Central rubber market expected after enactment of new rubber law in late 2018

22 ธันวาคม 2560

The drafting of a new Rubber Law, which aims to create a central rubber market and raise the export quality of Myanmar rubber, is close to three quarters complete and will be enacted in late 2018, U Khaing Min, secretary at the Myanmar Rubber Planters and Producers Association (MRPPA), told The Myanmar Times.

Myanmar is drafting fresh legislation which will lead to the establishment of a central rubber market once approved. It will control and release the market price for locally produced rubber, ensuring price stability and raising demand from foreign buyers. 

The central rubber market will also become the main platform on which local and foreign businesses can bid for rubber in Myanmar. Notably, it will facilitate the trade of local rubber and ensure producers are paid a fair price. This is expected to raise the quality of locally produced rubber and enrich the entire value chain over the longer term.

Details on the location for the central rubber market have not been revealed, but The Myanmar Times understands Mon and Kayin states as well as Taninthayi, Yangon and Bago regions, where rubber is mainly cultivated, are being considered. 

The new Rubber Law will also provide rules under which trade financing can be extended to rubber producers and funds raised to further develop the sector. “After enacting the law, funds will be raised for planters to replace non-producing trees with more productive ones,” U Khaing Min said.

Beneficial for all

The law, which has been in the works for 1.5 years, will be enacted in line with the country’s National Export Strategy, a five-year roadmap launched in 2015 to fuel sustainable development through trade promotion as well as policy and legislative changes. 

For the rubber industry, the aim is to promote local natural rubber and rubber products and raise the quality to be on par with international requirements. “The law is being drafted to develop the rubber sector,” U Khaing Min said. 

“The goal is for both large and small rubber planters to benefit from the Rubber Law. That is why we are taking time to draft it very carefully. The entire value chain from rubber production to product manufacturing and research is being considered under the new law,” he said.

U Khaing Min added that “the Myanmar Rubber Law is in the late stages of being drafted after the authorities studied equivalent legislation in India, Malaysia and Thailand.” Input by rubber businesses from Myanmar’s Regions and States have also been compiled and reviewed.

U Aung Myo, a rubber businessman from Dawei, Taninthayri Region, was among those who contributed suggestions. He said a rubber law should be enacted “as the existing one is very old and in effect since colonial rule. Going forward, the main area to reform is land utilisation.”

U Myint Soe, chair of Bago Region Rubber Producers Association, agreed. “Land issues and discrepancies between the Vacant Land Law and Farmland Law are major problems for rubber planters,” he said.

“I started planting rubber trees between 2007 and 2011. When I applied to the Union to approve a change in the land status from vacant land to farmland, it was approved within a week. However, inspections by the regional, district and township levels are still ongoing until now. It will be three years by next May. It is very difficult to operate in some parts of the country,” U Myint Soe said.

Cyclical sector

As a whole, insiders welcome the new rubber legislation. U Tun Htay, Mon State Minister for Agriculture, Livestock, Transportation and Communications, said the majority of locally produced rubber is of low and inconsistent quality, which forces local producers to become price takers during negotiations. 

So, a law that sets the stage for better rubber quality is welcome. It is also timely, given that demand is expected to rise in the coming years. 

According to U Myo Thant, major rubber producers like Thailand and Indonesia will soon be unable to supply sufficient quantities of rubber to tyre factories in China and other importing countries because their rubber saplings have not reached the right age for harvesting. 

Young sapplings typically take up to 7 years to mature.

Meanwhile, the International Tripartite Rubber Council comprising Thailand, Malaysia and Indonesia announced last month that it expects the ‘La Nina’ weather phenomenon to bring heavy rains to the region in the coming months which will affect production and supply of natural rubber to global markets. That will all raise demand for Myanmar rubber.

There is currently some 1.7 million acres of rubber plantation land in Myanmar. Around 700,000 trees are now at the right age for harvesting natural rubber. Myanmar rubber prices are currently around K800 per pound, which is higher compared to the last two years. The record high price was in 2004-2005 when rubber reached K 1,700 – K1,800 per pound.

As a result of Myanmar’s reliance on China, which buys around 80 percent of Myanmar rubber, industry losses amount to K400 million a year. The other importers of Myanmar rubber include Malaysia, Indonesia and Thailand. Myanmar exported 80,000 to 90,000 tonnes of rubber in 2015-2016 and 140,000 tonnes in 2016-2017.

 

(The Myanmar Times: https://www.mmtimes.com/news/central-rubber-market-expected-upon-enactment-rubber-law-late-2018.html )