Hainan Rubber to invest US$300mn into two rubber trade zones in Sri Lanka

Chinese company Hainan Rubber Industry Group (Hainan Rubber) will collaborate with Sri Lanka’s Plantation Industries Ministry to set up specialised rubber-based free trade zones in 2020 in Sri Lanka’s Kegalle and Kalutara districts. Hainan Rubber expects to purchase a significant portion of local rubber production, as part of the US$300 million deal,to manufacture rubber products which will later see export to China.

According to Plantation Industries Minister, Navin Dissanayake,the ministry has already signed a MoU with the Executive Governor of People’s Government of Hainan Province, Dr. Shen Danyang. The MoU is aimed at rejuvenating Sri Lanka’s ailing plantation sector that includes tea, rubber, coconut, and sugarcane and related industrial value chains. Hainan Rubber is likely to enter Sri Lanka’s plantation sector mid next year and has expressed strong interest in certain projects in Sri Lanka’s Rubber Industry Master Plan (RMP) – 2017-2026.

The Plantation Industries Ministry thus expects Sri Lanka’s low rubber yields to elevate from the current 800 kg/ha to at least 2,000 kg/ha by securing investments and technology transfers courtesy of Hainan Rubber.

Meanwhile, Hainan Rubber, through Ernst & Young China, is in negotiations with Regional Plantation Companies (RPCs) to set up joint ventures, which would allow a significant boost to the current low yields in RPCs.

Hainan Rubber is a subsidiary of Hainan State Farms, the largest State-owned agricultural enterprise in China – it has recently acquired several plantations and plantation-related firms across South-East Asia to source materials for value-added rubber exports for the Chinese market.