Rubber industry gains traction in Malaysia

0

ON THE MOVE: The efforts and collaborations between the government and the private sector will be vital to ensure that the four EPP for the rubber stay on track to meet the GNI targets.

KUCHING: Rubber production in Malaysia is set to double and reach two million tonnes per annum by the end of the decade – provided the government’s ambitious development plans for the industry come to fruition.

This expectation would boost the sector’s contribution to gross national income (GNI) to RM52.9 billion in 2020, up from RM18.5 billion in 2011.

However, the sector would have to overcome a number of obstacles, where 95 per cent of annual production came from smallholders, Oxford Business Group (OBG) stated in its Malaysian Report 2012 recently.

“Encouraging these farmers to adapt new techniques and technologues to boost yields and general production is a major challenge going forward,” it added.

Additionally, according to Malaysian Rubber Board (MRB), over the past decade a substantial percentage – from 30 per cent to 40 per cent on an annual basis – of Malaysia’s rubber trees had gone untapped, as smallholders had concentrated on more lucrative corps, such as oil palm.

Other challenges include climate change as well as a general lack of land for new planting and rural flight among younger generations of farmers which led to labour shortage in the country.

“The way forward involves improving productivity by accelerating replanting initiatives as well as tapping into niche markets as first movers,” MRB director-general Salmich Ahmad told OBG.

He further pointed out that continued efforts and collaborations between the government and the private sector would be vital to ensure that the four entry point projects (EPP) for the rubber stay on track to meet the GNI targets.

“So long as the EPP goals are met, the production of natural rubber has the potential to jump substantially,” he added.

Recalling history, Malaysia was a major rubber producer in 1957 when it achieved independance, with one-third of the national workforce employed in the sector. The industry maintained international dominance for the next few decades, even as the use of synthetic rubber expanded.

In 1980s, low international rubber prices led the government launching a large-scale initiative to build up the palm oil industry instead.

Over the next decade, the national rubber industry shrank substantially, as smallholders removed rubber trees to make room for oil palm in effort to take advantage of new state-sponsored subsidies and investment initiatives.

During this period, Malaysian rubber production was surpassed by nearby competitors Thailand and Indonesia, which continued to occupy the top two spots till date.

In 2011, Malaysia produced 996,210 tonnes of natural rubber, with just a slight jump on both 857,019 tonnes in 2009 and 939,241 tonnes in 2010.

In terms of export, the industry was responsible for nearly six per cent of nation’s total export in 2011, with Malaysia consuming around 401,923 tonnes, in addition to exporting 946,081 tonnes.

The exports were valued at RM39.83 billion, up substantially from RM33.85 billion in 2010 and RM25 billion in 2009.

OBG pointed out that the export market was set to benefit substantially from rapid economic expansion in China in the coming decade. China purchased 408,597 tonnes of Malaysian rubber in 2011, which equalled to over 43 per cent of total rubber exports.

Other major export markets included Germany (around 12 per cent of total 2011 rubber export), South Korea (4.6 per cent), the US (3.6 per cent) and Iran (2.9 per cent).

The majority of Malaysia’s rubber is exported in the form of rubber products, which include pneumatic tyres, inner tunes, gloves, catheters, condoms, footwear, rubber bands and rubber sheets.

“Also in the same industry, Malaysia is the world’s largest producer of latex gloves,” said the research team. “In 2011, Malaysia was home to 350 rubber manufacturing companies, including 58 dedicated solely to producing latex gloves and 13 condom manufacturers.”

With the improving economy and outlook, Malaysia is now the world’s largest supplier of surgical and examination gloves, condoms and foley catheters.

Under one of the EPPs, the target was to increase Malaysia’s global market share of latex glove production from 62 per cent in 2009 to 65 per cent by 2020.

With target on board, Malaysia is now on its way to meet this goal, with 30.89 billion pairs of latex gloves being produced in 2011, a major increased from 23.13 billion pairs in 2009.