Cambodia looks to increase tire making plants for domestic production

Phnom Penh, Cambodia- The Phnom Penh Post reports that two companies are assessing site plans to build a tire factory in Cambodia, amid the operation of three tire factories. According to the Cambodian Oknha Association (COA), Cambodia continues to export thousands of tons of rubber every year although there are tire making factories in special economic zones in Svay Rieng, Sihanoukville and Kratie.

Council for the Development of Cambodia (CDC) deputy secretary-general Chea Vuthy said the car tire industry in Cambodia is showing remarkable positive signs, with two companies currently looking for a site for the factory.

It is estimated that about 200,000 tons of natural latex produced in Cambodia per year would be absorbed locally when all five companies are in full production.

At present, Cambodia harvests around 500,000 tons of latex, with 300,000 tons exported officially and another 200,000 tons shipped out unofficially, he said quoting figures from the Cambodia Rubber Plantation Association.

“Since there is no domestic market, almost all quantities are shipped to international markets,” Vuthy said during the Cambodia Business Forus 2023, which was organized by COA on August 11.

“I have tried to discuss with the companies, urging them to buy local latex. To produce car tyres, they need about 100 components and raw materials but in Cambodia, we have only one natural latex that can contribute to the production chain,” he shared.

So far, only one of the three factories buys Cambodian latex, Vuthy said, adding that in the past five months, the company has bought 14,000 tons of local latex.

Most of the raw material for the production of car tyres in Cambodia is imported from neighbouring countries.

Cambodia Chamber of Commerce vice-president Lim Heng told the Post that increased investment in car tire factories will help to raise the market demand for domestic latex.

Currently, the harvested latex yield is almost entirely dependent on exports to international markets.

Investing in a car tire factory would not only help create jobs and markets for farmers and investors but it also help attract other investment projects, especially factories to produce or assemble cars and other machinery to open factories in Cambodia.

“The presence of new factories would increase the use of domestic products and boost exports,” he said.

At the inauguration of General Tire Technology (Cambodia)’s $300 million car tire factory in the Sihanoukville Special Economic Zone on May 22, Prime Minister Hun Sen called for more industrial plants that use local raw materials such as latex and cashew nuts as it would create jobs for the people.

“Local investment also helps bring modern technology into Cambodia, in line with Cambodia’s industrial policy,” he said then.

The General Directorate of Rubber (GDR) under the Ministry of Agriculture, Forestry and Fisheries said in the first half of 2023, latex exports amounted to $187.1 million.

The total rubber plantation area in the country is 404,578ha, where 78 per cent or 315,322 hectares is tapped for latex, while the maintenance area is 89,246 hectares, which is equivalent to 22 per cent.

In 2022, Cambodia recorded more than $531 million worth of latex and rubber wood exports. The income from latex export was $527.8 million while rubber wood exports stood at $4.1 million.