Cambodia is set to offer tax incentives for another two years on rubber exports, starting from January 1, 2024, aiming to encourage cultivation and support growers and exporters in the face of declining prices due to a drop in international demand.

A government sub-decree, endorsed by Prime Minister Hun Manet on November 23 and seen by The Post on December 28, outlined the revised export tariffs on rubber. 

Under the new regulations, exports will not be subject to tax if the price of rubber drops below $1,600 per tonne. 

The sub-decree further explained the duty structure for other situations depending on current price and export value: $25 per tonne for export values ranging from $1,600 to less than $2,000 per tonne; $50 per tonne for values starting at $2,000 but below $2,700 per tonne; $100 per tonne for values of $2,700 to $3,699 per tonne; and $200 per tonne if the price of the commodity reaches $3700 onwards.

It assigns responsibility for implementing these measures to various ministries and relevant institutions, with the effective date starting on New Year’s Day. 

Lim Heng, vice-president of the Cambodia Chamber of Commerce (CCC), said the government’s decision was prompted by a request from the private sector during the Government-Private Sector Forum in November. 

He said the appeal was made to facilitate adjustments to export tariffs in light of the prolonged decline in global rubber prices, which had caused difficulties for many rubber-producing countries.

“At [the forum], members of the CCC from the Association of Rubber Development of Cambodia [ARDC] presented a proposal to the prime minister. Later, we saw that the government approached the General Department of Customs and Excise [GDCE] to make adjustments to export taxes, resulting in positive outcomes, such as the extension of the rubber export tax [structure] for an additional two years,” he explained.

Heng emphasised the importance of tax incentives for the agriculture sector, particularly in the rubber industry, as it could help stabilise supply, given the country’s extensive rubber plantations spanning more than 400,000ha.

Recent data from the rubber department showed that from January to November, the country earned $445.5 million from rubber exports, along with an additional $1.503 million from rubber timber. 

In November, the price of rubber stood at $1,333 per tonne, reflecting a 7.7% decrease compared to the same period in 2022, while rubber wood was valued at $231 per cubic metre.

For reference, rubber wood, often referred to as “Hevea wood”, is harvested from the rubber tree (Hevea brasiliensis), generally after 25-30 years of growth and is known for its light color and resistance to shrinkage and warping

According to Heng, the establishment of tyre factories in Preah Sihanouk, Kratie and Svay Rieng provinces is expected to boost local consumption. 

He noted that the country is actively attracting investment to build the factories, which will have a positive impact on the domestic sector, reducing its reliance on international markets, particularly Vietnam.

“Once we have local tyre processing factories, it will definitely help us. I believe that the investment in the tyre industry will continue and thus boost local cultivation,” he added.

The Kingdom currently has a total rubber cultivation area of 404,578ha, with 78% (315,332ha) dedicated to latex production, while the remaining 22% (89,246ha) are under maintenance, according to the department.

Earnings from the export of latex and rubber wood surpassed $531 million in 2022, with exports contributing $527.8 million to the total, while rubber wood exports accounted for $4.089 million, as per the GDCE.