Acquisitions and sales of rubber farms
IN A NUTSHELL: For the acquisition or disposal if a rubber farm expert advice is required. Ask us for a consultancy and support proposal.
How to understand the investment in “white gold”
In recent past, Thailand’s rubber industry seemed to be in a bad shape. But now it might be the perfect point in time for a profitable investment in rubber farm land. More about the rubber farm economics when investing in the white gold of Thailand here.
In the past, the latex rubber price escalated continuously, which prompted Thai rubber farmers to grow rubber trees even on unsuitable land. Even traditional rice fields have been converted into rubber plantations. These projects depend on a high market price and make the farmer prone for a temporary price drop – for example because Thailand has traded substantial amounts of reserved latex rubber.
The long-term outlook for the rubber price seems still to be promising. There will be definitely sooner or later a globally growing demand for this particular commodity. However, currently, the latex rubber price has dropped dramatically in the world market due to oversupply. As a spontaneous reaction, Thai farmers have been chopping down rubber trees for the last several months and eliminated many Rai of rubber fields.
From a local farmer’s perspective, it is quite reasonable to grow one crop when he finds it profitable and then chop the plants down when prices drop to levels that cannot sustain profits. However, this does not take into consideration the long life-cycle of a rubber investment. Therefore, from an international investor’s point of view, it makes perfect sense to make use from the shake-out of market adjustment in the rubber industry.
Scope of services – where the rubber meets the success road
PUGNATORIUS has broad experiences and a unique know-how in the legal structuring and financial modeling of rubber farm investments in Thailand by foreign investors. This covers all Thai legal and tax issues and including:
- Comprehensive investment due diligence, the design of the legal structure including project company, joint venture agreement, land and tree purchase, harvest and latex delivery contract.
- Analysis of the forestry legislation and policy and negotiations with Royal Forest Department and other governmental agencies
- Land acquisition process from the design of foreign ownership acquisition structures through a comprehensive due diligence, the preparation and negotiation of the purchase agreement and supporting documents till the signing, closing, payment, transfer of legal ownership and registration.
- Corporate structuring from the basic design, the company formation, registration. This includes licensing, permissions, employment issues, and visa and work permit if required.
- Contracts like the harvest agreement, potential leases, rubber supply agreements, the implementation of an agreement to skim the founder benefits from the overall project structure and similar tasks.
- Thai tax structuring and international tax planning for the whole group of companies.
Given the current economic and political situation, the perfect time for a rubber investment in Thailand is now – whether it is a green field project, a rubber farm acquisition or a rubber investment funds. PUGNATORIUS Ltd. advises foreign investors how to successfully acquire and restructure rubber plantation farms in Thailand in compliance with local legislation and with a solid protection mechanism.