China seeks Cambodian concession to grow rubber

PHNOM PENH, Feb 22 - China is in discussions with Cambodia to acquire a 60,000 hectare (148,300 acre) land concession to grow rubber and help meet rising domestic demand, a senior official said on Monday.

China's ambassador to Cambodia had expressed interest in Cambodian rubber plantations that could produce as much as 60,000 tonnes for export, said Ly Phalla, director general of Cambodia's General Department of Rubber.

"The demand for rubber is high in China, especially in the production of tyres," Ly Phalla told Reuters.

He said Cambodia exported 42,000 tonnes of rubber in 2008, up from 40,000 tonnes in 2007. Last year's figure is not yet available.

In comparison, neighbouring Thailand, the world's biggest exporter of the commodity, shipped 2.74 million tonnes in 2009.

The mooted deal comes as the impoverished country seeks to modernise and expand its agricultural sector, its biggest currency earner ahead of tourism and garments, with moves to boost production of sugar and rice, mainly for export.

Some 11 Vietnamese companies announced earlier this month they had obtained separate land concessions totalling 100,000 hectares to grow rubber in Cambodia.

Ly Phalla said some of the companies had been operating in the country since 2007 and had so far utilised 10,000 hectares of the total 100,000 hectares awarded. He said Cambodia now had a total of 127,000 hectares set aside for rubber plantations.

Vietnamese investments in Cambodia were worth $210 million in 2009, mostly in rubber and mining, up from only $21 million in 2008, said Le Bien Cuong, head of commerce at the Vietnamese embassy in Phnom Penh.

He said Vietnamese exports to Cambodia totalled $1.1 billion last year, with Cambodia exporting only $172 million worth of goods to its neighbour.

The two countries signed a memorandum of understanding on Dec. 26 over planned Vietnamese investments worth more than $6 billion.

China is currently Cambodia's biggest source of foreign direct investment, having so far pumped $4.3 billion into its nascent economy, which grew in double digits for four successive years prior to the global economic slowdown.