The importance of Thai Rubber
Rubber is a very important industrial crop for Thailand, both for the local consumption as well as the global market. The major export markets for Thai rubbers are Germany, China and Japan, with the export value of US$ 134.9 billion in 2008.
Since Thailand has a large number of rubber plantations, a large quantity of rubber can also be produced. Most rubber plantations are in the southern part of Thailand and are likely to expand further. However, Thailand is still facing both internal and external obstacles that affect the wide range of Thai rubber industry.
Obstacles for the Thai rubber industry
Internal factors: The crises in Thai government cause a sharply rising rubber prices and the volatility of latex production. Like for any commodity crops, rubber farmer tends to plant rubber when the rubber price is high and plant palms or other vegetables instead when the rubber price is dropped down which cause the instability of raw material input to the plants. When the investors were not convinced, it will affect the economic in the whole area.
Marketing of Thai entrepreneurs to build credibility and investor confidence leading to use the natural rubber as a raw material feedstock is not effective. While some products such as rubber tires, landing gear wheel require creditable brand and reliability.
Zoning law enforcement has not been properly as buildings are still appear in the area provided for the cultivation and deforestation is also occur in those area.
Policy Management and the government projects have no flexibility and change according to each.
External factors: The demand for rubber in China is increasing because of the expansion of the automotive industry. China has chosen to expand the rubber planted area in their country or imported from neighboring countries with lower transportation costs and wages such as Laos and Vietnam instead of importing from Thailand.
Another major problem is the union of the ASEAN Economic Community (AEC) in 2015 that allow the investment liberalization among member which might change the rubber investment from Thailand to the lower costs countries. Beside, the low-cost products competing might be another problem to be concerned.
Reference: The Office of International Economic Industrial June 2011