Foreign Investments in
Rubber Tree Plantations
Rationale of a rubber tree investment in Asia
• Natural rubber, also called India rubber or caoutchouc is harvested mainly...
Main hurdles for a
foreign investor
• Foreign investment restrictions
under local legislations and
regulations in land acq...
Basic legal structuring for a rubber tree
plantation project in Thailand
Due Diligence
Land
Joint Venture Agreement

Trees...
Key factors for the financial modeling
• Acquisition costs for land, trees, fencing, reforestation/replanting, etc.
• Labo...
PUGNATORIUS:
Scope of services
• Comprehensive investment
due diligence

• Design of the legal structure

including projec...
Sophisticated solutions in a complex legal environment.
Serious legal and tax advice in the land of smile.

• Please feel ...
www.PUGNATORIUS.com
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Foreign Investments in Rubber Tree Plantations Thailand

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Rubber trees are cultivated in monoculture commercial plantations. Rubber plantations are actively managed for the commercial production of latex on a large scale. Rubber plantations are typically privately owned. Due to various success factors, a long-term growth cycle and a changing legal and business environment it has to be qualified as a high risk and high reward investment in a very valuable commodity. With this white paper, PUGNATORIUS highlights some basics of such project and offers professional services for a successful accomplishment.

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Transcript of "Foreign Investments in Rubber Tree Plantations Thailand"

  1. 1. Foreign Investments in Rubber Tree Plantations
  2. 2. Rationale of a rubber tree investment in Asia • Natural rubber, also called India rubber or caoutchouc is harvested mainly in the form of latex from rubber trees (Hevea brasiliensis, RRIT251, RRIM600) as a renewable natural source. A a general rule, rubber trees are tapped about once every two days, each time yielding about 50 g of latex. • The three largest producing countries are Thailand, Indonesia and Malaysia, together with three quarter of the global rubber production. Please read the complete and updated version condoms, Natural rubber is mainly used for tires, surgeons' gloves, at balloons and other http://www.scribd.com/doc/56826164 relatively high-value products. • Rubber trees are cultivated in monoculture commercial plantations. Rubber plantations are actively managed for the commercial production of latex on a large scale. Rubber plantations are typically privately owned. Due to various success factors, a long-term growth cycle and a changing legal and business environment it has to be qualified as a high risk and high reward investment in a very valuable commodity. • With this white paper, PUGNATORIUS highlights some basics of such project and offers professional services for a successful accomplishment.
  3. 3. Main hurdles for a foreign investor • Foreign investment restrictions under local legislations and regulations in land acquisition and business • High dependence from local people and local knowledge • Nontransparent calculation of Please read the complete and updated version at profitability and financial http://www.scribd.com/doc/56826164 forecast • Lack of physical presence on site favor manipulations and theft of latex and trees • Limited financing facilities for foreign investments
  4. 4. Basic legal structuring for a rubber tree plantation project in Thailand Due Diligence Land Joint Venture Agreement Trees Business partners Calculation and forecast Thai Shareholder 1 Thai Shareholder 2 Foreign Shareholder Please read the complete and updated version at Harvest agreement http://www.scribd.com/doc/56826164 owner Project Co. Ltd. Licensing (split latex between Plantation workers 66%, worker 33% or worse) Land selection and acquisition Ownership Leasehold right Concession Trees with gestation period of seven years Year 1 - 6: Income from pineapples Year 7-29: Income from rubber tapping Year 30: Income from rubber wood sale Plantation management Tree purchase, breeding, cultivation Harvest and latex marketing to wholesaler Wood sale and replanting
  5. 5. Key factors for the financial modeling • Acquisition costs for land, trees, fencing, reforestation/replanting, etc. • Labor costs for plantation workers • Costs for weeding, fertilizer, plowing etc. • Additional watering costs in dry areas • Latex output per tree - after sharing with plantation workers • Trees per Rai, size of plantation, growth cycle of the trees Please read the complete and updated version at (Future) market price for latex, market fluctuations and guaranteed prices • http://www.scribd.com/doc/56826164 • Central Rubber Market Auction Price as shown at www.rubberthai.com/en/ • Income from pineapples, etc. during gestation period of the trees • Income from sale of rubber wood when latex yields tend to decrease to an uneconomic level
  6. 6. PUGNATORIUS: Scope of services • Comprehensive investment due diligence • Design of the legal structure including project company, joint venture agreement, land and tree purchase, harvest and latex delivery contract, • Business licensing and negotiations with governmental agencies • Foreign business licensing for foreign investors • International tax planning for the whole cross-border investment project
  7. 7. Sophisticated solutions in a complex legal environment. Serious legal and tax advice in the land of smile. • Please feel free to contact us in our Bangkok office for questions, comments and other requests by phone or e-mail in Thai, English or German language. ! PUGNATORIUS Ltd. | International Lawyers
 29 Central World Tower | 999/9 Rama 1
 Bangkok 10330 | Kingdom of Thailand
 +66 22072647 | lawyers@pugnatorius.com ! • PUGNATORIUS Limited is an independent legal practice 
 based in Bangkok, Thailand. The law firm provides inter-
 national corporations, investors and foreign law firms with
 premium legal and tax services relating to Thailand, Southeast Asia and offshore jurisdictions.
  8. 8. www.PUGNATORIUS.com
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