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Rubber Manufacturing in Southeast Asia, an Introduction Part 1: Thailand and Indonesia

By 1 June, 2022June 30th, 2023No Comments

Rubber plantation in Thailand

Southeast Asia is widely known as the world’s largest region for rubber plantations, with Thailand, Indonesia, Vietnam, and Malaysia accounting for nearly 80% of the global natural rubber output. Thanks to their potential, the region has received a lot of attention from foreign investors for sourcing activities.

This article is part one of a two-part series and will cover some important information for companies to consider when thinking about sourcing rubber products in the two largest markets in the world, Thailand and Indonesia.

Overview of the rubber industry in Thailand and Indonesia

With suitable climate and cultivating conditions, rubber plantations in Indonesia and Thailand have prospered quickly since the end of the 20th century, paving the way for the two countries to become leading suppliers of natural rubber.

In terms of export volume, Thailand is the largest exporter of rubber with an average volume of 4 million tons per year, accounting for around 35% of the global output. Indonesia comes in second place, with an annual average export volume of 2.5 million tons. In both Thailand and Indonesia, rubber and rubber products are among the top 6 export commodities and have contributed significantly to their economies. The export values of rubber products are 19.7 billion USD in Thailand and 5.6 billion USD in Indonesia, respectively accounting for 7.5% and 3.5% of the whole national export value.

Products that can be sourced in Thailand and Indonesia

In general, rubber products can be divided into three main types: upstream products, midstream products, and downstream products. Upstream products refer to raw or semi-processed rubber (latex, dry rubber, cup lump). Midstream products are processed rubber such as ribbed smoked sheet (RSS), technically specified rubber (TSR), concentrated latex, and compound rubber. Downstream products are final outputs such as automobile tires, latex gloves, condoms, and rubber bands.

Upstream and midstream products are key export products of both Thailand and Indonesia, with the main export markets being China and the US. Manufacturing of downstream products, on the other hand, is not as developed yet due to a lack of investment in technology and production facilities. However, more and more manufacturing companies of tires and medical gloves are considering investing more in Thailand and Indonesia. Thus, making use of the abundant supply of natural rubber while also meeting the pandemic-fueled growing global demand for these products.

Governmental supports

In recent years, the global rubber market witnessed a severe drop in both demand and prices due to oversupply. To stabilize the rubber industry against these unfavourable changes, Thailand’s government introduced several initiatives such as cutting down on rubber supply (by reducing the number of plantations and cutting down rubber trees), increasing added values to rubber exports (by encouraging manufacturing activities of final outputs), and promoting domestic consumption of rubber. The ultimate goal of these initiatives is to solve the current oversupply issue, and thus, gradually increase the value of the rubber industry.

Facing the same issues as Thailand, Indonesia decided to implement similar approaches, for example reducing rubber exports and encouraging companies to increase the production capabilities of high-value downstream products.

In the coming years, more policies to support operations, as well as investment activities of manufacturing companies, are expected to be announced to help both Thailand and Indonesia solve the current issues and reach their full growth potential.

Import duties for rubber products from Thailand and Indonesia

Thailand and Indonesia, as members of ASEAN, have implemented several free trade agreements with the region’s key trading partners, including Australia, China, Hong Kong, India, Japan, South Korea, and New Zealand. Thanks to these agreements, 90% to 100% of rubber products exported from Thailand and Indonesia to partner countries are exempted from import duties.

In addition, each country is also active in discussing and promoting bilateral free trade agreements with other strategic markets such as the US and the EU. Thailand and Indonesia’s great enthusiasm for promoting trade agreements as well as the swift trade relations expansion of ASEAN promise great benefits for traders doing business with these countries.

Moreover, in 2021, Indonesia officially set up an agreement with the European Free Trade Association (EFTA). With this agreement, all rubber products exported from Indonesia to EFTA countries (Switzerland, Iceland, Liechtenstein, and Norway) will be completely exempted from import duty by 2029.

Import duties to the US

Thailand and Indonesia haven’t established any free trade agreement with the US, so products exported from these countries are subject to the general duty rates as other normal trade partners of the US. Depending on the HS code of the rubber product, the tariff rate can go as low as 0% or reach up to 14%.

Table of US tariffs for rubber products

Import duties to the EU

Currently, EU–Thailand Free Trade Agreement and EU–Indonesia Free Trade Agreement are being discussed among parties, but no agreement has yet been established. Therefore, rubber exports from Thailand and Indonesia are still subject to the EU’s general import duties. With different HS codes, the import duty of rubber products can vary from 0% (lowest) to 6.5% (highest).

Table of EU tariffs for rubber products

On a side note, the EU-Indonesia Free Trade Agreement has gone through 11 rounds of discussion, while Thailand and the EU have slowly picked up the discussion on a free trade agreement recently. There are still some issues all parties need to solve, such as disagreements on taxation regimes and trading policies, before these bilateral agreements can be finalized. However, future prospects look bright as all relevant parties are committed to finalising the discussion as soon as possible. It seems that after Singapore and Vietnam, the EU wants to establish trade agreements with other ASEAN members to pave the way for a future region-to-region agreement.


Thailand and Indonesia are the two largest suppliers of natural rubber in the world and have great potential for sourcing downstream rubber products. Although processed rubber products are Thailand and Indonesia’s key exports as of now, manufacturing of rubber tires and medical gloves is also getting more and more established and can later thrive to become major exports.

The governments of Thailand and Indonesia are also aware of the advantages of the natural rubber supply. Thus, they aim to take advantage of the source and increase the total value of the rubber industry by launching new policies to support operation and investment activities.

Moreover, as part of the ASEAN, Thailand and Indonesia enjoy great benefits from many free trade agreements. Each country is also active in promoting bilateral free trade agreements with big markets. As a result, importers and distributors of rubber products from Thailand and Indonesia will continue to receive great tariff benefits.


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