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Slow rubber market puts law on back burner

Slow rubber market puts law on back burner

The Ministry of Agriculture, Forestry and Fisheries has postponed the finalisation of a draft rubber law amid declining rubber prices, according to a senior official.

“It is not a good time to put more regulations or requirements for producers to follow.

[Because] the price of rubber is declining, we will wait until the price bounces back to have the law approved,” said Ly Phalla, undersecretary of state at the Ministry of Agriculture, Forestry and Fisheries.

Under the draft law, producers must be more selective in choosing the type of rubber for plantation and only processed rubber can be exported.

Phalla stated that this will ensure that Cambodia produces quality rubber and encourages processing in the industry.

The price of rubber has declined from $4,500 per tonne on average in 2011 to between $1,800 and $2,000 per tonne in 2013 up to now.

The declining price is attributed to the shrinking demand of rubber globally, especially in China.

Sliding natural rubber prices last year prompted the governments of Thailand, Indonesia and Malaysia, with additional help from Cambodia, Laos, Myanmar and Vietnam, to reduce supply.

The seven countries, which account for more than 70 per cent of global natural rubber production, met in October to discuss the exports cap.

Another regional meeting of 11 rubber producing countries is expected to take place in Siem Reap this October.

The countries are expected to come up with strategies to encourage the dropping price to rebound, according to Phalla.

“The draft is expected to be finalised and submitted [to the Council of Ministers and then the National Assembly] for approval after the meeting in October, and it will likely be adopted by 2016,” he said.

Men Sopheak, vice director-general at the CHOB rubber plantation, said he welcomed the idea to improve standards for the whole industry.

However, he urged the government to gather more input from the private sector before adopting the law.

“It is good that we have regulations to improve industry standards. But for the growth of the industry, we have to make sure the law will not become a restriction or challenge for the private sector,” he said.

“If possible, there should be meetings between the government and private sector to discuss more on the law before it is approved to make sure the law serves the interest of industry.”

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