BANGLADESH: Bangladesh fails to cash in on rising global demand for rubber

Local producers and exporters are yet to reap financial benefits of the growing demand for rubber in the global market due mainly to, what the sector insiders said, lack ofgovernment’s policy support.

They said international prices for rubber and rubber products are increasing as there is a shortage of the item because its main producing countries are switching over to palm oil cultivation.

But Bangladesh is yet to have its share of the global demand as the government does not pay attention to this sector, they claimed.

“We have no Rubber Board and even a policy that can guide the sector people,” Syed Moazzam Hossain, president of Bangladesh Rubber Garden Owners Association (BRGOA) said.

The rubber growers also do not get loans while a farmer needs minimum six to eight years to collect rubber latex from a tree which requires a lot of investment, he said.

Moreover, while a farmer gets fertiliser at subsidised rate for rice and other agro-products cultivation, rubber growers pay double compared to them for fertiliser, he added.

The industry needs policy support like soft bank loans, VAT waiver, institutional supports, including research and training, for the growth of the sector, he noted.

Explaining the potential of the product, he said businessmen from many countries, especially China, Malaysia, Turkey, Singapore and Pakistan, are showing keen interest in Bangladeshi raw and processed rubber for its quality.

The global shortage and price hike of rubber have forced international traders to treat Bangladesh as an alternative source, he said adding the price for a kilogram (kg) of rubber has gone up to Tk 350, which was only Tk 70-Tk 100 per kg two years ago.

According to Export Promotion Bureau, the country fetched $19.78 million during July-May of the current fiscal year showing a robust growth of 123 per cent compared to the corresponding period in 2009-10 fiscal.

“Rubber is considered a natural and organic product, the demand for which is significantly growing both in local and international markets as use of rubber in tyre and tube, electric insulator, printing and garment industries is increasing,” the BGROA chief said.

He said, “It is the Rubber Board, that is yet to be formed, only which could decide the right time to impose tax and VAT on the raw rubber. In the absence of a Rubber Board, there is none to oversee rubber plantation, processing, marketing and export.”

“The government should form a Rubber Board and rubber policy for nurturing the nascent sector,” he said adding imposing VAT on raw rubber is ‘unfair’, as the government has withdrawn VAT from all agro-based products, such as rice, jute, potato and tomato, to boost growth of these sectors.

Rubber growers demand for their recognition as an ‘agriculture-based sector’ and the government’s support to utilise its vast potential by providing loans, withdrawing of VAT and other policy supports.

Cultivation of rubber is relatively new in Bangladesh, compared to other countries. The government has been encouraging plantations in the hill areas since 1980. About 45,000 acres of land have been allotted to the Bangladesh Forest Industries Development Corporation (BFIDC) so far, and 32,500 acres to private owners, for rubber plantations.

(Syed Rashid Ali, Karachi, Pakistan)