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Thailand’s rubberwood industry: a new rising star

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Author: Pharadon Heemmuden

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  • The market outlook for rubberwood exports is bright thanks to an increasing supply, as well as demand, especially from China, where the furniture industry is growing. Thai rubberwood is competitive in the global market due to its price and quality.
  • EIC sees increased potential for the local production of rubberwood furniture and other wooden products, which will help boost Thailand’s export value. Both the public and private sectors should join hands in research and development of new rubberwood products with an eye especially on design and branding.

 

Past hikes in rubber latex prices have led to the continual growth of rubberwood plantations. Thailand’s rubberwood production capacity is projected to climb even more in the future. EIC expects local production of rubberwood to increase by 3% in the medium term, from 20 million tons in 2016 to around 23 million tons in 2020 (Figure 1). This increase is due to new plantings dating from 1991-1995 and the typical rubberwood plantation cycle. A rubberwood tree’s latex production capacity lasts for about 25 years, after which the amount of latex it can produce drops dramatically, prompting farmers to cut trees down in order to plant new trees. In the long term, Thailand’s rubberwood production is expected to expand by approximately 5% per year, reaching 35 million tons in 2030. This projection is calculated based on the number of new plantings from 2000-2005, which grew significantly due to the high price of rubber latex during the same period. Although the price of rubber latex has dropped since 2011, new plantings have continued at a rather stable rate since rubberwood remains as a relatively profitable cash crop.

 

Thailand is a major exporter of rubberwood, shipping over 65% of its rubberwood production abroad. Thai rubberwood is competitive thanks to its quality and price, especially when compared with other types of woods. Rubberwood is a hardwood, and as such easy to use; it is also relatively cheap compared to similar woods (Figure 7). It has thus become a popular choice in the furniture and construction industries. Furthermore, rubberwood is environmentally friendly—an important consideration among buyers today. It is a product of plantations rather than deforestation. And although neighboring countries such as Indonesia and Malaysia also produce large quantities of rubberwood, they do not compete directly with Thailand since they do not export raw rubberwood but use it to produce furniture for export instead.

 

Thailand’s rubberwood exports to China are likely to continue growing thanks to the latter’s expanding real estate sector and furniture industry, including furniture exports China’s demand for rubberwood imports has continually climbed, totaling more than 1 billion USD in 2015—a 15% uptick (Figure 3). In the medium term demand is expected to grow further based on home sales figures, which have grown by approximately 14% per year over the past five years. In 2016 alone home sales in China totaled approximately 9.6 trillion yuan (Figure 4). A spike in home sales is also likely to drive up the demand for rubberwood as it can be used for furniture production and related construction needs. In addition, China’s rising per capita income and the growth of third- and fourth-tier cities will be supporting factors for the purchase of wood furniture and other wood-based products. China’s wood furniture export industry is also doing well despite a gloomy global economic outlook. In recent years its wood furniture exports have grown at a rate of approximately 13% per year, totaling 4.510 billion USD in 2015 (Figure 5). The number is projected to rise even more in the future thanks to the American demand for wood furniture. Currently the US is the biggest importer of Chinese wood furniture (Figure 6).  Thanks to a better outlook for the US economy, this demand is expected to grow too.

 

Thailand should enhance its export value and competitiveness by investing in the production of rubberwood furniture and other rubberwood-based products rather than relying…

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Economics

Thailand’s Ministry of Finance expects 3.5 to 4.5% economic growth in 2022

For next year, the Ministry of Finance is projecting an economic growth of 3.5-4.5% from effective pandemic control measures, incentives, domestic spending, the export sector, private investment support, global economic recovery, and government expenditures.

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The Minister of Finance says Thailand’s economy this year would see only a 1.1-1.2% growth

BANGKOK (NNT) – The Ministry of Finance is now projecting an economic rebound to 4.5% growth next year, with government investments serving as key drivers. The Minister of Finance says the government will focus more on inclusive growth next year, with no sectors left behind.

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Ecommerce

Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN PEETATHAWATCHAI:

PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point. 

As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.

In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?

PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
 

 

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