Monday, November 10, 2014

Rubber industry can grow bigger than garments


Daily FT - 10/11/2014
  • Potential to become a 10 billion dollar business: Prabhash Subasinghe
Global Rubber Industries Managing Director Prabhash Subasinghe receiving the Platinum Sponsor award from Minister of Economic Development Basil Rajapaksa at the recently concluded Global Rubber Conference 
The rubber industry in Sri Lanka has the potential to grow bigger than the garment industry. “Unfortunately, foreign investors have not seen the possibility of this factor,” says Global Rubber Industries Ltd (GRI) Managing Director Prabhash Subasinghe.


According to GRI, a leading industrial solid tyre manufacturer based in Sri Lanka; supplying solid tyres to Original Equipment (OE) manufacturers and replacement markets in more than 45 countries worldwide since 2001; Sri Lanka is the world’s largest producer of high-quality solid tyres, dominating about 60% of the global market.

Commenting on Industry & Commerce Minister Rishard Bathiudeen’s statement at the recently held Global Rubber Conference (GRC) 2014, the MD of GRI said that Sri Lanka can become a natural polymer hub and that the country needs to strive towards making this goal a reality. The Global Rubber Conference, held for the first time in Sri Lanka earlier this month, was co-organised by the Sri Lanka Export Development Board and supported by the International Rubber Research Development Board (IRRDB). The conference had over 20 global government agencies and associations participating in the event.

Currently Sri Lanka exports just under a billion dollars’ worth of value added rubber products says Prabhash Subasinghe. “Sri Lanka is the largest producer of solid tyres in the world. The value addition in this segment is over 60% and we can categorically state that this is the highest value addition especially in comparison with the garment industry. I am by no means being negative about garments but looking at the rubber industry on a positive note, I would like to explain why there is a huge future for the rubber industry in Sri Lanka. Taking into account the significant value addition as well as the vast potential for future investment; this industry in Sri Lanka can be a 10 billion dollar business.”

Since the solid tyre business category is relativelya small one, the MD of GRI points out that there is a need for Sri Lanka to increase production of rubber in order to grow the business. He says that the subsidy for rubber farmers in this year’s budget was an encouraging step towards this goal as that would help to promote more rubber production and especially support the small holders.

Speaking of the tyre trade he says, “We need large foreign manufacturers to come and invest in our tyre tradeas well as to look at other businesses which are parallel to the solid tyre business let it be in construction tyres, miningtyres, and agricultural tyres to name a few. As much as Sri Lanka is the global leader in solid tyres, we can also become global leaders in related industrial tyre products – and that should be our absolute target.”

The Export Department Board has said that by 2020, Sri Lanka should export 3 billion dollars worth. Currently exports from garments are valued at 5 billion dollars while rubber exports stand at only $ 1 billion.  However, according to Prabhash Subasinghe the value addition from rubber is far higher than most other products.

“What is important for a country is the value addition from exports because that value addition can only be kept within the country. When you look at our Sri Lankan foreign trade, we import products and we export products. In the case of garments, we have to import majority of the raw material from overseas, add value and then export; so your value addition percentage is smaller. This is certainly not the case with the tyre business; because we produce and grow rubber in Sri Lanka andwe add value in Sri Lanka as well. More than 80% of the rubber produced in Sri Lanka is value added locally.

“We also expect to increase our production in the future and hence the value addition in this trade will be far higher. High value addition is necessary for any country to grow, because value addition stays in the country.  In the case of the tyre manufacturing sector for export a value addition of 60% is currently retained in Sri Lanka.  Where there is more value addition a country can become more prosperous.”

Prabhash Subasinghe says we need to be known as a serious player in the raw material production if Sri Lanka is to attain ‘hub’ status, which is why rubber production overall needs to increase and manufacturing processes need to increase parallely in order for the country to become No. 1 in this industry. The plus factor according to him is that the country already has a lot of it in place, and only requires more awareness and the will to achieve the goal.

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