Transcript COUNTERMEASURES OF VIETNAM RUBBER INDUSTRY

THE COUNTERMEASURES STRATEGY
ADOPTED BY VIETNAM RUBBER INDUSTRY
AGAINST GLOBAL ECONOMIC CONSTRAINTS
The 1st Qingdao International Natural Rubber Forum,
April 2nd 2009, Qingdao CHINA
Session “How rubber businesses should act under the
global financial storm?”
Presentation by
Dr. Tran Thi Thuy Hoa
Secretary General
The Vietnam Rubber Association
TREND OF VIETNAM ECONOMY:
KEY INDICATORS
2004
7.7
2005
8.4
2006
8.2
2007
8.5
2008
6.2
Agric.
%
21.8
20.9
20.4
20.3
22.0
Industry
%
40.2
41.0
41.6
41.6
39.9
Services
%
38.0
38.1
38.1
38.1
38.1
GDP
growth%
Source: General Statistics Office of Vietnam
Vietnam Rubber Association – Qingdao, 2 April 2009
TREND OF VIETNAM ECONOMY (1)
• The global financial crisis and economic recession
have affected markets worldwide. It is predicted that
world economic situation cannot recover quickly and
consuming markets could be restricted until 2010.
• Vietnam’s economy grew about 8% from 2004 to
2007, but only 6.2% in 2008. GDP growth rate in the
first quarter 2009 reached 3.1%, only half of the level
recorded in the same period of last year. Vietnam
would suffer stronger impacts from the slowdown of
world economy this year.
• Vietnam’s GDP would drop to 4.7% according to the
predict of IMF in March 2009.
Vietnam Rubber Association – Qingdao, 2 April 2009
TREND OF VIETNAM ECONOMY (2)
• Until now, agricultural products still play an
important role in Vietnam’s economy. This
sector shares around 20% – 22 % of the
general domestic product value.
• The share of industrial sector is about 40%42% and the share of services sector is 38%.
Vietnam Rubber Association – Qingdao, 2 April 2009
TREND OF VIETNAM RUBBER INDUSTRY
• Natural rubber was the 9th exported commodity in
2008 and the 3rd exported agricultural products,
behind rice and coffee.
• As a natural rubber (NR) producing country, Vietnam
has been strongly affected by the downward trend in
global rubber demand and declined prices beginning
in late 2008 till now.
• The current economic crisis impacts on automobile
consumption which pulls the slowdown of tyre
production and rubber demand. Besides this, prices
of natural rubber and synthetic rubber cannot
increase to high levels when crude oil prices are still
at low levels.
Vietnam Rubber Association – Qingdao, 2 April 2009
Trend of Rubber Area and Production in Vietnam,
1976 - 2008
The area and production of rubber plantations have been
increased continuously since 1976. In 2008, this sector reached
618,600 ha and 662,900 tons. NR productivity was 1661 kg/ha.
700,000
600,000
500,000
400,000
Ha
Ton
300,000
200,000
100,000
0
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: GSO, compiled by VRA
Area and Production of
rubber tree in Vietnam, 2007
NORTHWEST: 700 ha (0.1%)
2008: 4,600 ha
COASTAL REGION: 55,150 ha (9.7%)
1,173 kg/ha
The biggest rubbergrowing area is
located in the SE,
following areas are
in Highlands and
Coastal region.
New area has been
in NE.
/
22,700 tons (3.8%)
HIGHLANDS: 126,500 ha (22.7 %)
1,360 kg/ha / 106,560 tons (17.7%)
SOUTHEAST: 374,950 ha (67.4%)
1714 kg/ha / 472,400 tons (78.5%)
TOTAL: 556,300 ha
601,700 tons
Area and production by sector, 2007
In Vietnam, state-owned rubber companies still dominate so far over
area, production and productivity. Rubber smallholding has been
encouraged to develop recently and would catch up 50% of the total
area soon as the Government strategy.
Sector
Estate
Smallholding
Total
Ha
Ton
kg/ha
301,800
398,100
1716
(54%)
(66%)
(106%)
254,500
203,600
1441
(46%)
(34%)
(90%)
556,300
601,700
1612
Source: Provincial Dept of Agriculture, compiled by VRA
Trend of NR export from Vietnam, 1990-2008
NR export of Vietnam has been increased continuously in value but
dropped 8% from 2007 in volume, reached 619,300 tons (drc).
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
0
Tons
USD/10T
000 USD
Source: General Statistics Office and MOIT, compiled by VRA
Trend of NR Export Prices from Vietnam in
2008 and 2 first month of 2009
3500
3000
USD/ton
2500
2000
1500
1000
500
0
Jan08 Feb08 Mar08 Apr08 May08 Jun08 Jul08 Aug08 Sep08 Oct08 Nov08 Dec08 Jan09 Feb09
Source: Customs Office, compiled by VRA
Trend of NR Export Volume from Vietnam
in 2007 and 2008
NR export of Vietnam has been dropped 8% from 2007 in volume due to
slowdown demand.
