Rubber industry investors in Cambodia are calling on the government to revise rubber export taxes as they face falling natural rubber prices, decreasing demand, and global economic slowdown.
Hean Mean Investment Co. chairman, Lim Heng, asks for consideration to bring down the export tax on rubber to help keep the industry afloat, suggesting that it should be reduced to zero if the total export price is below US$1,500. The current ceiling is US$1,000.
The government charges US$50 in tax duty per tonne of rubber exported if the price is from US$1,000 to US$2,000 and US$100 of tax duty per tonne of rubber if the export price is above US$2,000. If the price is below US$1,000, no tax is imposed.
In an interview, Heng said that the reason behind the call for the revision is because they are not making any profit and just meeting operation costs at the moment. The current export price per tonne of rubber is at US$1,300 and according to Heng, the cost of production per tonne of rubber is quite close, leaving them with very little profit.
Mong Reththy, a senator and co-chair of a private sector agriculture working group, also joined in urging the government to revise the current rubber export taxes for the industry’s survival. He said rubber prices are falling due to the global economy slowing down and China, being the biggest market for rubber, decreasing its imports.
Men Sopheak, the secretary-general of the Association for Rubber Development in Cambodia, said in an interview that rubber prices increased to US$1,500 per ton in April because it was the time when they stopped collecting and supply fell. Prices went up naturally when the demand increased.
Malaysia, Indonesia and Thailand are the world’s major rubber suppliers, accounting for around 70% of rubber in the global market. According to Sopheak, the three countries recently agreed to cut the rubber supply in the market for three months in the hopes of boosting demand and prices.
The price of rubber was about US$1,400 per tonne on average last year, but fell below US$1,050 per tonne this year. It was US$4,500 a tonne in 2011.
According to the figures from the country’s Ministry of Agriculture, Forestry and Fisheries, Cambodia exported 152,160.25 tonnes of dry rubber in 2015, up 55.5% from the 97,800 tonnes in 2014. The bulk of this, 129,425.62 tonnes, was exported to Vietnam, according to ministry reports.