Logo of Phnom Penh Post newspaper Phnom Penh Post - Business Insider: Rubber firm expands processing power

Business Insider: Rubber firm expands processing power

General manager of Socfin, Jef Boedt, at his office in Tuol Kork in 2016.
General manager of Socfin, Jef Boedt, at his office in Tuol Kork in 2016.

Business Insider: Rubber firm expands processing power

Europe-based international rubber firm Socfin is nearing completion on its first rubber processing factory in Cambodia’s Mondulkiri province. The Post’s Hor Kimsay spoke with Socfin General Manager Jef Boedt about the upcoming venture, the rubber sector’s problem with widespread rubber smuggling and the future of industry in the Kingdom.

You have unveiled plans to operate your first rubber factory this April. What can you tell us about the factory?
Today, 95 percent of the construction work of our factory is completed. The remaining 5 percent covers the final touches such as commissioning, testing and fine-tuning. Overall, we invested $5.7 million in the construction of the facility.

Upon completion, our factory will be able to process 16,000 tonnes of dry rubber per year. This is more than enough to cover our own field production and give us leverage to purchase the production of local smallholders, hence creating a long-term market for them. We have also designed the factory in such a way that it gives the opportunity to enlarge the processing lines and stocks if needed. This is an option for the future and will depend on the activities in the coming years.

Why did you decide to set up your own processing factory? How does this help your business?
Setting up our own factory has always been an integral part of our master plan. It will give us the opportunity to be independent and in full control of our own process (from harvesting on the field to processing and selling) and will help to maximise the return on our investment and future profits.

It is also part of our commitment to contribute to the development of infrastructures in Cambodia. Authorities have called for the development of more facilities to process raw materials such as rubber and cassava in order to reach the country’s development goal by 2025 and increase the value of the products it exports.

Does Socfin’s factory benefit family rubber farmers nearby?
Since the start of our activities (and as in all the countries we operate in) emphasis has been laid on integrating the local communities in our operations and sharing the benefits of our operations in the country. This is achieved by bringing in administrative and physical infrastructures, as well as with high investments in the area where we operate.

We already have a program integrating family rubber farmers in our activities. We provide them with training and technical assistance for technology transfer as well as with planting material. We currently work with around 50 smallholders through this project which are progressively starting producing rubber on their plots. Our factory will be in line with this commitment as it will provide a market for local smallholders as there is only one other rubber factory in Mondulkiri.

Are you worried about fluctuations in rubber prices, like those we’ve seen in the recent past? And do you expect prices to go up, down, or remain stable in the near future?
As a rubber producer company, we always hope that we can sell our product at the highest price. Unfortunately, there are fluctuations in prices, but this is not different for many other commodities. The rubber sector has always experienced fluctuations in prices as they depend on supply and demand from the sector. As a long-term investor with experience in our activity we have, through our history, faced ups and downs in the rubber industry. This is the kind of scenario we are well prepared for.

It is very difficult to say where the rubber prices are heading, but in my opinion, the probability of pricing going up are higher than the prices going down. They will most probably fluctuate between $1,400 and $1,600 per tonne in the coming months.

Despite an increase in rubber exports, widespread smuggling on the Vietnamese border has crippled potential profits for larger rubber producers. Does smuggling worry you or hurt the profits of your plantation?
Unfortunately, a lot of Vietnamese rubber traders are doing business around the boundaries of the different countries. As they are providing illegal business, they can operate with profit margins that are difficult to compete with. This situation gives them the opportunity to offer higher prices to the rubber sellers who get a price for their product that does not represent the real market prices. These activities are unhealthy for the country and for the rubber business as they can be deemed as illegal activities.

Of course for us, as a responsible rubber producer, it is difficult to compete with these illegal activities. We try to establish a bench market and hope smallholders who partner with us choose security and long-term partnerships instead of trading on the black market which is not sustainable for their future.

This interview has been edited for length and clarity.

MOST VIEWED

  • PM: West unfair to Cambodia

    Prime Minister Hun Sen released a message celebrating the International Day of Peace on Monday, saying that some major powers and western countries had been systemically cooperating to put political pressure on Cambodia as they did in the 1970s and 1980s. Hun Sen said pressuring

  • First ‘mobile kitchen’ in Cambodia enters service

    A catering company recently rolled out Cambodia’s first “mobile kitchen” – a $50,000 container capable of serving up to 200 people at a time. The kitchen is the brainchild of Seng Hok Heng Catering Services. At 4.4m-high, 6.8m-long and 2.4m-wide (expandable to 6.8m), the kitchen is equipped

  • Kingdom, China rebut basis for US sanctions

    The Council for the Development of Cambodia, the Ministry of Foreign Affairs and International Cooperation, and Tianjin Union Investment Development Group Co Ltd (Tianjin) have responded to US sanctions on Union Development Group Co Ltd (UDG), a Chinese-owned company currently developing the sprawling $3.8 billion Dara

  • ‘Bad news is an investor’s best friend’ – unlocking investment potential in Cambodia

    It is time to shop. Economic woes provide good pickings for investors if they know where to look The poem If, written by English Nobel laureate poet and novelist Rudyard Kipling for his son circa 1895, is widely perceived as fatherly advice for John who would

  • Influenza breaks out in eight provinces

    Nearly 600 people have been infected with influenza in eight provinces in the past month, Ministry of Health spokesperson Or Vandine said. The ministry is advising extreme caution. A report released by Vandine on Saturday said the Ministry of Health observed transmissions of influenza between August 15

  • PM requests Russia’s Covid vaccine

    Prime Minister Hun Sen has requested that Russia provide Cambodia with its Covid-19 vaccine after the former announced it planned on mass vaccinating its population next month. The request came on Thursday through the prime minister’s Facebook page as he met with Anatoly Borovik,