South-east Asia rubber sector needs consolidation

Subject

South-east Asia's rubber industry.

Significance

Restrictions imposed by the four leading natural rubber exporters to boost prices have entered their second month. The moves are intensifying efforts by buyers to seek alternatives to their longstanding suppliers in South-east Asia. Low global prices have driven thousands of tappers from the industry throughout ASEAN member countries and could lead to supply shortages within a decade as ageing plantations are not being replanted quickly enough.

Impacts

• Automobile firms may invest more in research into more efficient production and rubber alternatives.
• Consolidation of plantations will bring needed investment but also risks social conflicts over land rights.
• Increasing agricultural efficiency could provide opportunities for logistics, courier and perhaps automation firms.