90,000
80,000
70,000
Ton
60,000
50,000
2007
40,000
2008
30,000
20,000
10,000
0
1
2
3
4
5
6
7
8
9
10
Source: General Statistics Office and MOIT, compiled by VRA
11
12
Vietnam NR Export by country in 2008
China has been the NR biggest importer of Vietnam sharing 69 % of the
total NR export in 2008. Other predominant importers were Korea,
Germany, Malaysia and Taiwan which shared about 3-4% per each.
Others
18%
Taiw an
3%
Malaysia
3%
Germ any
3%
Korea
4%
China
69%
Source: Ministry of Industry and Trade, compiled by VRA
Vietnam NR Export by type in 2008
The major type of
the NR export was
SVR 3L (48%),
followed by SVR
10 (16 %) and latex
concentrate (9%)
SVR 5 Others
1%
16%
SVR 20
2%
SVR CV
3%
SVR 3L, L
48%
RSS
5%
Latex
9%
SVR 10
16%
Source: Ministry of Industry and Trade, compiled by VRA
Vietnam NR Import by country, 2008
Total: 150,100 tons
Vietnam imported NR from
other countries for re-export
and domestic consumption,
mainly from Thailand (49 %),
Cambodia (26 %), Indonesia
(17 %) and others (8%).
Others
8%
Indonesia
17%
Thailand
49%
Cambodia
26%
Source: Ministry of Industry and Trade, compiled by VRA
NR domestic consumption in Vietnam
• NR domestic consumption in Vietnam is still low,
80,000 – 100,000 tons/year, accounting 12 - 15 % of
the total production.
• Value of Rubber Products made in Vietnam was
estimated about US$ 300 million, which total export
tunrnover was about US$ 100 million in 2008.
• The main rubber-based products are tyres and tubes
produced for commercial vehicles, motorcycles and
bicycles (70% of total value). Other rubber products
are gloves, mattress, technical rubber products,
shoe soles, conveyor belts, sport balls, rubber
bands, mats, …(30% of total value).
COUNTERMEASURES OF VIETNAM
RUBBER INDUSTRY
In response to the sharp decline in NR prices and
demand, the Vietnam Rubber Association (VRA) has
recommended the following countermeasures
against global economic constraints, which should
be implemented in 2009 in order to minimize
damages of NR producers:
•
•
•
•
Reducing NR production and export volume
Reducing cost of production
Improving quality of rubber products
Stockpiling natural rubber
Vietnam Rubber Association – Qingdao, 2 April 2009
COUNTERMEASURES OF VIETNAM
RUBBER INDUSTRY (1)
• Reducing NR production and export volume
Speeding up replanting program is one of measures
to reduce production, to compensate rubber income
by wood income and to maintain jobs of labors, to
have opportunities to use high-yielding clones and
take full advantage of low prices of input in this
period. Production cut-down will lessen pressure on
pushing down prices deeper. Other measures would
be applied such as reducing tapping intensity or
frequency and late opening newly mature plantations.
Vietnam Rubber Association – Qingdao, 2 April 2009
COUNTERMEASURES OF VIETNAM
RUBBER INDUSTRY (2)
• Reducing cost of production
Expenses to be cut or restricted will reduce
production costs to avoid loss when turnover would
be declined in this period. Current low prices of
fertilizers and inputs will contribute to reduce rubber
production costs in 2009-2010.
Vietnam Rubber Association – Qingdao, 2 April 2009
COUNTERMEASURES OF VIETNAM
RUBBER INDUSTRY (3)
• Improving quality of rubber products
Customers will be more and more exigent in narrow
consuming markets and will prioritize high quality
products or materials from reliable producers;
therefore, consistent quality products must be given
care.
Vietnam Rubber Association – Qingdao, 2 April 2009
COUNTERMEASURES OF VIETNAM
RUBBER INDUSTRY (4)
• Stockpiling natural rubber
In case the NR trading prices in domestic markets
below 1,000USD/ton or the NR export prices fall
below 1,350USD/ton, state-owned companies and
VRA’s members would be encouraged to cut rubber
export and buy smallholders’ natural rubber for
stockpile. The downward NR export volume could
be amounted from 100,000 to 200,000 tons (15 – 30%
of the total production) according to the demand
and prices.
Vietnam Rubber Association – Qingdao, 2 April 2009
Long-term responses to the impact of
NR prices downturn
• In long-term responses to the impact of NR prices
downturn, planters are encouraged to increase the
productivity of rubber plantations by using high
yielding clones, advanced techniques in planting
and upkeeping, high effectively tapping systems to
improve the productivity of tappers.
• The additional incomes for planters should be more
focused such as intercropping, rearing and wood
for furniture.
• New potential opportunity to improve the rubber
planters’ income should be implemented as rubber
planters contribute to reduce the impact of the
climate change through carbon sequestration by
rubber plantations.
Vietnam Rubber Association – Qingdao, 2 April 2009