Market Size and Potential Growth
Total sales of rubber sector is US$4.16bn in 2012. Vietnam’s natural rubber sector has little organic growth in the next few years. Most listed rubber companies are facing declining plantations as they can be too old or replanted areas are not ready for yielding. The revenue growth can only come from increasing rubber prices, which Vietnam has no impact or influence on.
Plantation & processing is the largest segment amounting to US$3.36bn, mainly from export. Manufacturing is just US$0.8bn with few players namely Dang Nang Rubber JSC, Casumina JSC, Sao Vang Rubber JSC. 85% of processed rubber materials is exported and the rest 15% is used for domestic manufacturing of rubber end-products.
Domestic Key Players
VRG is currently managing 333,235 ha rubber trees throughout the Indochina peninsula, including 262,627 ha in Vietnam and 70,608 ha in Laos & Cambodia. VRG currently has 44 factories and processing units, total capacity is 433,000 tons/year. VRG’s products are exported to about 70 nations, accounting for 70% total exporting rubber of Vietnam. GMD and HAG are private players tapping in this segment. While HAG has been increasing huge fund of rubber plantation land (43,500 ha), GMD currently has only 4,000 ha and considering to sell its rubber business.
Rubber is a commodity based sector i.e. profitability of plantation players depends heavily on the fluctuation of global rubber prices. Productivity also depends on the age of rubber trees.
There are no foreign ownership restriction in a rubber business companies if it is not a public company. For SOE rubber companies, maximum foreign ownership is also 49%. However, for any new investment license in rubber plantation areas, it is subject to a careful review and approval of Ministry of Defence, Ministry of Public Security and Ministry of Natural Resources and Environment (Decree 108/2006).
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