Thailand mulls building 'Rubber City'

Thailand mulls building 'Rubber City'

Dow Jones, Bangkok

Thailand's Industry Ministry will seek approval from the Cabinet at its meeting Tuesday for a budget of 900 million baht (US$21.2 million) to establish an integrated rubber industry estate in southern Thailand, Deputy Agriculture and Cooperative Minister Prapat Panyachatirak said.

The first 700 million baht of the budget will be for the first phase of construction and the rest for the second phase, Prapat said, without elaborating further.

The estate, or "Rubber City," is located in Chalung district, Hat Yai, in southern Thailand's Songkhla province.

The budget for the rubber city will be from the government's supplementary budget of 58 billion baht, which was part of the government's measures to boost the country's growth amid the global economic slowdown, Prapat said.

"(Establishment of) the Rubber City will also help Thailand add value to rubber for domestic use, accounting for around 10% of the country's total rubber production," Prapat said, without providing additional details.

Currently, Thailand's main interest with rubber is exports of raw material, accounting for around 90 percent of the country's production.

Thailand is the world's largest rubber producer and exporter. It produces around 2 million to 2.4 million metric tons of natural rubber annually.

As reported, the budget will be used to improve and develop infrastructure and utility networks in the "Rubber City". The estate will be a center for rubber raw material processing, trading, logistics and product exhibition.

Deputy Minister of Industry Pichate Satirachaval said earlier that the "Rubber City" is expected to be ready for operations in 2004. He added that establishing the "Rubber City" is in line with the government's policy to lift and stabilize rubber prices.

The idea of establishing the estate was recently put forth by Thailand's Prime Minister Thaksin Shinawatra with the expectation that its establishment, combined with the setting up of the Thailand-Indonesia-Malaysia joint-venture rubber consortium, would help shore up and stabilize rubber prices.

The world's three largest rubber producers signed a memorandum of understanding last week to formally establish the International Tripartite Rubber Corp., or ITRCo, to buy and stock rubber to raise prices.

Pichate said earlier that he would also make a request to the Cabinet to allow ITRCo's headquarters to be located in the "Rubber City"