China/Cambodia tie up in US$1 bn rubber/tyre projects

China/Cambodia tie up in US$1 bn rubber/tyre projectsThe influx of Chinese investment into Cambodia was given a boost with the recent collaboration between the Cambodian government and the Chinese National Engineering Research Centre for Rubber and Tire (Nercrat). The partnership is set to bring a new level of stability to the market, potentially reducing the country’s reliance on global exports of raw latex in the coming years. Nercrat, located in Qingdao, Shandong province, is an R&D centre dedicated to advanced technology in the rubber and tyre industry.

Sun Chanthol, first vice-president of the Council for the Development of Cambodia (CDC), led a delegation from the private sector to meet with various Chinese companies, particularly in the tyre industry, during a recent visit. The parties also entered into an memorandum of understanding (MoU) with the research centre to enhance Cambodia’s rubber industry.

The centre expressed its intention to invest US$1 billion in priority projects within the sector, as per a recent CDC statement.

The council reported that Cart Tire Co Ltd is setting up a factory in Svay Rieng province, making it the first tyre manufacturing venture in the country with an initial investment exceeding US$350 million.

The company plans to increase capital investment to US$700 million across approximately 120 ha of land.

The expansion aims to bolster exports to major markets, including the US, Canada and South Korea.

It will not only boost production but also enhance the quality of rubber latex to meet the demands of local tyre-processing plants.

According to Him Aun, head of the General Department of Rubber, the country currently has three tyre-processing plants.

These include Newbustar (Cambodia) Tire Co Ltd, a subsidiary of the Chinese state-owned Doublestar Group, which invested US$138 million in a Kratie province factory; General Tires Technology (Cambodia) Co Ltd, with an investment of about US$300 million in coastal Preah Sihanouk; and Cart Tire Co Ltd, which invested US$350 million in Svay Rieng.

CDC has also recently approved two additional tyre-processing factories, signalling further investment in the sector this year.

Last year, the government announced plans to extend tax incentives for rubber exports for another two years, starting January 2024.

The move aims to support cultivation and assist growers and exporters amid falling international prices. The new regulations stipulate that exports will be exempt from tax if the price of rubber falls below US$1,600 per tonne.

The sub-decree outlines varying duty rates for other scenarios based on current price and export value.

Recent data from the rubber department showed that between January and November, the country earned US$445 million from rubber exports and an additional US$1.5 million from rubber wood.

In November, rubber was priced at US$1,333 per tonne, a 7.7% decrease compared to the same period in 2022, while rubber wood was valued at US$231 per cu m.

Cambodia’s current total rubber cultivation area spans 404,578 ha, with 78% (315,332 ha) dedicated to latex production and the remaining 22% (89,246 ha) under maintenance.

The export of latex and rubber wood in 2022 exceeded US$531 million, with exports contributing US$527.8 million to the total and rubber wood exports accounting for US$4 million, according to the General Department of Customs and Excise (GDCE).