"Rubber City" to spur investment in Deep South

Insurgent violence has prevented the troubled southern provinces of Thailand from reaping the full economic benefit of the rubber trade. A planned new industrial park could help change that.

By Somchai Huasaikul and Thongchai Nasamila for Khabar Southeast Asia in Phuket

July 02, 2013
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Leaders in the Thai rubber industry are pushing to build a "Rubber City" industrial estate in Songkhla province as a way of spurring investment and helping to foster peace in the insurgency-torn Deep South.

  • A rubber tapper in Songkhla's Namom district prepares to leave work after an overnight shift. Industry leaders want to build a

    A rubber tapper in Songkhla's Namom district prepares to leave work after an overnight shift. Industry leaders want to build a "Rubber City" along the border with Malaysia in an effort to boost the Deep South's economy and bring peace to the region. [Sanda Nasamila/Khabar]

News of the project was made public at a gathering of rubber industry experts at the ASEAN Rubber Seminar in Phuket earlier this year. In late May, a working committee decided to move forward and hold discussions with counterparts in Malaysia.

Pongsak Kerdvongbundit, Honorary President of the Thai Rubber Association, told Khabar Southeast Asia the project will help build prosperity in a part of the county that has been seriously affected by insurgent violence.

Rubber production in Yala, Narathiwat and Pattani comprises only about 15% of the total production in Thailand. Despite being almost ideally suited for rubber plantations, the insurgency has stifled investment in the region, Pongsak said.

The new industrial park promises to help change that. It will be built on a plot of land, owned by Tradewinds (Malaysia) Sendiran Berhad, near the new border checkpoint at Ban Prakob, Nathawee.

According to Pongsak, there is also a great deal of support in Malaysia, which imports 400,000 tonnes of Thai rubber annually. Tradewinds would benefit from an increase in value of its landholdings. Furthermore, buyers operating inside the estate would be exempt from a rubber export tax known as Cess.

"If we do this combined project, Malay producers that invest will enjoy cheaper raw materials from Thailand. As for tax breaks, both countries are committed to a tax holiday of at least eight years if the project goes forward," Pongsak said.

He said his own firm – Von Bundit Corporation -- had no interest in benefiting directly from the project. The company is the largest rubber producer in Thailand, the country with the highest production volume in the world.

"As Thais, we would like to donate our time to help bring peace to the region. This is the point of the project, to help the Deep South," he said. "It's like a form of CSR (corporate social responsibility). We are trying to get co-operation from organisations across the globe to help try and bring peace [to the region]."

Pichet Pramoon, of the Rubber Research Institute of Thailand, said development would benefit not only the Deep South region, but the natural rubber industry throughout ASEAN.

"Any project that increases demand for natural rubber is good for the rubber-producing countries, not just Thailand but also Malaysia, Indonesia and Vietnam. It is good for the natural rubber industry on the whole," he said.

Pichet said he was not concerned about security-related issues in Nathawee, but stressed that the project is still only in the planning stages and that alternative sites are still under consideration.

According to Pongsak, the new Rubber City could serve as a pilot project for ASEAN. He says he would like to eventually see similar ventures set up along the Thai border with other countries as part of a broader ASEAN effort to increase economic integration in the region.

The government has also voiced its support for the initiative. Speaking to the press in April, Thai Deputy Minister of Agriculture Yuthapong Jarassathian said his ministry and its counterparts in Malaysia support the provision of tax incentives for entrepreneurs who operate in the planned industrial park.

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