Vietnam Rubber Group vexes local rubber manufacturers

Despite Vietnam can product raw rubber, local rubber makers still have to import raw rubber from abroad to deal with domestic material shortfalls as the Vietnam Rubber Group’s “unprofessional operation”, the firms blamed.


Last year, Da Nang Rubber JSC imported around 13,000 tons of raw rubber, while the Hanoi-based Sao Vang and the giant Casumina bought 8,000 tons and 20,000 tons respectively from foreign countries.

The Vietnam Rubber Group, known as VRG, three months earlier made a bad deal, signing an exporting contract of raw rubber with a price of around US$3,000 per ton before the global price surged to $4,300 soon later, rubber companies said.

The group also failed to estimate the shortfall in raw rubber output last year, leaving it struggling to meet with the amount required in the contract, the firms said. 

Therefore, efforts to save enough raw rubber for the shipment have seen VRG raise the domestic price around $100 higher than the global ones to prevent local firms’ buying, the local companies blamed.

“Enterprises holding more than 50 percent of the output control the market, according to the Anti-Monopoly Law. VRG is holding a large part of the country’s output, so it is responsible for the domestic supply. It should have sold raw rubber at international prices at least,” said Casumina’s deputy general director Le Van Tri.

Local manufacturers importing raw rubber have to pay an additional tax of 5 percent to as protectionism for VRG, Tri added.

The conflict between VGR and local manufacturers showed a bad cooperation of domestic suppliers and producers, which slows down the industry’s growth, analysts said.

Experts expect the natural raw rubber demand will increase around 35 percent in couple of years as the auto makers around the world are recovering from the recession.

They also estimated in the next decade, the auto industry will require around 14 million tons of raw rubber per year, while the global output reach 10 million tons per year only.

Statistics show Vietnam ranked fifth in the world for its plantation rubber area and fourth in quantity of natural rubber export.

“Export turnovers of rubber in the period between 2006 and 2009 are pretty high, reaching more than $1 billion. Rubber is among Vietnam’s 13 commodities with over-$1-billion turnovers. The export turnover in 2010 will likely to reach more than $2 billion as the rubber price surged to $4,300 per ton,” said Le Quoc Trung of the Ministry of Industry and Trades.

Latest reports show the natural rubber output has increased to 700,000 tons per year since 1996, of which VRG makes 400,000 tons and farmers produce the rest.

By Yen Lam – Translated by Vu Minh

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