The production and processing of rubber (hereinafter referred to as the rubber industry) is currently one of Vietnam’s most economically, socially, and environmentally important industries in the agriculture and forest sectors. In 2017, Vietnam's rubber area reached 969,700 ha, with 67% of the total area ready for latex harvesting (the remaining 37% remains immature). Currently, there are numerous economic actors involved in rubber production, most of which are state-owned enterprises belonging to the Vietnam Rubber Group (referred to as Rubber Group or VRG) and smallholders (also known as rubber smallholders). In 2017, 51% of Vietnam’s total rubber production area consisted of smallholdings.

The rubber industry remains export oriented. Currently, three main categories of product are exported: natural rubber materials (natural rubber, or latex), processed rubber products, and more recently, rubber wood and furniture made from rubber wood. In 2017, the total export turnover of these three groups reached over 6.2 billion USD, accounting for 3% of Vietnam’s total export turnover. Domestic consumption of rubber products is smaller in both volume and turnover compared to the export market, but is increasing. The rubber industry's strong development and growth has created jobs for approximately 500,000 workers in different stages of the supply chain, including 264,000 rubber smallholders who directly participate in production.

Vietnam's rubber industry has been intensely integrating with the world market. The industry's opportunities to expand its export market continue to expand through free trade agreements that have been signed or are under negotiation by the Vietnamese Government. However, integration also increases international competition pressure and creates difficulties for market access due to trade barriers and risks. One basic condition for many consumer markets, particularly for buyers based in the United States (US) or European Union (EU), is compliance with sustainability requirements. These take the form of company-specific commitments, but also laws, regulations, taxes, and fees related to environmental impact, labor use, and other socioenvironmental factors in a product supply chain. These regulations are not only limited to the policies of the countries of production and where the business activities take place, but also provisions of the international treaties to which participating Governments have committed.

In order to adapt to new market regulations, enhance competitiveness, and reduce risks for the rubber industry in the context of integration, Vietnam Rubber Association (VRA), Vietnam Timber & Forest Product Association (VIFORES) and Forest Trends Association conducted an overview study of the rubber industry. This study outlines basic features of the rubber industry, of the industry, from production, processing, and transport, to product consumption. The findings of this study aim to clarify the rubber industry's current role and position, along with the advantages and difficulties that the industry is facing in the context of market integration. Findings of this report will help inform the creation of practical business policies, thus contributing to expanding development opportunities, minimizing market risks, and promoting sustainable development in the rubber sector. The findings of this study are expected to open collaboration opportunities for stakeholders, especially among businesses that have shared interests, and between enterprises and other stakeholders (for example, rubber and wood industries); to promote market expansion; and, to contribute to the sustainable development both individual rubber enterprises and the industry as a whole.

Vietnam Rubber Industry: Current Status and sustainable development solutions outlines each stage of the natural rubber and rubber product supply chain. In particular, the report focuses on the supply chain of natural rubber and rubber products, assesses the current state of the supply chain, and presents key opportunities and challenges in each stage. In addition, the report reviews policies related to of each stage in the supply chain. Rubber wood and rubber wood product supply chains are the focus of another complementary report produced by the same research team.

The data used in this report was gathered from various sources. Secondary sources include statistics on area, production, yield, quantity, and participant composition of the supply chain collected by the General Statistics Office (GSO) data, General Department of Customs, and survey data of other agencies and organizations. Additional secondary sources include technical reports of external organizations, industry statistical data, VRA newsletters, and reports by provincial Departments of Agriculture and Rural Development and Statistical Offices. Furthermore, secondary information was collected from the data shared by 14 natural rubber companies that were consulted by the research team through online surveys, and interviews with representatives of natural rubber companies in Gia Lai, Binh Phuoc, Binh Duong and Son La, where the fieldwork was conducted by the research team in 2017-2018.

The report consists of four parts. Part two describes the context of Vietnam’s rubber industry, including its key features and expansion to meet global market demand. Part three details the natural rubber supply chain from production and processing, to trade and consumption; this section also includes information on Vietnam’s natural rubber and rubber product exports as well as imports from a number of supplier countries into Vietnam. These findings inform the report’s discussion (part four) and recommendations for the industry’s future sustainable development.

GO VIET