As rubber price falls, rubber companies shift to develop IZs

Since the core business field is facing difficulties, rubber companies are now gathering strength on developing industrial zones (IZs).

Both Dong Phu Rubber (DPR) and Phuoc Hoa Rubber (PHR) are long-standing companies in the rubber industry. In Vietnam, DPR is managing 9,221 hectares of rubber plantations, while the total rubber growing area PHR owns is 15,000 hectares.

As rubber price falls, rubber companies shift to develop IZs



However, due to the adverse rubber price fluctuations in recent years, both of them plan to convert their rubber plantations into different projects in the future to take advantage of the available advantages to further diversify sources of profits.

Meanwhile, their plantations in Cambodia will be taken care and put into exploitation in the future which will replace the existing plantations in Vietnam. DPR is exploiting 5,500 hectares of rubber in Kratie. Rong Viet Securities predicted that 2023 would be the time when DPR’s rubber plantations enter the high exploitation phase.

Since the core business field is facing difficulties, rubber companies are now gathering strength on developing industrial zones (IZs).

As for PHR, the company is harvesting 5,775 hectares of rubber in Kampongthom, and the rubber latex harvesting in all the area is expected to be implemented between 2021 and 2039.

 


According to Rong Viet Securities, both DPR and PHR are taking losses in rubber farming in Cambodia. However, the revenue and profit of the two companies will improve in the next five years.

Rubber growers shift to IZs

With abundant human resources, low labor costs and stable politics, Vietnam proves to be the ideal destination point for multi-national manufacturing groups. This can be seen in the steady increase in FDI in Vietnam.

According to Bui Huy Hoang from Rong Viet Securities, industrial real estate, or industrial zones, is getting the biggest benefits from the strong FDI wave.

Hoang said both DPR and PHR are taking full advantage of their abundant land to accelerate their business in leasing industrial land.

Binh Duong province, with an advantageous geographical position (it is adjacent to HCM City) and developed infrastructure, has been attracting FDI more than other areas. Therefore, PHR, which has large land plots in the province, is moving ahead to convert rubber farming land into industrial production land.

PHR has begun transferring its 1,016 hectares of land to VSIP and Nam Tan Uyen. The company plans to receive VND600 billion in 2019. In the long term, PHR plans to expand Tan Binh IZ and develop Tan Lap IZ which would specialize in serving wooden furniture manufacturers.

Meanwhile, DPR takes a cautious move in developing IZ real estate as its land plots are located in Binh Phuoc, far from HCM City. After leasing Bac Dong Phu and Nam Dong Phu IZs, it plans to expand Bac Dong Phu by 317 hectares.

Mai Lan 

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