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Vietnamese Rubber Enterprise Federation to increase outlay by $200 million

THE Vietnamese Rubber Enterprise Federation (VREF) announced it would invest an additional US$200 million on planting rubber trees in Cambodia from 2009 to 2012, on top of a previous $600 million commitment, officials said Saturday.

The 14-member federation intends to plant a total of 100,000 hectares of rubber trees in Cambodia, its chief of governing council Le Quang Thung said at the ceremony for rubber plantings by Vietnamese firms Dong Nai and Dong Phou in Sambor district, Kratie province.

“We are happy to increase our capital for growing rubber in Cambodia, because we hope it will help the federation form strong infrastructure for long-term rubber plantations,” he said.

Le Quang Thung said the initial announcement for $600 million might be enough for operating the plantations, but it would not be enough to improve infrastructure in the area.

“We will use the additional amount to build roads, bridges, healthcare centres, schools and houses, so workers can access the areas companies are developing,” he said Saturday.

The VREF announced the initial $600 million investment to grow rubber when it was granted 100,000 hectares of land concessions in Kampong Thomg, Kratie, Stung Treng, Ratanakiri, and Mondulkiri provinces in 2009.

Cambodian Rubber General Directorate director general Ly Phalla said the increased investment, now totalling $800 million, was a positive sign for the VREF, as it would help create a strong basis to carry out its future plans, but that cooperation is still to be worked out.

“We are not yet aware of the degree of cooperation required to help the Vietnamese Rubber Enterprise Federation succeed in its plans to grow rubber in Cambodia, as we have not worked together yet.”

The VREF first revealed plans to grow up to 100,000 hectares of rubber in Cambodia by 2012 following an agreement last year between leaders of the two countries.

It said the group’s 14 companies planted rubber on 10,000 hectares as a first step in 2009, adding 20,000 hectares in 2010, 30,000 hectares in 2011, and 40,000 hectares in 2012.

Last year’s VREF planting took place on 10,500 hectares in Kratie, Kampong Thom, and Ratanakiri provinces.
Le Quang Thung added the Federation might expand future plantations in Cambodia pending future discussions.

“We will invest more on growing rubber in Cambodia if the country is able to give more economic land concession,” he said.

Minister of Land Management, Urban Planning and Construction Im Chhun Lim said the Cambodian government weighed forest loss against economic needs when granting concessions.

Firms investing in the domestic agro-industry created job opportunities, reducing poverty and boosting sources of income for the national economy, he said.

“We welcome the investment from Vietnam because it can help improve Cambodia to be as capable as other countries in the region.”
Low-quality rubber traded for $2,900 per tonne over the weekend, and high-quality rubber sold for approximately $3,800 a tonne.

The Vietnamese Rubber Enterprise Federation plans to be growing rubber on 200,000 hectares in Myanmar by the end of 2010, Le Quang Thung said.

In 2006, the federation also invested capital to grow rubber on a total of 100,000 hectares in Laos.

High temperatures over the year to date may restrict the Vietnamese federation’s planned yield, VREF’s Cambodia president Leng Rithy said.

He added that he expects a 10 percent smaller yield due to changing weather in 2010, and that the federation might be able to grow only 18,000 hectares of rubber this year.

Le Quang Thung did not mention the potential impact of hot weather when speaking Saturday.

Despite growing prices for rubber on international markets, several producers have said that poor weather and rising oil prices are slowing plans to plant the lucrative crop.