Following factory closures in the footwear and garments industries, now Thailand's rubber producers face bankruptcy.
The growth of the automobile industry from the end of the nineteenth century stimulated the demand for rubber to make tyres. This led to one of the most significant changes of land use in world history. Within a generation, vast swathes of what was then British Malaya and southern Thailand were given over to rubber plantations. Migrant Chinese workers were brought in to work the plantations and the profits mostly returned to Europe. These days the plantations are worked for the best of domestic companies or the state and the workers migrant Burmese, officially present or not.
Thailand has become the world’s leading exporter of rubber, followed closely by neighbouring Malaysia and then Indonesia. Yet these are not very good times for the rubber industry. The price of rubber smoked sheet (the industry standard) has declined by around 35% over the course of a year, falling to just US$2,240 per tonne. Although overall demand for rubber is increasing around the world, and is likely to continue to do so alongside the rise in the world’s population, it is constrained by the rapid increase in the production of synthetic rubber. Synthetic rubber comes in at around US$300 per tonne cheaper than the real version and manufacturers appreciate the cost-saving. The only products now in large-scale production which require natural rubber are condoms and surgical gloves. Unless new areas of production requiring natural rubber are discovered in the next few years, rubber plantation owners are likely to face continued problems.
In the case of Thailand, this is far from the only problem and maybe not even perhaps the most significant. The baht, Thailand’s currency, has appreciated some 18% against the dollar over recent months and while the same trend has been seen in the Malaysian ringgit, it is less severe. Thai rubber producers have been put under pressure continually to reduce costs both to meet new competition and to meet cheaper competitors. It is estimated that approximately 70 rubber producing companies are currently at threat of closing their doors, which would add to the thousands of jobs lost in the country over the past few weeks in the garment and footwear industries. While government spokespersons speak in terms of some kinds of rubber marketing board, which will control marketing, distribution and R&D, this seems unlikely to be sufficient, especially given the resources likely to be devoted to the project. There seems to be no halt to the upwards rise of the baht, still less any credible explanation for the demand for the currency.
