Working towards greater community control over land, forests and natural resources

Rubber factories encounter export problem with China

Vientiane Times, 21 May, 2013

Rubber processing factories in Oudomxay province are facing unexpected problems because China is not allowing the import of rubber from Laos at the moment, causing large amounts of the material to remain in stock. Sino-Lao Rubber Company Director Mr Oun told the media recently that, after the company had invested in the building of a rubber processing factory, they encountered an export problem when China refused to allow imports of their rubber, forcing the factory to hold 270 tonnes of processed rubber, worth over one billion kip, in stock.

“If they do not allow the goods into China, all local people as well as the rubber growers will be affected because the factory will be forced to decrease the price it pays for the rubber. So all the business operators hope that they will receive immediate assistance from the relevant sectors to negotiate a solution,” he said.

Rubber is a major export product in Oudomxay province and its production has become a career for many local people. It helps to improve their standard of living and to solve the difficult issue of illegal narcotics growing also. Sino-Lao Rubber has encouraged the local people to grow rubber or purchase it from around the country for processing and export to China. After the company urged the people to grow more rubber, it decided to build a processing factory, which can produce 6,000 tonnes a year, to cater for the increased production.

The company’s secondary objective was to encourage the local people to stop growing narcotics like the opium poppy and change to producing rubber because it helps to generate a better and more reliable income and will give them a higher standard of living as well as strongly supporting the national socio-economic development policy. Mr Oun said that since almost the beginning of the year the company has encountered export problems when it couldn’t export to China the 270 tonnes of processed rubber they had in stock because they were told the product wasn’t allowed to be imported into China and, even if it was, the customs tariff would be raised.

“Now it has become a burden that the company has to shoulder because we must purchase rubber from the local people at market price. The company hopes that it will receive assistance from the relevant sectors to negotiate with China to accept the product so that we will able to export it and earn the income we need to use in the business. If this issue is not resolved quickly, the company will be forced to reduce the price at which it can buy the raw material, and limit the amount of rubber it can purchase in order to sustain its business,” he said.

He added that the company has plans to bring in a modern machine to use in the processing to increase its rubber production capacity and encourage the local people to grow rubber in more areas. The aim is to promote the rubber production industry in Laos to meet the anticipated demands of a market that will grow bigger in the next two years.

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