE RUBBER THE OVER ZEALOUS SENTIMENT PRESENTLY PREVAILING AMONG THE RUBBER GROWING WORLD IN THE REGION SHOULD BE REPLACED BY CAUTIOUS AND GROWING WORLD IN THE REGION SHOULD BE REPLACED BY CAUTIOUS AND COORDINATED COLLECTIVE PLANNING AT REGIONAL LEVELCOORDINATED COLLECTIVE PLANNING AT REGIONAL LEVEL

• THE FUTURE ROADMAP FOR THE THAI RUBBER INDUSTRY IS CLEAR – VALUE THE FUTURE ROADMAP FOR THE THAI RUBBER INDUSTRY IS CLEAR – VALUE CREATION THROUGH PROMOTION OF DOMESTIC RUBBER-BASED INDUSTRIES CREATION THROUGH PROMOTION OF DOMESTIC RUBBER-BASED INDUSTRIES AND INCREASE DOMESTIC CONSUMPTION TO 30 PCT OF TOTAL PRODUCTION AND INCREASE DOMESTIC CONSUMPTION TO 30 PCT OF TOTAL PRODUCTION BEFORE 2020BEFORE 2020

39

THANK YOU

40

FIGURE AND TABLE PAGE

•FIGURE 1 THAILAND’S GDP GROWTH 4

•FIGURE 2 PROJECTION OF RUBBER PRODUCTION OF THAILAND UP TO YEAR 2020 5

•FIGURE 3 THAILAND’S NR PRODUCTION (1983-2006) 6

•FIGURE 4 THAILAND’S NR PRODUCTION BY TYPES 7

•FIGURE 5 PRODUCTION DISTRIBUTION BY TOTAL PLANTED AREAS 8

•FIGURE 6 PRODUCTION DISTRIBUTION BY TAPABLE AREAS 9

•TABLE 1 REPLANTED AREAS IN RECENT YEARS 10

•TABLE 2 GOVERNMENT SPONSORED NEW RUBBER PLANTING PROJECTS 11

•FIGURE 7 TOTAL OF THAILAND’S NR EXPORTS 12

•FIGURE 8 THAILAND’S NR EXPORTS BY TYPES 13

•FIGURE 9 THAILAND’S NR EXPORTS BY COUNTRIES 14

•FIGURE 10 THAILAND’S NR EXPORTS BY PORTS OF LOADING 16

•FIGURE 11 INCOME FROM NR EXPORTS 18

•FIGURE 12 DOMESTIC CONSUMPTION OF NR BY TYPES 19

•FIGURE 13 DOMESTIC CONSUMPTION IN TERMS OF TOTAL PRODUCTION 20

•FIGURE 14 DOMESTIC CONSUMPTION OF NR BY TYPES OF PRODUCT 2006 21

•FIGURE 15 THAILAND’S EXPORTS OF RUBBER PRODUCTS 2006 22

•FIGURE 16 IMPORT VALUE OF RUBBER PRODUCTS INTO THAILAND 2006 23

•TABLE 3 THAILAND’S SYNTHETIC RUBBER PRODUCTION, EXPORTS, IMPORTS AND CONSUMPTION 24

•TABLE 4 NUMBER OF RUBBER LICENSED DEALERS, PROCESSING FACTORIES, NURSERIES AND LICENSED LABORATORIES (CONTINUED)

27

•TABLE 5 THE DOWNSTREAM RUBBER INDUSTRIES (CONTINUED) 29

FIGURE AND TABLE’S PAGEFIGURE AND TABLE’S PAGE