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Logo of Phnom Penh Post newspaper Phnom Penh Post - Rubber industry dying

Rubber industry dying

CHUP - In Cambodia's oldest rubber plantation, the last remains of a once great industry

trickle slowly from the towering trees.

The bitter scent of latex, which once made great fortunes here, fills the air in

the aging forest.

The Cambodian rubber industry, once among the world's most productive, is collapsing

under the weight of poor management, corruption and little investment in new trees,

analysts say.

Unless the government revives the industry through privatization, rubber production

is expected to dry up within 10 years - an inglorious end for a formerly lucrative


In the 1920s, a French group called the Compagnie du Cambodge started Cambodia's

first rubber plantation on the red soils of Chup.

Other firms soon flocked to Cambodia's ideal climate, and for many years they produced

among the world highest yields per hectare (2.4 acres) - about two tonnes per hectare

for a total of 200,000 tonnes of rubber annually, say officials.

But in the aftermath of war and Khmer Rouge era, the neglected plantations went under

state ownership, during which the six state companies planted few new trees.

Today, Cambodia's aging trees - one quarter of which are more than 40 years old -

produce less than 40,000 tonnes of dry rubber per year from 61,000 hectares according

to state documents, and annual yields are expected to drop about 2,000 tonnes.

While 93 percent of the world's rubber comes from Asia, Cambodia's share of the market

has dropped to 0.6 percent of production, according to Commerce Ministry statistics.

At Chup, trees date back to the 1920s, with most at least 40 to 50 years old - far

beyond the usual 25 to 30 year limit when they are cut and replanted.

"If Cambodia continues as it has, in the 10 years there will be no more production

of rubber," says one rubber expert.

Most analysts say privatization is the answer for Cambodia's rubber industry, and

international donors such as the International Monetary Fund have recommended it.

At least three firms have tried unsuccessfully to rent state plantations.

"In principle, we have decided to privatize," says Kaing Leang Khan, deputy

director of state property at the Finance Ministry, but he concedes there has been

little progress.

Part of the problem is that most state companies resist the idea.

"In my opinion, we have no need to privatize," said Mak Kim Hong, director

of the state's Chup Rubber Co., noting his firm made $3 million in profit in 1996.

As long as plantations are in government hands, say analysts, little new investment

in planting is expected.

While the wood from old rubber can fetch $1,500 per tonne and its signature white

color is highly popular, felling the trees would put about 20,000 rubber trappers

out of a job.

State owners would have to wait seven years before new trees could begin to be commercially

viable, says Kaing Leang Khan.

Opposition leader Sam Rainsy says corruption is another reason for resistance to

investment and privatization. He thinks state rubber companies should be generating

$30 million per year for the government, but notes little has found its way into

state coffers.

"Where is the money? Where has it gone?" he asked.

Officials at the Finance Ministry concede no rubber money went to the government

in 1995 and less than one million was received in 1996, though they deny any high-level


But all officials concede there is corruption on a small scale. Second Prime Minister

Hun Sen has spoken out against people in the countryside notorious for stealing latex

at night, and Mak Kim Hong says others seize latex in transit from the plantations.

The lack of movement toward privatization and the dearth of new trees has cast gloom

on the industry, say analysts.

The French government spent 28 million francs ($4.4 million) helping to rehabilitate

the government's rubber cultivation, but has since ended the program.

Observers say the French were frustrated with the government's lack of movement on

privatization, but the French embassy declined to discuss the program other than

to say it had run its course.

Analyst say the result is that aging trees will soon dry up unless someone is allowed

to come in and plant in the estimated 330,000 of hectares ideal for cultivation.

Even the government realizes it may be the end of an era.

"The backlog in replanting needs to be cleared early with an accelerated replanting

program if a serious shortfall in production is to be avoided," said a recent

government report.

"(The) age structure of the tree stock...would not allow a sustained level of




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